Bought an auto lemon in California?
Most lemon owners have to do more to get a refund.

CONSUMER ALERT for California auto and recreational vehicle lemon owners!! Don’t get stuck with a defective lemon car because you skipped this step.

Auto and RV manufacturers won major changes to California’s auto lemon law that make it harder for most owners of seriously defective “lemon” vehicles to get warranty repairs or a refund. The changes apply to lemon owners who purchase vehicles from:

General Motors, Ford, Fiat Chrysler / Stellantis (FCA), Hyundai, Infiniti, Isuzu, Kia, Mercedes-Benz, Mitsubishi, Nissan, Subaru, and other manufacturers who opted in to the new, anti-consumer version of the law.

The California Department of Consumer Affairs has posted a list of auto manufacturers who opted in to the new law. If the manufacturer of your car is on the list, your life as a consumer is now more complicated.

Before the changes to the law took effect, all you had to do was to take your faulty car to a manufacturer-authorized repair facility (usually one of their franchised dealerships) for repairs. The manufacturers were responsible for tracking the repairs and offering to “promptly” buy back vehicles that qualified as lemons. That makes sense, since the manufacturers are the ones that produce the defective vehicles. They also review and approve warranty repairs, including reimbursing their dealers for performing repairs. Plus they have their own attorneys, who should be familiar with the lemon law.

What has changed?

Now, most lemon owners are required to also notify the manufacturer directly, IN WRITING, in order to have the full protection of the lemon law. You must provide specific information, including:

The vehicle owner’s name.
The Vehicle Identification Number, or VIN, which must be “accurate.” You can find the VIN on a plate on the dashboard, and in the sales documents. It’s 17 numbers and letters. Take time to double-check that the VIN is correct.
A “brief summary of the repair history and problems with the vehicle.” It’s not clear from the new law exactly what will do the job. We suggest that you provide a complete list of all the problems that you have experienced, and of each of the times you attempted to get the vehicle fixed.
A demand that the manufacturer buy back the lemon, or provide a replacement vehicle. It’s not enough to tell the dealer or manufacturer “I don’t want this car anymore,” “I’m afraid to drive this car,” or “This car is a lemon.” You need to tell the manufacturer IN WRITING that you are demanding a buy back or replacement vehicle.

You must send this written message to one of two places:

By email: to the email address that the manufacturer of your defective vehicle has provided, which shows up on this list.

By snail mail: “by certified or registered mail, return receipt requested, to the address provided by the manufacturer in the owner's manual or warranty booklet.” The contact name and mailing address are also posted here, on the website for the California Department of Consumer Affairs.

When you send the written notice, you must still have possession of the vehicle, so don’t wait until you have traded it in to the dealership or sold it to someone else. You are also required to keep the car for at least 30 days from when the manufacturer has received the written notice.*

Plus you must inform the buyer IN WRITING about the problems you experienced with the car — even if it’s the dealer where you’ve been taking the car for repairs.**

Is calling the manufacturer’s toll-free number enough? NO!!

Even if you have called the manufacturer’s customer service number over and over again, and talked to agents of the manufacturer who say they have opened a case in your name, and they will get back to you, that is no longer enough to preserve all of the protections you need, under the lemon law.

If you don’t send a written notice that complies with the new law, the manufacturer can get away with refusing to fix your lemon or buy it back, without facing the civil penalty for willfully violating the lemon law. The possibility of having to pay a penalty is the #1 incentive for manufacturers to do the right thing when you have a lemon. Unless they face a significant penalty, they have little to lose by failing to fix your car or give you a refund.

Why do auto manufacturers want you to have to write directly to them, before you can benefit from the lemon law?

The reason the manufacturers desired a change in the law to require lemon owners to write to them directly was to make it super easy for them to screen out vehicle owners who haven’t taken that additional new step, and refuse to pay for warranty repairs to fix their cars — reducing their warranty costs.

Auto manufacturers know that most lemon owners will not be aware of the new requirement, or write to them and provide all of the required information, so they can get away with stonewalling and giving consumers the run-around, in hopes they will give up and trade in their defective cars at a huge loss.

Not surprisingly, the auto manufacturers who steered the lobbying effort to weaken California’s auto lemon law have the worst record of producing the most lemons, having to issue the most safety recalls, and having the highest warranty costs.

General Motors and Ford steered the battle to change the law. In the first half of 2025, Ford had warranty costs of over $2.8 billion and GM had warranty costs of over $2.5 billion.

In 2025, Ford broke records for having to issue safety recalls, recalling nearly 13 million vehicles due to serious safety defects — more than the next 9 auto brands combined.

How did the auto manufacturers get CA legislators to vote for weakening the lemon law?

For decades, CARS succeeded in not only blocking anti-consumer changes to California’s auto lemon law, but in expanding the law to cover vehicles purchased for business use and to include protections for military servicemembers stationed in, or deployed from, California.

However, the Consumer Attorneys of California (CAOC) sided with GM and Ford over the changes to the law, under threat of a ballot initiative that would have capped their attorneys’ fees — threatening their incomes.

The changes to the law were introduced using a sleazy tactic called a “gut-and-amend” — stripping out the contents of a bill on an unrelated topic, and inserting the unpopular provisions — just two weeks before the end of the legislative session, when the fate of hundreds of bills was being decided all at once. Many legislators complained about the unfair, rushed process and having to make a decision on such an important issue without the usual months-long scrutiny such a bill should get.

CARS worked night and day and fought back hard against the changes, which were also opposed by manufacturers such as Toyota (which produces relatively few lemons compared with GM and Ford), but most legislators caved in to GM, Ford, and the CAOC. Notable exceptions, who sided with consumers: Assemblymembers Rebecca Bauer-Kahan, Dr. Jasmeet Bains, Jacquie Irwin, and Cottie Petrie-Norris, and Senators Marie Alvarado-Gil, Angelique Ashby, Susan Talamantes Eggman, and Roger Niello.

