Buying a car in California may get more affordable and less risky

Posted on September 9, 2025 by admin

At a time when consumers are facing record-high prices for new and used cars, and President Trump’s tariffs are predicted to cause the price of cars to skyrocket even higher, California is fighting back. It has received little attention outside the Capitol in Sacramento, but California is close to passing sweeping first-in-the-nation legislation to make buying a new or used car more affordable and less risky.

For months, car dealers and auto lenders attempted to kill SB 766, the California Combating Auto Retail Scams (CARS) Act, authored by Senator Ben Allen (D-Santa Monica / Torrance / Malibu). But the senator and a large coalition of pro-consumer organizations advocating for the bill persisted. Democratic legislators overwhelmingly voted for the bill. In August, California Attorney General Rob Bonta, who led a coalition of 19 state attorneys general in support of the FTC’s CARS Rule, also submitted a letter of support.

Key provisions of the landmark measure:

Requiring auto dealers to disclose the “total price” up front and in advertising, making the price of cars more transparent and competitive
Prohibiting the sale of add-on products and services that would not benefit car buyers, such as lifetime oil changes for electric vehicles or extended service contracts that fail to cover pre-existing conditions like damage from prior wrecks or floods, or mechanical conditions
Creating a new, first-in-the-nation 3-day cooling off period for used car buyers who purchase vehicles that cost $50,000 or less, including vehicles weighing less than 10,000 pounds that are purchased for business use. Consumers, rideshare workers, and small businesses will be able to return used cars, trucks, and vans for any reason and obtain a refund (minus a restocking fee) without having to take the dealer to court or submit to arbitration, which can drag out for a year or more.

SB 766’s price transparency and prohibition on worthless add-ons are modeled after the Federal Trade Commission’s Combating Auto Retail Scams (CARS) Rule, a federal rule issued during the Biden Administration that targeted bait-and-switch pricing, hidden junk fees, and deceptive practices, particularly deceptions aimed at military Servicemembers.

Last year, the agency issued the CARS Rule, to require price transparency and prohibit the sale of worthless add-on products and services. Based on rigorous economic analysis, the FTC projected that the Rule would save American car buyers $3.4 billion each year, and another 72 million hours otherwise spent shopping and haggling over the price of cars.

Leading economists from Stanford, MIT, Clemson, University of Arizona, and University of Michigan, who crunched the numbers and backed the FTC’s CARS Rule in court, conservatively project that passage of similar provisions in the CA CARS Act 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.

Year after year, auto sales and service complaints top the list of consumer complaints to state and local consumer protection agencies.

Car dealer scams cost victims billions of dollars each year in bait-and-switch pricing, junk fees, and “loan packing” of high-profit items of little or no value

Typical scams the FTC’s Rule was aimed at stopping, described in news releases issued by the FTC:

“FTC and Wisconsin Take Action Against Rhinelander Auto Center for Illegally Discriminating Against American Indian Customers and Charging Unlawful Junk Fees”

“The Federal Trade Commission and State of Wisconsin are taking action against Wisconsin auto dealer group Rhinelander Auto Center, its current and former owners, and general manager Daniel Towne for deceiving consumers by tacking hundreds or even thousands of dollars in illegal junk fees onto car prices and for discriminating against American Indian customers by charging them higher financing costs and fees.”

“Auto Dealership Bronx Honda, General Manager to Pay $1.5 Million to Settle FTC Charges They Discriminated Against African-American, Hispanic Car Buyers. Complaint also alleges deceptive advertising, bogus fees, price inflation and other practices”

“In addition to alleged racial discrimination, the defendants are charged with numerous illegal practices in the advertising and sales process that caused consumers to pay substantially more than they expect. The complaint alleges that the defendants:

failed to honor advertised sale prices, inflating the cost through a variety of methods;
changed the sales price on paperwork in the middle of the sale without telling the consumer, a practice the defendants internally referred to as adding “air money” to the contract;
double-charged consumers for taxes and fees without their knowledge; and
told consumers that they had to pay thousands of dollars in unnecessary fees to purchase ‘certified pre-owned’ cars that were not required by that program.”

Fed up with auto rip-offs, consumers, former dealership employees, and honest dealers flooded the FTC with over 25,000 comments in support of the CARS Rule. Many who commented were from California. A few samples:

“Selling cars to the general public has been reduced to a contest of which dealership can effectively lie the best. I fully support the FTC in passing these regulations.”

