FTC CARS Rule Vacated: What Still Applies to BHPH GPS
Key takeaways
- The FTC's CARS Rule (Combating Auto Retail Scams) never took effect. The FTC delayed it in February 2024 while dealer groups challenged it in court.
- On January 27, 2025, the U.S. Court of Appeals for the Fifth Circuit vacated the rule because the FTC skipped a required step in its own rulemaking process.
- On February 12, 2026, the FTC formally withdrew the rule in the Federal Register (91 FR 6507).
- The FTC Act still prohibits unfair or deceptive practices, and state law still governs GPS devices and starter interrupt on financed vehicles.
Is the FTC CARS Rule in effect?
No. The FTC published the CARS Rule on January 4, 2024 (89 FR 590). On February 22, 2024, it delayed the rule's effective date while the National Automobile Dealers Association and the Texas Automobile Dealers Association challenged it in court. The rule never took effect, and it has now been withdrawn.
Why did the court strike it down?
The Fifth Circuit found that the FTC "violated its own regulations when it failed to issue an ANPRM," an advance notice of proposed rulemaking, and that the error was not harmless. The decision turned on how the rule was made. The court did not decide whether the rule's requirements were good policy.
When did the FTC withdraw it?
The FTC published the withdrawal in the Federal Register on February 12, 2026, effective the same day, to conform the rule with the Fifth Circuit's decision. The same notice also revised the FTC's Negative Option Rule and removed its Non-Compete Rule, both after court decisions.
What does this mean for GPS on financed vehicles?
The CARS Rule's specific requirements for add-on products do not apply, because the rule no longer exists. Other law still does. Section 5 of the FTC Act (15 U.S.C. § 45) prohibits unfair or deceptive acts or practices in commerce, and it applies whether or not the CARS Rule exists.
What still applies to GPS and starter interrupt?
- Federal: Section 5 of the FTC Act, which covers how any product, including a GPS device, is described and priced to a customer.
- State: State law governs GPS devices and starter interrupt on financed vehicles, and the rules differ from state to state. Several states set specific rules for disabling a financed vehicle, so starter interrupt is used within your state's rules.
- Your contract: the terms in your retail installment contract and any GPS disclosure the customer signs.
What GPS Leaders offers for BHPH dealers
Our BHPH / lender tracker is $89 per car with five years of service included and no annual fees, with an optional starter interrupt. See BHPH tracking .
FAQ
Is the CARS Rule coming back?
The FTC withdrew it in February 2026 to match the court's decision. A new federal rule on auto retail would need a new rulemaking.
Do I still have to disclose GPS to customers?
The CARS Rule's requirements are gone, but the FTC Act and state laws still apply, and state rules vary. Check your state's rules with your attorney.
Is starter interrupt legal?
Dealers use it in many states, but several states have specific rules for disabling a financed vehicle. Use it within your state's rules.
Did the court say dealers can charge for anything?
No. The ruling was about the FTC's rulemaking process, and the FTC Act's ban on unfair or deceptive practices still applies.
Sources: Federal Register, 91 FR 6507 (Feb. 12, 2026) ; National Automobile Dealers Association v. FTC (5th Cir., Jan. 27, 2025); 15 U.S.C. § 45 .
This is general information, not legal advice.