Governor Newsom expressed reservations about the bill and insisted that the legislature enact another bill (SB 26) to allow auto manufacturers to opt out, as a condition of signing the bill.

* Here’s the actual quotation from the GM-Ford-CAOC changes to the lemon law (AB 1755):

California Code of Civil Procedure Section 871.24.
(a) At least 30 days prior to the commencement of an action seeking civil penalties under subdivision (c) of Section 1794 of the Civil Code, the consumer shall do all of the following:

(1) Notify the manufacturer of the consumer's name, the accurate Vehicle Identification Number ("VIN") of the motor vehicle, and a brief summary of the repair history and problems with the motor vehicle.

(2) Demand that the manufacturer repurchase or replace the motor vehicle.

(b) Minor deviations in the notice submitted pursuant to subdivision (a) shall not disqualify consumers from seeking civil penalties.

(c) At the time that notice submitted pursuant to subdivision (a) is sent, the consumer shall have possession of the motor vehicle.

(d) The notice required by subdivision (a) shall be in writing and shall be sent either by email to the email address prominently displayed on the manufacturer's website for this purpose or by certified or registered mail, return receipt requested, to the address provided by the manufacturer in the owner's manual or warranty booklet. The notice information on the manufacturer's website, owner's manual, and warranty booklet shall be provided in both English and Spanish.

** Here’s the actual quotation from the opt-out bill, SB 26, that requires auto lemon owners to inform the buyers IN WRITING about the problems with the vehicle and any legal action they may bring — even if the buyer is the dealer who has been attempting to repair the car, and is already familiar with its history.

(i) If a consumer sells their vehicle as authorized by subdivision (g), the consumer may not seek civil penalties under subdivision (c) of Section 1794 of the Civil Code unless the consumer provided to the prospective buyer or recipient of the vehicle, prior to the sale, written notice of the basis for the consumer's request for restitution or replacement from the manufacturer and of any pending action described in subdivision (a) of Section 871.20.

CARS President Awarded "2025 Legislative Advocate of the Year" Award

CARS President Rosemary Shahan was recently awarded the "2025 Legislative Advocate of the Year" Award, presented by the Consumer Federation of California and the California Low Income Consumer Coalition, in honor of her work to win passage of the California Combating Auto Retail Scams (CARS) Act, a landmark first-in-the-nation law that will take effect on October 1 of this year.

Rosemary led the coalition that advocated for passage of the law, and worked closely with the author, Senator Ben Allen (D-Santa Monica) and his Legislative staffer Shoshana Levy, to overcome the vehement opposition from new and used car dealers and their trade associations, auto lenders, banking interests, the Chamber of Commerce, and the Civil Justice Association of California (including Big Tobacco, the oil industry, and other multi-national corporations that profit from causing horrific human misery).

Front row: Shelmun Dashan (Policy Director, Berkeley Center for Consumer Law and Economic Justice), Erika NGO (Legislative Director for CA Assemblymember Ash Kalra -- holding two awards, presented to her and to Assemblymember Kalra), CARS President Rosemary Shahan, National Consumers League Executive Director Sally Greenberg, Shoshana Levy (Policy Analyst for Senator Ben Allen -- holding two awards, presented to her and to Senator Allen), Yarissa Ramirez (Associate Director, Consumer Federation of California), and Heidi Pickman (Vice President of the small business organization, CAMEO Network)

Back row: Dani Kando Kaiser (Policy Advocate, California low-income Consumer Coalition), Megan Varvais (consumer advocate and Board Member, CARS Foundation), Robert Herrell (Executive Director, Consumer Federation of California), Ted Mermin (Director, California Low-income Consumer Coalition), Andrea Luquetta (Senior Counsel, Center for Responsible Lending), and Jamie Duong (Director of Operations and Development, Consumer Federation of California)

"New California laws rewrite car-buying rules with return policy and pricing reforms"

CalMatters

by Ryan Sabalow
December 26, 2025

"California lawmakers made major changes to the state's car-buying rules this year, including a controversial rewrite of the state law that allows buyers to get their money back if they are sold a defective vehicle and a right to return a used vehicle within three days.

After October 1, California's used car buyers will have a new right to return the car within 3 days for any reason, and get a refund. Dealers may charge a restocking fee, based on the price of the car.

After an intense lobbying push this year from automobile companies, dealers and consumer groups, more legislative battles over California vehicle purchases could follow in 2026. Sky-high car prices show no signs of falling, and a Republican-led Congress and the Trump administration have sought to thwart Newsom's goal of having 100% of new cars sold in California be zero-emission by 2035....

In the meantime, Gov. Gavin Newsom signed [Senator Ben] Allen's Senate Bill 766, creating a first-in-the-nation policy that allows a buyer to return a used vehicle for a full refund within three days if the purchase price was less than $50,000. Dealers can charge a restocking fee.

The law, which takes effect in October, also contains other protections for buyers intended to prevent them from getting suckered.

The law also prohibits dealers from charging for add-ons that have no benefit to the buyer, such as free oil changes for electric vehicles — which don't need oil changes.

'That is a huge deal,' said Rosemary Shahan of Consumers for Auto Reliability and Safety, which championed the bill. 'It's historic. It's going to make cars more affordable.'

. . . .

Brian Maas, president of the California New Car Dealers Association, said the law should make buying a used car more transparent and easier for consumers.

'The bill certainly is a net positive in terms of more transparency about the total price and advertising,' he said.

But he said the new law 'clearly imposed more responsibility on dealers,' which is why Maas said his group was extremely frustrated Newsom vetoed its bill that would have allowed dealers to raise document-processing fees by $175.