“My name is Steven Adler and I reside in Vista, CA. I have purchased numerous vehicles from dealerships in my lifetime. As well, I worked as a vehicle sales person for a number of years. I left the industry due to the corrupt practices of the dealerships that I worked for. I saw people cheated, treated poorly, and taken advantage of many times over. The system in its current design MUST change, so that it provides more transparent, equitable and fair business practices. I therefore strongly support the FTC in its bid to create a more level playing field for automobile shoppers and buyers. Thank you.”

“I was looking for a new chevy bolt ev and I was looking online for availability when I talked to the dealerships and this was most in southern California they had additional fees and markups from $3000 to $10000 over msrp. I’ve seen new and used cars so overpriced I no longer can afford to drive because I’m not going to overpay. I work too hard to do that. Average cars cost more than I make in a year — disgusting!”

“I have gone to a dealership and negotiated the price of a car with the salesperson. Then when I got back into the finance area to sign the papers.. the price for the car was suddenly higher. They would not drop the extra things they added to the car and it was a scam. It wasted my time and was a lot of pressure to get out of the bad deal. They should not be able to do that to customers.”

“I am a California resident and am pro this regulation, I’ve gone to buy cars and seen this stuff happen all the time and wish it was illegal. Without these regulations we’re just destroying good honest dealers and promoting the shady ones.”

As expected, car dealers and lenders sued the FTC in the 5th Circuit (covering Texas and Louisiana). While the case was pending, the Rule was put on hold. Groups filed amicus briefs in support of the rule, including consumer groups, economists, leading organizations that represent U.S. military servicemembers, veterans, and their families, and the attorneys general of 20 states, including California.

However, before it could take effect, the Rule was overturned in a 2-1 split decision, on procedural grounds — not on the merits.

Under the Trump administration, the FTC has not re-issued the Rule. Dealers and lenders thought they had won. They expected to be able to continue scamming car buyers billions of dollars in junk fees and other hidden costs.

But — California is now on the brink of passing its own version of the CARS Rule, in the nation’s largest auto sales market.

SB 766 has already passed out of the full Senate and all of the policy committees in the Assembly. UPDATE: On Sept. 9, SB 766 passed on the Assembly Floor.

At the final hearing on the bill, after they won many changes to the bill in their favor, car dealers and auto lenders dropped their opposition. The bill has some flaws and will need a tune-up to address shortcomings in the cooling-off period. But — it will still be the most sweeping overhaul of consumer protections for car buyers in the nation.

If it passes in the Legislature and is signed by Governor Gavin Newsom, SB 766 will take effect on October 1, 2026, and help empower car buyers such as William Bradley, who lives with his family in Lincoln, CA, from being victimized by unscrupulous car dealers. He testified for SB 766 before the Senate Judiciary Committee about his nightmare car buying experience. According to Mr. Bradley:

“Last year, on April 2^nd, my wife and I went to check out a 2003 Subaru Baha at an independent auto dealership in Roseville. I looked it over carefully, including taking a look underneath, and saw nothing that set off any alarms. Some undercoating was visible, but it appeared to have been a preventative measure against rust.

I asked the salesperson about the condition of the car and its history, and he said it had recently passed a safety inspection. He specifically said they had inspected it for rust, since the Carfax report said it came from Pennsylvania, and it checked out OK.

I took him at his word, since he’s a professional and in a position to know about the car. I paid $10,500 in cash. As soon as I could, I took it to an independent mechanic who hoisted it up on a lift. Initially my mechanic believed the car looked clean and was impressed with the low mileage.

However, after he looked closer, we were both shocked at what he found. The entire undercarriage was severely corroded due to rust. The rust was covered up by an extremely heavy layer of undercoating over top of duct tape, to hide the damage. Brake components, steering, suspension and frame were rusted beyond repair.

He warned me not to drive it at all, since it was grossly unsafe.

I took the car to a major franchised new car dealership for a second opinion, and they told me the same thing. They couldn’t even use a hoist, because the frame began to bow and crumble.

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. I finally ended up having to sue the dealer just to get a refund. Over a year later, the case is still pending. Meanwhile, I’ve had to borrow cars just to get to work. This whole experience has been a serious hardship for myself and my family and delayed our plans to buy our first home.

If SB 766 were the law, I could have taken the car back for a refund without having to sue. Used car buyers like me shouldn’t have to file a lawsuit just to get a refund for a bad used car deal.”

