MANNING LEAVER LEGAL LANE The regulatory landscape facing California motor vehicle dealerships today is a high-stakes environment where the rules of the road are constantly shifting. For dealership professionals, navigating this terrain requires more than a basic understanding of sales; it demands a rigorous commitment to legal compliance with federal and state statutes, administrative regulations and evolving court decisions. The complexity of this environment is only increasing with the upcoming implementation of the California Combating Auto Retail Scams (CARS) Act, set to take effect on Oct. 1, 2026. Notably, while a Federal Trade Commission (FTC) rule of a similar name was recently vacated by a federal appeals court, the California CARS Act, although much less burdensome than the FTC rule, will soon impose new obligations on dealers. This article provides a brief summary of certain advertising requirements to help dealerships with advertising compliance. The Foundation: Sources and Standards of Law To stay ahead, dealerships must recognize that advertising law is not a single set of rules but a multifaceted body of legal standards. The primary backbone of this framework consists of federal and state statutes. However, these statutes are given specificity and detail through regulations issued by government agencies, such as the FTC and state agencies. These agencies do not just write rules; they provide ongoing guidance and interpretations that reveal how they intend to enforce those laws in the real world. Furthermore, court decisions serve as essential benchmarks, interpreting how these laws apply to specific dealership scenarios. In California, two specific codes form the bedrock of advertising rules: the Business and Professions Code Section 17500 and the Navigating the Fast Lane Understanding California’s Advertising Laws By Wade Kackstetter, Esq., Partner, Manning, Leaver, Bruder & Berberich LLP Vehicle Code Section 11713(a). While the former applies to all businesses in the state, the latter is a specialized statute designed specifically for DMV license holders, including automobile dealerships. Together, they establish the industry’s “Golden Rule” for advertising: Advertisements must not be untrue or misleading. The Regulator’s Perspective. When a regulator reviews your ad, they aren’t looking for your intent to deceive. It is irrelevant whether you intended to be honest or whether a consumer was actually harmed or relied on the ad. Instead, the standard is objective: Is an ordinary person likely to be misled or deceived by the advertisement? If the answer is “yes,” your dealership is at risk. The Art of the Disclosure: Clear, Conspicuous and Consistent Disclosures are the primary tool for staying compliant, but they are often misunderstood. To satisfy legal standards, every disclosure must be clear and conspicuous. In the fast-paced world of digital and print media, this means the advertisement must actively draw the reader’s attention to the fine print. 18
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