. . . .

Consumers face a watered-down lemon law

Newsom also signed Senate Bill 26, a bill that allows car manufacturers to opt out of changes to the state's lemon law that gives consumers a right to get their money back if they buy a defective vehicle — sometimes referred to as a "lemon."

The result is that California car buyers have different legal protections under the state's lemon law depending on which brand they buy."

Read more: CalMatters: "New California laws rewrite car-buying rules with return policy and pricing reforms"

FOR IMMEDIATE RELEASE: Tuesday, October 7, 2025
Contacts: Ben.Cheever@sen.ca.gov, 916-651-4024

Senator Allen Delivers Needed Transparency and
Consumer Protections for Car Shoppers

          SACRAMENTO – Senator Ben Allen (D-Santa Monica) celebrated the signing of SB 766, the California Combating Auto Retail Scams (CARS) Act, in order to increase affordability and reduce the risk of purchasing a used vehicle in California.

          "This bill will codify best-in-class protections for California car buyers – protecting folks from junk fees and imposing much-needed transparency on advertised car prices," said Senator Allen. "I'm very grateful to the Governor for recognizing the importance of this legislation. It'll make a real difference for consumers by making the car buying experience more fair and transparent."

          Key consumer protections provided by this bill are modeled after the Federal Trade Commission's Combating Auto Retail Scams (CARS) Rule, which was overturned by the federal Fifth District court solely on procedural grounds in a split decision before the Rule could take effect. Under Trump's appointees, the FTC has not re-issued the Rule, despite projections from leading economists that estimate the Rule would save American car buyers $3.4 billion annually.

          SB 766 adopts the FTC CARS Rule into state law, prohibiting car dealers from misrepresenting the price of the car while requiring them to be transparent about the full offering price and total payments. It also requires dealers to be transparent about add-on services or features that are optional, and prohibits them from charging for add-ons that will not benefit the consumer such as free oil changes for an electric vehicle.

          Going beyond the FTC CARS Rule, SB 766 provides a first-in-the-nation 3-day return period to provide consumers time to catch issues that may not have been caught during a short test drive, as well as to mirror standard practices for sellers. Customers will be able to return their vehicle and receive a full refund, and dealers will be permitted to charge a reasonable restocking fee.

          "We applaud Senator Allen's leadership in championing this landmark first-in-the-nation consumer protection legislation, and are thrilled that Governor Newsom signed it into law," said Rosemary Shahan, President of the non-profit consumer organization Consumers for Auto Reliability and Safety, which led the coalition in support of SB 766. "The California CARS Act is the most sweeping reform of protections for car buyers since the Car Buyers Bill of Rights was enacted in 2005. The 3-day cooling off period for used car buyers promises to be a game-changer."

          The same economists who analyzed the FTC CARS Rule conservatively project that SB 766 will save California car buyers $234 million annually, and an additional 8.5 million hours of time annually that would otherwise be spent haggling, navigating bait-and-switch practices, and negotiating unnecessary and expensive add-on products that offer little to no value to consumers.

          SB 766 will take effect on October 1, 2026 – a delayed implementation to allow car dealers to train employees and take needed steps to comply with the new law.

What others are saying

          "This bill is a significant step forward for California consumers and for an industry that has been allowed to get away with outrageous sales tactics for far too long," said Ted Mermin, director of the California Low-Income Consumer Coalition. "Today, when you ask a car dealer how much a car costs, you're going to get a three-hour wait in an office. When the CARS Act takes effect, you're going to get a direct answer."

          "This bill will help empower California car buyers to avoid being taken for a ride when they buy a new or used car," said Robert Herrell, Executive Director of the Consumer Federation of California.

          "The CARS Act will protect millions of Californians from costly auto sales scams and make the car-buying experience easier and more transparent," said John Van Alst, senior attorney at the National Consumer Law Center and director of its Working Cars for Working Families project. "We applaud the work of Senator Allen, the California Legislature, and Governor Newsom, and encourage state legislatures across the nation to act to protect auto buyers."

          "As the FTC abandons protections for car-buyers, it's great to see California stepping up to fight hidden costs and wasted time," said Sam Levine, Senior Fellow at Berkeley's Center for Consumer Law and Economic Justice, and former Director of the FTC's Bureau of Consumer Protection. "By requiring upfront prices and banning junk add-ons, the CARS Act will strengthen transparency and competition and save Californians money."

          "It's great to see California stepping up to help fill the void at the FTC in protecting car buyers from predatory car dealers and lenders," said Erin Witte, Director of Consumer Protection for the Consumer Federation of America.

Ben Allen represents the 24th State Senate District, which consists of the Westside, Hollywood, coastal South Bay, and Santa Monica Mountains communities of Los Angeles County.

NEWS Immediate Release: Thursday September 11, 2025

Contacts:
Ben Cheever, Press Secretary, Senator Ben Allen Ben.Cheever@sen.ca.gov, 916-651-4024
Rosemary Shahan, President, CARS, press@carconsumers.org, 530-759-9440

California Legislature Sends Bill to Make New & Used Cars More Affordable
To Governor Gavin Newsom
First-in-nation 3-day cooling off period for used car buyers

          At a time when the already-high price of cars is projected to skyrocket even more due to tariffs imposed by President Trump, the California legislature voted to pass SB 766, the California Combating Auto Retail Scams (CARS) Act, championed by Senator Ben Allen (D- Santa Monica), to make buying a new or used vehicle in California from a car dealership more affordable and less risky.

          "For years, car shoppers have often complained about deceptive practices that lead to higher prices or unfair deals," said Senator Allen. "The California CARS Act will make cars more affordable, and will benefit both car buyers and honest car dealers by making the car market in California fairer and more competitive," said Senator Allen.