The cooling off period in SB 766 gives CA used car buyers a new right to return the vehicle for any reason. But there are limitations:

The vehicle’s total price must be $50,000 or less.
The vehicle must be returned to the selling dealership within 3 calendar days, unless the dealership is closed on the 3rd day, and then the period is extended until the next day the dealership is open.
When it is returned, the vehicle must be in the same condition, except reasonable wear and tear and any defect or mechanical problem that becomes evident and that you did not cause.
The vehicle cannot be driven more than 400 miles.
Dealers are permitted to charge $1 per mile for miles driven over 250 miles.
Dealers can charge a restocking fee or the actual amount of shipping costs, of 1.5% of the price of the car, with a minimum of $200 and a maximum of $600.
If you traded in a vehicle, the dealer must return the traded-in car and all keys, UNLESS the dealer has sold or “initiated the process to transfer the title of the trade-in vehicle.” If that is the case, the dealer must provide the car buyer a refund that is the greater of:
- The agreed-upon value of the trade-in vehicle in the sales or lease agreement
- The amount for which the dealer sold the trade-in vehicle
- The fair market value of the trade-in vehicle

Caution: If you trade in a vehicle before you have paid off the loan, then you still owe money that car dealers usually roll into the next transaction, adding to your debt. If you return the car you just bought or leased, the dealer can charge you for the amount you owed when you traded in your car, known as “negative equity.” Currently, the average amount of negative equity is around $6,000. That means many car buyers who have negative equity will not be able to afford to use the cooling off period.

For more information about the bill, see:

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

Autonomous cars cause confusion, pose hazards

Posted on January 5, 2017 by admin

Auto manufacturers are rushing to be the first to sell cars that are semi-autonomous. But they have failed to invest in adequate training for sales personnel who can explain the features — and their limitations.

So what can go wrong? Here’s one example: According to a recent report in Automotive News, “As Donna Lee approached the intersection of Roberts Drive and Spalding Drive in Sandy Springs, Ga., the salesman in the passenger seat told her not to hit the brakes, even though two cars were stopped and waiting at the red light ahead.

According to court documents, Lee and Mercedes salesman Desmond Domingo have similar accounts of what happened next on the evening of May 10, 2014. The Distronic semiautonomous system in the Mercedes-Benz GL450, which Domingo believed would bring the car to a full stop, did not kick in as he expected. The Mercedes slammed into the car in front of it at around 40 mph, causing a chain reaction of crashes that left a 16-year-old driver with a concussion and significant damage to the cars involved.”

CARS has testified at forums regarding autonomous vehicles that they should not be offered for sale to the public until they are fully autonomous, and they have been proven safe through at least one year of real-life testing in all normal weather conditions, including heavy rain, fog, and snow. Otherwise, consumers who purchase the cars may end up stranded, or in collisions — particularly if they purchase the cars as used vehicles, and are not familiar with their limitations.

Buying a used car? YIPES!!

Posted on September 30, 2016 by admin

Comedian and commentator John Oliver lambastes crooked car dealers and greedy auto lenders. These are the unscrupulous characters we’re battling with, to protect consumers.

How can you avoid becoming a victim of greedy dealers and Wall Street bankers? It’s easier than you think. Here’s how you can get a good deal on a nice, safe, reliable used car — without having to deal with professional crooks.

How to get a good deal on a nice, safe, reliable used car

Can’t get your car registered? Stopped by Police? You are not alone.

Posted on July 10, 2016 by admin

According to the Associated Press, Minnesotan Philando Castile, who was shot and killed during an otherwise “routine” traffic stop, had been pulled over at least 52 times in recent years, in and around the Twin Cities, and cited for minor offenses. He had been assessed over $6500 in fines and fees, although many violations had been dismissed in court.

His tragic death is a stark and heartrending reminder of what can go horribly wrong when car drivers are pulled over by police. It should also raise serious, urgent questions about why some people are being pulled over at all.

Consumer and civil rights groups are raising alarms about a new law that was just enacted in California that will lead to many innocent people being pulled over by police, ticketed, having their cars impounded, and facing severe criminal sanctions. Why? Because car dealers failed to provide them with permanent license plates within the 90-day deadline for displaying permanent plates.

Governor Jerry Brown just signed the bill, AB 516, into law in the nation’s largest, most diverse state. It is now on track to take effect in January, 2019. So there is still time to change it before more innocent car buyers are harmed.

