Other Prohibited Activities Add-Ons That Provide No Benefit You cannot charge a consumer for an add-on that provides no benefit to the consumer. The FTC provides some examples: 1. Nitrogen-filled tire-related products or services that contain no more nitrogen than naturally exists in the air; 2. Sale of service contracts that are duplicative of manufacturer warranties; 3. Supposed rust-proofing add-ons that do not actually prevent rust; 4. Add-ons that the vehicle itself cannot support (like engine oil-change services on an electric vehicle); 5. Software or audio subscription services that the vehicle cannot support or use; and 6. GAP agreements on vehicles with a low LTV. Charging a Consumer Without Consent You cannot charge a consumer for any item unless you obtain the consumer’s “express, informed consent” to be charged for that item. The FTC defines “express, informed consent” as “an affirmative act [that communicates] unambiguous assent to be charged, made after receiving and in close proximity to a Clear and Conspicuous disclosure, in writing … of the following: 1. What the charge is for; and 2. The amount of the charge, including if the charge is for a product or service, all fees and costs to be charged to the consumer over the period of repayment with and without the product or service.” Furthermore, the FTC identifies the following as not being “express, informed consent”: 1. A signed or initialed document by itself; 2. Pre-checked boxes; or 3. An agreement obtained through any practice designed or manipulated with the substantial effect of subverting or impairing user autonomy, decision-making or choice (which sounds eerily similar to “dark patterns” as it is related to consumer privacy choices). Though not explicitly stated in the regulations, we believe that this will require you to provide the customer with an additional disclosure form that they must acknowledge and sign. We will cover that in more detail in an upcoming article. Recordkeeping For 24 months, dealers must create and retain copies of the following: 1. Copies of all materially different advertisements, sales scripts, training materials and marketing materials regarding the price, financing or lease of a vehicle; 2. Copies of all purchase orders, financing and lease documents signed by the consumer (whether you sold a vehicle or not); 3. All written communications relating to sales, financing or lease between you and any consumer in which you sold or leased a vehicle. Another question we regularly saw during our live webinar was whether text and email communications between a salesperson and a customer, in which a vehicle was sold, needed to be retained for 24 months. The answer is “yes,” and we recommend that you train your staff to use software that tracks and records this electronic communication. Outlook Though the regulation itself spans only 12 pages (with over 358 pages of comments), the ramifications to the industry are significant and very complex, but that’s why we’re here. Led by dealers and industry compliance experts, ComplyAuto has been preparing a solution for the CARS Rule since 2020 called “Guardian,” which was announced at the NADA Convention in Las Vegas. To learn more, visit complyauto.com/guardian. As the FTC continues to receive commentary about the CARS Rule and ratchets up enforcement in other areas of the automotive industry, ComplyAuto intends to remain the nation’s leading automotive compliance software solution by bringing you the latest information that affects your dealership. This article is intended to be for INFORMATIONAL PURPOSES ONLY and is NOT to be construed as legal advice. The Rule is comprehensive and will fundamentally change the way dealers do business. WVADA News 25
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