          The first part of the bill is modeled after the Federal Trade Commission's Combating Auto Retail Scams (CARS) Rule, which was overturned by the federal Fifth District court solely on procedural grounds in a split (2-1) decision before the Rule could take effect. Under Trump's appointees, the FTC has not re-issued the Rule. Leading economists projected that the FTC's CARS Rule would have saved American car buyers $3.4 billion each year, plus 72 million hours annually otherwise spent shopping for cars, haggling over the price, being subjected to bait-and-switch practices, and getting stuck with unwanted, expensive add-on products that boost profits for car dealers and lenders, but are often of little or no value to consumers.

          The same economists, from Stanford, MIT, Clemson, University of Arizona, and University of Michigan, conservatively project that enactment of the CARS Rule provisions in SB 766 will save California car buyers $234 million in reduced search costs and another 8.5 million hours in time savings – each year the law is in effect. They did not evaluate the second part of the bill, which creates a new, first-in-the-nation 3-day cooling off period for used car buyers.

Key provisions of the California CARS Act

Requires car dealers to disclose the "total price" up front and in advertising, making car prices more transparent and enabling car buyers to comparison shop for a good deal online without having to spend hours at car dealerships just to find out the price.

Prohibits dealers from selling worthless add-on products that fail to provide any benefit to the car buyer, such as lifetime oil changes for an electric vehicle or service contracts that fail to cover pre-existing conditions like prior damage from wrecks or floods

3-day Cooling-Off Period for Used Car Buyers

          SB 766 will provide used car buyers, including ride share workers and small businesses that purchase or lease used vehicles that cost $50,000 or less, a new 3-day cooling off period. They will have the right to return the car for any reason within 3 days, for a full refund, minus a restocking or shipping fee. The fee is capped at 1.5% of the total cost of the car, with a minimum of $200 and a maximum of $600. The car can't be driven more than 400 miles. Dealers may charge $1 per mile for mileage over 250 miles. The car must be in the same condition, except reasonable wear and tear and any defect or mechanical problem that becomes evident and that the car buyer did not cause.

          The cooling off period will allow car buyers time to review the paperwork without being under pressure. Many will be also able to get the car inspected by an auto technician with the necessary diagnostic equipment for detecting odometer or emissions tampering, prior damage, latent safety defects, and other major problems. Car buyers will not have to file a lawsuit, go to arbitration, or prove they were cheated in order to return the car and get a refund.

          California Attorney General Rob Bonta led a coalition of 19 state attorneys general in support of the FTC's CARS Rule. In August, Attorney General Bonta sent legislators in Sacramento a letter expressing his support for passage of SB 766.

          "A car is the largest and most important purchase many Americans make. At a time when the FTC is falling down on its job of protecting American car purchasers, it's great to see California standing up for them," said FTC Commissioner Rebecca Kelly Slaughter.

          "People should be able to buy a car without constantly having to worry about getting tricked or ripped off. That's what this is about and frankly it's a no-brainer." said former FTC Commissioner Alvaro Bedoya.

          "We hope Governor Newsom will become the first Governor in the nation to enact this landmark legislation to help address the #1 source of consumer complaints: auto sales scams," said Rosemary Shahan, President of the non-profit consumer organization Consumers for Auto Reliability and Safety, which led the coalition in support of SB 766.

          "This bill will help empower California car buyers to avoid being taken for a ride when they buy a new or used car," said Robert Herrell, Executive Director of the Consumer Federation of California.

          "This bill is a significant step forward for California consumers and for an industry that has been allowed to get away with outrageous sales tactics for far too long," said Ted Mermin, director of the California Low-Income Consumer Coalition. "Today, when you ask a car dealer how much a car costs, you're going to get a three-hour wait in an office. When the CARS Act takes effect, you're going to get a direct answer."

          "The CARS Act will protect millions of Californians from costly auto sales scams and make the car-buying experience easier and more transparent," said John Van Alst, senior attorney at the National Consumer Law Center and director of its Working Cars for Working Families project. "We applaud the work of Senator Allen and the California Legislature and encourage state legislatures across the nation to act to protect auto buyers."

          "As the FTC abandons protections for car-buyers, it's great to see California stepping up to fight hidden costs and wasted time," said Sam Levine, Senior Fellow at Berkeley's Center for Consumer Law and Economic Justice and former Director of the FTC's Bureau of Consumer Protection. "By requiring upfront prices and banning junk add-ons, the CARS Act will strengthen transparency and competition and save Californians money."

          "It's great to see California stepping up to help fill the void at the FTC in protecting car buyers from predatory car dealers and lenders," said Erin Witte, Director of Consumer Protection for the Consumer Federation of America.

          For many months, car dealers and auto lenders and their trade associations attempted to kill SB 766. But the bill kept moving forward, thanks to "AYE" votes from Democrats. After many amendments were adopted to address concerns they raised, the dealers and lenders eventually dropped their opposition and the bill passed with widespread bi-partisan support. Dealers also demanded a delay before the bill will take effect. Legislators agreed to a delay of 10 months from the usual date – until October 1, 2026.