According to the Lawyers Committee for Civil Rights of the Bay Area, “LCCR recently published, in collaboration with other groups, a report entitled Not Just a Ferguson Problem: How Traffic Courts Drive Inequality in California, which shows the many ways that low-income California drivers, and particularly communities of color, are impacted by unfair laws that result in license suspensions and hefty fines, and that lead people into an endless cycle of debt and court involvement from which they cannot extricate themselves. Rather than reverse this trend, AB 516 would contribute to it.”

Here’s why this obvious injustice keeps happening, and how AB 516 would make it worse:

Under California’s current law, car buyers who purchase new or used cars without permanent metal license plates, at a car dealership, pay the dealer $29 for an “electronic vehicle registration or transfer charge” plus an $80 “document processing charge” to handle the registration. Sometimes they pay an additional $100 or more for a “registration /transfer/titling fee.” Then they drive off the car lot with a document that is folded up and taped in the back window that shows the date of sale and other relevant information. The dealer is supposed to handle the registration, and send them the permanent plates, either directly or by hiring a company approved by the DMV.

Car buyers must install permanent plates as soon as they receive them, or within 90 days. There are no exceptions. The law says they have to put them on the car before the 91st day — even if they have not received them, through no fault of their own. No plates? Tough. Hapless car buyers still face being pulled over, ticketed, and having their car impounded.

The kicker: There is NO requirement for dealers to ensure that car buyers receive their permanent plates within the 90 days. Some dealers take advantage of this major loophole in the law to abuse the system and increase their profits. As a result, this scenario plays out all too often:

You pay good money to buy a car from a car dealer. You drive it home. You paid cash, or if you got a car loan, you are making the payments, in full and on time. Life is good. Until….

You are pulled over by the police. Why? Because the temporary registration has expired, and you have not received the permanent plates. Why not? Because the dealer failed to submit the registration documents to the Department of Motor Vehicles.

As in, the dealer went out of business without paying the taxes he collected, or submitting documents to the DMV — some dealers do this to hundreds of people, then go belly up. OR —

The dealer entered the wrong Vehicle ID Number (VIN) into the system.
The dealer fired the person who handles vehicle registrations and hasn’t gotten around to hiring a replacement.
The dealer sold you a car that is registered in another state, which can take months to straighten out.
The dealer sold you a car with an unpaid lien, and the lender is demanding payment (which can run thousands of dollars) before it will release the title.
The dealer had the permanent plates sent to him, and not to you, so he can demand that you pay more, under threat of being pulled over again and again, and having your car impounded.
The DMV has a backlog in issuing permanent plates.
The DMV entered the wrong VIN.
Or — one of a myriad of other scenarios that are beyond your control.

None of that is your fault. You paid the fees for the dealer to properly register the car, when you bought it. It’s the dealer or the DMV who messed up. But who gets penalized? YOU.

According to consumer attorney Steven Simons, on July 19, 2014, Matthew Smith and his brother Luke bought a 2003 Acura for about $6900 (plus financing) from a dealership in Van Nuys, CA. They paid the dealer the usual fees to handle the registration. But the dealer failed to follow through and do his job. Despite repeated attempts by the Smiths to get their car properly registered, and their fruitless attempts to get the DMV to assist them, to this day their Acura has not been properly registered, and they have not received their permanent plates. Meanwhile, police officers in several jurisdictions have repeatedly pulled Matthew over, including at gunpoint, and detained him for hours, searching him and his car.

Think this is wrong? We agree! Unfortunately, it’s going to get a lot worse, when AB 516 takes effect.

The author of AB 516 is Bay Area Assemblymember Kevin Mullin (D-San Mateo). The most avid backers are toll authorities, who want temporary tags to be mandated, so they will rake in more revenue. Currently, they lose money when people who don’t have readily traceable plates drive through unattended toll booths without paying.

The other major backers are the car dealers. They keep pushing aggressively to shorten the amount of time car buyers have to install permanent plates, or face criminal penalties. California car buyers used to have 6 months to install permanent plates. Then in 2011, car dealers persuaded legislators to cut the time in half, to 90 days. Recently, car dealers tried to get lawmakers to slice the deadline in half again, to just 45 days. That bill has temporarily stalled, pending enactment of AB 516. But dealers are expected to bring it back.

