California Gov. Gavin Newsome signed the California CARS Act (Senate Bill 766) into law last month, making official the state's response to the Fifth Circuit's vacating of the FTC's Vehicle Shopping Rule. The legislation takes effect Oct. 1, 2026.
To help dealers prepare, Terry O'Loughlin, Director of Compliance at Reynolds Document Services, and Adam Crowell, VP of Legal & Corporate Development at KPA, recently joined forces for a webinar exposing what the California CARS Act means and how dealers can ready their business before the October 2026 enactment date. One encompassing point made throughout the webinar was that while the Act only pertains to California dealers, it's not uncommon for other states to look toward the Golden State when crafting legislation of their own. Therefore, this is something dealers in every state should being paying attention to.
Other key takeaways include:
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Total Price Transparency: Mandates total price transparency in vehicle advertisements and initial written communications, excluding only the $85 document processing fee and government fees.
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Three-Day Cancellation Right: Dealers must implement a three-day right to cancel for used vehicle transactions under $50,000 - with specific conditions on mileage and vehicle condition, and must provide refunds within 48 hours of check verification.
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Written Add-on Consent: Requires written consent for add-ons, clear disclosures that add-ons are not required for vehicle purchase, and mandates that dealers pay third-party providers for add-ons within 10 days.
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Two-Year Record Retention: Dealers must retain records for two years, including advertisements, signed contracts, add-on proof of payments, cancellation records, and consumer complaints - with strict adherence to disposal rules to avoid unnecessary liability.
The California CARS Act, along with recent State Attorney General enforcement actions across the U.S., highlights how states are stepping up in response to reduced federal enforcement of consumer finance issues. Dealers in every state should be taking notice, evaluating their compliance risk, and taking steps to ensure their F&I documents are up to the task of helping to protect their business.