LINKS:
Consumers for Auto Reliability and Safety (CARS) blog, with more links, history, and details

CA comments in favor of the FTC's CARS Rule

– 30 –

California on brink of passing massive overhaul of car buying practices
First-in-nation 3-day cooling off period
for used car buyers,
including small businesses

Floor Alert
SUPPORT SB 766 (ALLEN)

Combating Auto Retail Scams (CARS) Act

SB 766 (Allen) will make buying a new or used car in California more affordable and less risky. SB 766 will benefit millions of California consumers and small business owners and help address the #1 source of consumer complaints. SB 766 will also benefit honest car dealers who currently are at a competitive disadvantage. Key provisions:

Requires improved car pricing transparency, allowing car buyers to better comparison shop.
Prohibits add-on items and services that fail to benefit consumers, such as lifetime oil changes for electric vehicles.
Reduces litigation by providing a new 3-day cooling off period for USED car buyers, helping them avoid common scams that cost vehicle owners billions of dollars, such as:
- odometer fraud
- rebuilt wreck frauds
- "loan packing" of unwanted items
- "clear coding" vehicles that fail to pass smog
Allows car buyers purchasing USED vehicles priced at $50,000 or less to return them for any reason, provided the vehicle is in the same condition and driven less than 400 miles. Allows car dealers to charge a restocking fee based on the purchase price.

Vote AYE on SB 766

July 2, 2025

Honorable Rebecca Bauer-Kahan
Chair, Assembly Committee on Privacy and Consumer Protection
California State Assembly
1021 O Street, Suite 5210
Sacramento, CA 95814

Re: SB 766 (Allen) Combating Auto Retail Scams (CARS) Act: SUPPORT

Dear Chair Bauer-Kahan:

Consumers for Auto Reliability and Safety (CARS) strongly urges passage of SB 766 (Allen), the Combating Auto Retail Scams (CARS) Act. SB 766 includes key provisions modeled upon the Federal Trade Commission's Combating Auto Retail Scams (CARS) Rule, which was supported by California Attorney General Bonta, and would make buying new or used vehicles in California more affordable and less risky.

Enactment of SB 766 is particularly important now, when tariffs are already increasing the price of new vehicles. For example, Ford Motor Company recently announced that due to the tariffs it is hiking up the Manufacturer's Suggested Retail Price of many popular models up to an additional $2,000.

California Attorney General Bonta:
The FTC's CARS Rule is Needed, in Addition to Existing Law

          SB 766 is needed to address persistent unfair and deceptive practices that continue to harm California car buyers, despite existing laws. As California Attorney General Rob Bonta stated: "[T]he new FTC rule is a necessary step to protect consumers as existing law has proven insufficient to stamp out widespread dealer misconduct....

          In 2022, Attorney General Bonta expressed his support for the FTC's rulemaking, which would establish new protections for car buyers nationwide, and will be instrumental in assisting ongoing state efforts to eliminate unfair and deceptive practices that victimize consumers and disadvantage honest businesses.

          'For many consumers, a vehicle is a necessity and can be the most expensive one-time purchase they ever make. That car or truck can be a lifeline that takes them to school, a job, or back home to their families,' said Attorney General Bonta. 'Unfortunately, car dealers too often fail to honor advertised prices, tack on

unnecessary add-on products, or engage in other deceptive practices. As attorneys general, we know these practices harm low-income consumers and we need more tools in the toolbox to address persistent unfair and deceptive practices in the auto sales industry.'

          ....[T]he FTC's CARS Rule is necessary to protect consumers from misconduct that remains widespread and pernicious, in spite of existing regulation. As states' top law enforcers, the attorneys general know unfair and deceptive business practices in the automotive sales industry are a pervasive problem and are first-hand witnesses to ongoing violations of existing law. States have a long history of protecting consumers in the automotive sales industry through investigations, settlements, and enforcement and have found existing law has proven inadequate to address persistent unfair and deceptive practices in the automotive sales industry.

          In 2022, Attorney General Bonta announced a $27.5 million settlement with the now-defunct Paul Blanco's Good Car Company resolving allegations that the company engaged in unlawful business practices, including false advertising about credit and discount programs, making false statements on credit applications, and deceiving customers into purchasing add-on products. Through a judgment entered with the court, the company admitted to and agreed to be held liable for publishing 650,000 false advertisements, defrauding auto lenders by misrepresenting vehicle values on 20,000 occasions, and deceiving consumers regarding add-on products. Mr. Blanco also accepted a ten-year ban on participation in the California auto industry....Paul Blanco's deceptive radio and television advertisements targeted vulnerable, predominantly low-income consumers with subprime credit, promising easy approval for unrealistically low interest rates to lure unsuspecting consumers to their dealerships...."

          In addition to states' enforcement experiences, consumers themselves have made voluminous reports of their experiences falling victim to deceptive practices when purchasing cars. Further, complaints to the Better Business Bureau about new and used auto dealerships numbered in the tens of thousands annually, and from 2020 to 2021 were the second highest of any industry.

          In the brief, the coalition [of state Attorneys General] argues that the CARS Rule is tailored to address the noncompliance state attorneys general see in their enforcement role, and that FTC's move to add specificity to industry regulations is a reasonable—and important—way to reverse the trend of noncompliance that remains in spite of the existing, pre-CARS Rule regulations. The CARS Rule does so by taking important steps to address these problems by prohibiting dealers from making misrepresentations and charging for add-ons that provide no consumer benefits, and by strengthening disclosure and record-keeping requirements. The coalition asserts that CARS Rule is an important supplement to existing authorities and would provide the states with much-needed ammunition in their ongoing efforts to detect and remediate unfair and deceptive practices in automotive sales."¹

Cost and Time Savings for California Consumers

According to a thorough, robust, and authoritative analysis by the U.S. Federal Trade Commission, the Combating Auto Retail Scams (CARS) Rule provisions requiring transparency and full disclosure of the actual out-the-door price and reducing fraud involving high-cost add-ons of little or no real value would save American car

_______________________________
1"Attorney General Bonta Supports Biden Administration Effort to Protect Car Buyers." News release issued May 22, 2024. Posted at: https://oag.ca.gov/news/press-releases/attorney-general-bonta-supports-biden-administration-effort-protect-car-buyers

buyers $3.4 billion each year, and also save car buyers 72 million hours annually otherwise spent shopping for vehicles and haggling over the prices.