The author claims that the first ticket you would get is supposedly just a “fix-it” ticket. So what’s the big deal? Here’s the catch: you cannot fix it. Typically, people caught in this trap call the dealer and the DMV over and over again, file complaints, and even go in person and spend hours at the DMV and dealership waiting around, and pleading with them. What they discover is that getting the registration completed, so they can drive legally, is out of their hands. It is an exercise in extreme frustration.

Sometimes it takes over a year to get things straightened out. By then, many people are pulled over repeatedly and ticketed, and their cars are impounded. Even if they pay all the tickets and the hefty impound fees, they cannot get their cars back because they are not the registered owners.

What happens to many hard-working consumers when their cars are impounded? They often lose their only means of transportation to work, and their jobs. Then they default on the car loan. Guess who swoops in to take back the car? The dealer. Then he turns around and resells the same car, over and over again, making a profit each time. You, on the other hand, get stuck with no car, a repossession that harms your credit for at least 7 years, harassing phone calls from the lender demanding immediate payment of the remaining car loan, and no job.

The bottom line: the bill will play right into the hands of unscrupulous car dealers, who want customers to give up and default on car loans, because they can make bigger profits from reselling the cars, and trashing people’s lives. According to a major series of reports by Ken Bensinger at the Los Angeles Times, some dealers in California engage in the practice of “churning” cars — reselling the same car over and over again — as a regular business practice.

The bill would also make it easier for unscrupulous dealers to engage in an illegal practice known as “yo-yo” financing, which is very common, even among supposedly reputable car dealers. When dealers “yo-yo” a consumer, they sell them a car, hand them the keys, and encourage them drive it away. Weeks later, they reel them back in, telling them the “financing fell through.” Then threaten to have the consumer arrested for driving with an expired registration, or to report the vehicle as “stolen.” They exploit the fear of criminal sanctions to extract a larger down payment, higher interest rate, or other terms more favorable to the dealer. They refuse to return the down payment or the traded-in vehicle, leaving car buyers over a barrel.

If AB 516 is enacted, dealers will be required to install temporary tags. Good idea. We are in favor of law enforcement agencies being able to properly identify the car and the car buyer. But — the temporary tags will be highly visible, and will have an expiration date that is easy to spot — and easy for a scanning device to pinpoint. Suddenly, people with expired temporary tags will become ridiculously easy to target. Enforcement of that 90-day deadline, which tends to be relatively spotty now, will skyrocket.

Here’s what will happen, only a vastly larger scale: In a village on Long Island, New York, “Since the scanners went live Nov. 2, they have been triggering an average of 700 alarms a day, mainly about cars on the road with expired or suspended registration stickers. Officers have impounded 500 vehicles. They’ve written more than 2,000 court summonses, mostly for minor violations.”

Plus — AB 516 would make altering even just the expiration date on a temporary tag a wobbler/ felony offense, subjecting car buyers to a potential prison sentence of 2-3 years. Imagine: you keep being pulled over by the police because you have not received your permanent plates. If you are detained one more time, making you late for work, you will lose your job. In your desperation you take a magic marker and change the expiration date. For this “horrible crime,” you will be at risk of having to do hard time in prison. Even though you have not altered the number of the temporary tag, and toll agencies and law enforcement can readily identify the car, for toll collection or public safety purposes.

Consumer groups and the California Police Officers Association worked together and drafted amendments to AB 516 that would have addressed these serious problems with the bill, and presented those to the author’s staff, at an in-person meeting. The amendments would have changed the bill so that:

When law enforcement officials detect that your car has a temporary tag with an expired date, they would have to check an existing law enforcement database, that they can already access electronically, to find out whether you were issued permanent plates. In a matter of seconds, they can tell. If the plates have not been sent to your address, you would not be issued a citation.
It would be an infraction, not a wobbler / felony, to alter just the expiration date on the temporary tag, leaving the rest of the tag unaltered and readily traceable.

The California Police Officers Association, to its credit, expressed the sentiment that its members are not overly eager to pull over and detain people who are already frustrated because they cannot get their permanent plates, so long as they properly display the temporary tags, and the car is readily identifiable for public safety purposes.

However, Assemblymember Mullin refused to accept those amendments. Instead, he added a “fig leaf” to the bill that would require consumers who have not received their permanent plates to prove their own innocence by obtaining a form from the DMV and showing it, if they are detained. That may sound easy, but in reality, it’s just another Catch-22. The form cited in the bill requires that you sign, under penalty of perjury, that you are the “registered owner of record.” But that’s the problem. You are not the registered owner. That is why you didn’t receive your permanent plates. Gotcha.

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