Note: The opponents of SB 766 cite a so-called "comprehensive study" for their misleading claim that somehow enactment of SB 766 would add to the time it would take for car buyers to purchase a vehicle from a dealer. However, it is important to note that the study lacks credibility, since it was performed at the request of the National Automobile Dealers Association and was based upon a survey of a mere handful of auto dealers –hardly an unbiased source or sufficient numbers to be either objective or rigorous.

Cost Savings for California Courts

          Contrary to claims by opponents, SB 766 will NOT increase court costs. As the opponents have conceded, misrepresentations and false advertising are already actionable under the Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. Also, nearly all car dealers and auto lenders who sell and finance vehicles in California include mandatory private arbitration clauses in their sales and leasing contracts, which means such cases rarely go to court at all.

          In fact, it is likely that as a result of SB 766 significantly fewer car buyers will need to resort to litigation or arbitration. By allowing used car buyers to return used vehicles costing $48,000 or less for a refund without having to engage in litigation or arbitration, SB 766 will reduce the need for many victims of unscrupulous car dealers to file lawsuits in court or cases in arbitration. Instead, consumers would be able to simply return the car within 3 business days and obtain a refund, minus a reasonable restocking fee.

          A typical example of the type of fraud SB 766 addresses involved a severely rusted car purchased by William Bradley, who resides in Placer County. According to Mr. Bradley:

I contacted the dealership where I bought the car and they told me too bad, I bought the car 'AS IS,' so basically I was stuck." In an endeavor to get his money back, Mr. Bradley had to hire an attorney and file a lawsuit. Over a year later, he is still unable to drive his own car and is still in litigation against the dealership that sold him the unsafe car, which is attempting to compel arbitration. If SB 766 were the law, Mr. Bradley would be able to get a refund without having to file a lawsuit.

Cooling-Off Period is a Necessary Antidote to High-Pressure Sales Tactics and Fraud

By allowing used car buyers time to get vehicles inspected by skilled auto technicians with access to computerized diagnostic equipment and lifts, the cooling off period in SB 766 would help address typical auto sales scams involving used cars, including:

Salvage, flood, and rebuilt wreck frauds: According to Carfax, "damage from accidents and other causes is common. Carfax data shows as many as 40% of vehicles on the road sustained damage – about 110 million cars in the U.S....In fact, of all the used cars for sale now...about 1 in 4 have sustained damage."²

Every time there's a hurricane, flood cars – which tend to be terribly unsafe and beyond repair – end up being shipped from the states there the disaster happened to California, where they are sold to unsuspecting used car buyers (as Mr. Bradley's experience cited above illustrates).
Recalled used car roulette: Too often, unscrupulous car dealers sell used vehicles with potentially deadly safety recall defects, such as wheels that fall off, brakes that fail, loss of steering, catching on fire, and ticking time bomb Takata airbags that have caused dozens of fatalities and hundreds of debilitating injuries, including blindness and brain damage. Often, victims of this dangerous practice encounter lengthy delays in obtaining repairs. Tragically, some owners and passengers have been injured or killed. One report found that approximately 25% of vehicles CarMax offered for sale in California had at least one unrepaired safety recall defect. Many had multiple safety recall defects.³ More recently, CarMax's own Board Chair openly admitted they fail to remedy safety recall defects.⁴ AutoNation also has a well- documented record of selling vehicles with unrepaired safety recall defects.⁵

_______________________________
2 "Don't Let Accident Reports Steer You Away from a Used Car," Carfax, Feb. 23, 2021, posted at: https://www.carfax.com/buying/buying-a-used-car-that-has-been-in-an-accident

3 "Used Car Roulette: CarMax Doubles Down on Selling Unrepaired Recalled Vehicles," by Consumers for Auto Reliability and Safety Foundation, Massachusetts PIRG, and Frontier Group, Sept. 28, 2017, posted at: https://frontiergroup.org/resources/used-car-roulette/

4 CarMax Board Chairman Tom Folliard, speaking at Florida Tech, posted at: https://www.youtube.com/watch?v=Bg5CV264mGg

5 "Unsafe Used Cars for Sale: Unrepaired, recalled vehicles at AutoNation dealerships," by CARS Foundation, US PIRG Education Fund, and Frontier Group, Oct. 20, 2019, posted at: https://pirg.org/resources/unsafe-used-cars-for-sale/

Clear-coding: Some car dealers temporarily disconnect the battery or use a cheap device to erase the error codes, so the "check engine" light goes off until the car is driven far enough (usually roughly 100 miles). Then - after the consumer has purchased the car -- the "check engine" light comes back on again, indicating the car has problems and may not pass California's emissions testing and therefore cannot be legally operated in our state. As the Coalition for Clean Air asserts in their letter of support for SB 766, this practice is all too common and calls for providing used car buyers with a window of opportunity to return their vehicle for a refund, after they realize they were sold a seriously defective used car.
Odometer fraud: According to the National Highway Traffic Safety Administration, odometer tampering costs consumers $1 billion a year. Also, "it can be difficult, but not impossible, to detect whether an odometer has been altered."⁶

While odometer fraud is difficult for most consumers to detect, an experienced auto technician can often spot telltale signs of odometer tampering. "For digital odometers, you'll likely need a professional to investigate. Some dealers will only clear the numbers on the dash but leave the data in the ECU [Electronic Control Unit]....Bringing in someone experienced and with the tools can help you detect odometer fraud. They can run various diagnostic tests and uncover tampering in various areas."⁷

According to vehicle history report provider Carfax, rolling back an odometer has never been easier and odometer fraud remains a widespread and serious issue for used car buyers across the country. Carfax warns that "In 2024 alone, more than 2.14 million cars on the road may have had their odometer rolled back....It can take a bad actor just seconds to roll back an odometer, causing unsuspecting buyers to lose an average of $4,000 in value...not to mention the additional costs of unexpected repairs and potential safety risks."⁸
Churning: Dishonest car dealers engage in the predatory practice of selling vehicles that break down soon after purchase, on terms that are unaffordable, then repossessing them when the owner stops making payments and reselling the same car over and over again, each time making an excessive profit.

For example: California's former Attorney General Becerra and 33 other state attorneys general sued the nation's largest subprime auto lender, Santander, over its deceptive and predatory lending practices, which resulted in an appallingly high default rate of 70%. The nationwide settlement totaled over $550 million

_______________________________
6 National Highway Traffic Safety Administration (NHTSA), "Odometer Fraud," posted at: https://www.nhtsa.gov/vehicle-safety/odometer-fraud

7 "Odometer rollback: How to avoid Fraud" OBDEleven, April 2, 2024, posted at: https://obdeleven.com/odometer-rollback?srsltid=AfmBOooNmSEoAf4StqDJjumzDKP0g4J-oncPmHu0lZHXvrHgplycYe6d

8 "Carfax" Odometer fraud increases nationwide to 2.4 million vehicles," Carfax, PR Newswire, Dec. 10, 2024. Posted at: https://www.prnewswire.com/news-releases/carfax-odometer-fraud-increases-nationwide-to-2-14-million-vehicles-302327017.html

⁹

¹⁰

Finally, it is important to note that even vehicle history report provider Carfax recommends that consumers get vehicles inspected by a trained automotive mechanic who can identify serious problems that are not apparent in vehicle history reports. "It's always a good idea to take any used car you're seriously considering to a mechanic to check it out and ensure it's in good working order. They have the expertise and equipment to check for things you can't see."¹¹

For all of the reasons stated above, we strongly urge your AYE vote for SB 766. Thank you for your consideration.

   Sincerely,

      Rosemary Shahan

      Rosemary Shahan, President

1107 Ninth Street, Suite 560 • Sacramento, CA 95814 • 530-759-9440 • www.carconsumers.org.

_______________________________
9 Attorney General Becerra Announces over $550 Million Settlement Against Nation's Largest Subprime Auto Financing Company for Deceptive Auto Loan Practices, Press release, May 19, 2020, posted at: https://oag.ca.gov/news/press-releases/attorney-general-becerra-announces-over-550-million-settlement-against-nation%E2%80%99s

10 "Auto Lending," produced by John Oliver, Last Week Tonight. Posted at: https://www.youtube.com/watch?v=4U2eDJnwz_s

11 "How to Buy a Used Car: A Checklist," Carfax, Feb. 18, 2021, posted at: https://www.carfax.com/buying/car-buying-checklist

VIDEO of hearing, debate and vote on SB 766 (Allen) in CA Assembly Committee on the Judiciary July 1, 2025

VIDEO of hearing, debate and vote on SB 766 (Allen) in CA Assembly Committee on Privacy and Consumer Protection July 16, 2025

CONSUMER ADVOCATES APPLAUD FTC FOR MOVING FORWARD WITH CARS RULE

December 12, 2023 | Press Release

WASHINGTON, D.C. – The Federal Trade Commission (FTC) announced its final rule targeting deceptive conduct in the sale and financing of motor vehicles, titled the "Combatting Auto Retail Scams" (CARS) Rule.

After a decade of attempts to fix a broken auto marketplace, the FTC announced in July 2022 that it was pursuing an auto dealer rule aimed at ending bait and switch pricing tactics and junk fees in the form of worthless add-on products and services. After receiving over 25,000 comments from the public and widespread support for addressing auto dealer misconduct, the FTC has published its final rule, summarizing the comments and laying out its plan for the CARS rule.

"The time is long overdue for the FTC to level the playing field for car buyers and honest dealers," said Erin Witte, Director of Consumer Protection at Consumer Federation of America. "The CARS Rule will bring some improvements to the auto market, and we look forward to working with the FTC to ensure that all consumers, especially those in vulnerable populations, are prioritized throughout the process."

The CARS Rule prohibits misrepresentations about key information, like price and cost, and requires dealers to provide the offering price, tell consumers add-ons are optional, and give information about the total payment when discussing monthly payments. The rule also prohibits dealers from charging for any add-on that has no benefit to the consumer.

"We applaud the FTC's efforts to help millions of Americans through the use of its rulemaking authority to bring a level of transparency to auto sales," said John Van Alst, senior attorney at the National Consumer Law Center and Director of its Working Cars for Working Families Project. "We look forward to continuing to work with state and federal policymakers to address discriminatory practices and bring transparency to the car sales and finance markets."

The Rule also includes clear protections for members of the military and their families who are targeted with deceptive information about whether dealers are affiliated with the military and face other issues specific to servicemembers.

"The FTC has taken the courageous step of addressing the top consumer complaint in the country: auto sales," said Rosemary Shahan, President of Consumers for Auto Reliability and Safety. "This rule should benefit both consumers and honest car dealers, who wrote in support of the proposed rule and complained about being at a competitive disadvantage because of unscrupulous car dealers who lure car buyers with false promises of low prices, then jack them up using sneaky tactics."

"Consumers are beyond frustrated with the deceptive practices some unscrupulous dealers use to jack up the price of cars," said Chuck Bell, advocacy programs director for Consumer Reports. "The FTC's new rule will protect consumers from shady bait and switch sales tactics and help ensure that car dealers provide fair and accurate prices for vehicle purchases."

The CARS Rule will take effect on July 30, 2024. The FTC has created new guidance for consumers to help them understand their rights when they buy a vehicle as well as guidance for auto dealers with advice to help them prepare for the rule to go into effect.

"We know all too well how car buyers across the country are ripped off by unscrupulous auto dealer sales and financing tactics," said Christine Hines, legislative director at National Association of Consumer Advocates. "We appreciate that the FTC has taken action to provide protections for consumers in this market."

"We are thrilled that the Federal Trade Commission has issued its CARS rule today bringing some badly needed consumer protections to Americans looking to buy or lease a vehicle," said Mitria Spotser, vice president and director of federal policy at the Center for Responsible Lending. "This rule will help curb dishonest sales and financing practices in the industry. The steep rise in automobile prices over the past few decades means we need to be doubly vigilant of junk charges and financing scams, especially given current interest rates."

BEWARE: Your family's safety is at risk

Greedy car dealers threaten lives, downplay the risks posed
by deadly safety recalls

Don't be tricked into buying a deathtrap on wheels

When car dealers want to make a killing by selling you a dangerously defective car at top dollar, can you trust them to tell you the truth about how hazardous it is?

Nope. Car dealers know that if you are aware how serious the safety recall defects are, chances are very good you won't buy that car, and that would cut into their profits.

So if a car dealer tells you anything at all about the safety recall defects, they usually try to trick you into thinking they're nothing to worry about. Just something minor. But don't fall for it. In reality, safety recall defects are often deadly. They injure and kill car buyers and their children, other family members, and other victims at an alarming rate.

But that doesn't stop car dealers from seeking to profit from selling the hazardous cars without bothering to get the free safety recall repairs done first.

CarMax: Multi-billion $$ Scamster

CarMax is the largest retailer of used cars in the U.S. It's a multi-billion $$ company that routinely sells vast numbers of hazardous recalled cars and has some of the worst practices in the used car industry.

In a shocking video, CarMax's former CEO / current Board President Tom Folliard minimizes the risks posed by safety recalls, while speaking at a public forum hosted by Florida Tech that included many college students, who are at high risk of being injured or killed in a car crash. In fact, for most of them, a car crash is the most likely cause of death for their age group.

After boasting about his lucrative career at CarMax, Folliard (estimated net worth: "at least $125 million") took questions from the audience. When asked about how CarMax handles safety recalls, his response was stunningly reckless and misleading.

First, he said that because CarMax is not a manufacturer, they can't fix safety recalls.

Is that true? Yes and no. It's true that CarMax isn't a manufacturer. But it's false to say that means that CarMax can't get safety recalls fixed. All CarMax has to do, is hire some more employees to take the recalled cars to nearby dealerships that are authorized by the manufacturer to perform safety recall repairs. And get this: the repairs are free, for at least 15 years from when the recall was issued. So there's really no excuse for CarMax to neglect this vitally important step, especially when they advertise that all their vehicles must pass a rigorous inspection. They're just too cheap to hire enough employees to do the job.

Worst of all, Folliard downplayed the risks posed by safety recall defects, telling the audience:

"Many of them are not really safety issues, they're just open recalls. But because of all the consumer movement around it, they're all considered safety recalls."

Is that true? NO!!!

Let's look at the facts.

According to the National Highway Traffic Safety Administration, ALL safety recall defects are serious.

Tragically, unrepaired safety recall defects continue to cause thousands of horrific, debilitating injuries and kill people.

Typical safety recall defects include:

catching on fire - some people have burned to death
loss of steering, including steering wheels that literally come off in the driver's hands
faulty brakes that can cause a crash
sticking accelerator pedals that cause cars to speed out of control
seat belts that fail to work when they're needed in a crash
child safety seat latches that come undone in a crash
Takata airbags that explode with excessive force and propel metal shrapnel into drivers' and passengers' face, neck and torso, often causing blindness or bleeding to death

The U.S. Federal Trade Commission warns consumers about the hazards posed by unrepaired auto safety recalls

"Unrepaired auto recalls pose a serious threat to public safety. Car manufacturers and the National Highway Traffic Safety Administration have recalled tens of millions of vehicles in each of the last several years for defects that pose significant safety risks to consumers. In 2015, for example, recalls affected 51 million vehicles nationwide. And defects that have been the subject of recalls have led to severe injuries and even death for many consumers."

Source: Statement of the Federal Trade Commission Concerning Auto Recall Advertising Cases (December 15, 2016)

The U.S. Federal Trade Commission warns: "Unrepaired auto recalls pose a serious threat to public safety."

Mike Jackson, CEO of AutoNation, talks candidly about safety recalls. Source: Tramel33166 at English Wikipedia., CC BY-SA 3.0 , via Wikimedia Commons

Who else warns about how dangerous safety recalls are? It isn't only government officials and safety experts. It's also industry insiders, such as the CEO of CarMax's #1 competitor, AutoNation, the largest new car dealership chain in the U.S.

Mike Jackson, the CEO of AutoNation, told Automotive News:

"These are not that the wrong tire-pressure sticker is on the car or some other little minor item....These are significant safety recalls, and we feel the time has passed that it's appropriate to take a vehicle in trade with a significant safety recall and turn around the next day and sell it to consumers."
-- AutoNation CEO Mike Jackson, quoted in Automotive News, "Used-Car Loophole Tightens up," February 8, 2016.

California on brink of passing massive overhaul of car buying practices First-in-nation 3-day cooling off period for used car buyers, including small businesses

Floor Alert SUPPORT SB 766 (ALLEN)

Combating Auto Retail Scams (CARS) Act

Vote AYE on SB 766

CONSUMER ADVOCATES APPLAUD FTC FOR MOVING FORWARD WITH CARS RULE

California on brink of passing massive overhaul of car buying practices
First-in-nation 3-day cooling off period
for used car buyers,
including small businesses

Floor Alert
SUPPORT SB 766 (ALLEN)