California’s CARS Act Starts October 1, 2026. Check Your First Written Replies.

After more than thirty years in automotive retail, I’d start preparing for California’s CARS Act with the messages customers receive from the store. The law adds a total-price disclosure duty to the first qualifying written response, whether it comes from a salesperson or an automated CRM reply. That makes the BDC’s templates part of the compliance review.³

Senate Bill 766 was signed on October 6, 2025, and becomes operative on October 1, 2026.¹ The changes reach advertising, customer communications, add-ons, cancellation rights, and recordkeeping. Here’s what I would check before the deadline.

01 · BackgroundWhere this came from, and who it covers

The FTC finalized its CARS Rule in late 2023. The Fifth Circuit vacated it on January 27, 2025, because the agency had not followed the required rulemaking procedure. California enacted its own CARS Act that fall, drawing on the federal rule and adding a three-day cancellation right for qualifying used-vehicle transactions. The FTC formally withdrew its rule on February 12, 2026.⁹¹

The Act covers retail transactions by licensed California motor vehicle dealers and dealers within Vehicle Code Section 285. Its vehicle definition excludes wholesale transactions, vehicles not required to be registered under the Vehicle Code, and vehicles with a gross vehicle weight rating of 10,000 pounds or more. It also excludes fleet sales of more than one vehicle in a single transaction primarily for business use, and sales to commercial purchasers buying five or more vehicles from that dealer per year primarily for business use.²

Auction exclusions apply to specific provisions, rather than the entire Act. Motorcycles are excluded from the used-vehicle definition governing cancellation. A vehicle that has not yet been registered is not exempt merely for that reason.²³⁶

02 · PricingTotal price, and where it has to appear

California defines “total price” as the full vehicle sale price, including dealer price adjustments and items installed at the time of the advertisement or communication. It excludes the taxes, fees, and charges listed in Vehicle Code Section 11713.1(e), including a permitted document-processing charge. No rebate is deducted from that statutory price; rebates and incentives may be disclosed separately under the applicable advertising rules.²³

An advertisement must clearly and conspicuously state the total price if it references a specific vehicle for sale or gives a monetary amount or financing term for a specific vehicle.³

The first-written-communication rule also reaches a reference to a specific vehicle for sale, or any monetary amount or financing term for any vehicle. Section 1784.41(a)(3)(A) requires the total price at least once in the dealer’s first response regarding that specific vehicle. Review emails, texts, and automated replies against that trigger. Keep a copy of the qualifying communication for at least two years and provide it to the customer on written request.³

A payment figure appearing before the total price does not, by itself, establish a violation of this provision. The disclosure must be present, clear, and conspicuous. A reply that omits the price or makes it difficult to find needs review.³

During a specific-vehicle negotiation, a written monthly-payment representation also requires a clear written disclosure, at least once, of the total amount payable at that payment after all scheduled payments. If that total assumes a down payment, trade-in value, or other consideration, disclose the amount of that consideration. A written comparison discussing lower monthly payments must warn that lower payments often increase the total amount paid.³

The misrepresentation list

Civil Code Section 1784.40 prohibits material misrepresentations about vehicle availability at the communicated price, deal terms, add-on benefits and limitations, preapproval, down payments, and trade-in payoffs.⁴ Review any script that says “you’re approved” to make sure the statement accurately reflects the customer’s approval status and conditions.

03 · Add-onsAdd-ons, and what can no longer be charged for

When a dealer makes a written representation about an add-on during negotiation over a specific vehicle, it must disclose at least once, clearly and in writing, that the product is optional and the customer can buy or lease the vehicle without it.³ I would include that disclosure in the relevant menus and message templates so staff do not have to remember to add it.

The Act prohibits charging for an add-on that would provide no benefit to the customer. Section 1784.42 lists seven examples, shown below. A product the customer selects and would benefit from is not prohibited under this section simply because no claim or other coverage event occurs.⁵

The dealer must pay the add-on provider within ten days of signing, unless an agreement permits later payment without affecting coverage.⁵ Put the deadline into accounting’s workflow, keep proof of timely payment, and document any alternative arrangement with the provider.⁸

Translations also belong in the template review. When a transaction is negotiated primarily in a language covered by Civil Code Section 1632(b), the optional-add-on disclosure and the specified disclosure of assumed down payment, trade-in value, or other consideration must also be provided in that language.³

04 · CancellationThe three-day right to cancel

California already required dealers to offer a purchasable two-day cancellation option for qualifying used-car sales. The CARS Act replaces that option with a three-day right the customer does not have to buy. It applies to qualifying used-vehicle purchases and leases at $50,000 or less, subject to the return conditions and exclusions below.¹⁶

The three calendar days begin the day after the purchase or lease is signed. If the third day falls when the dealership is closed to the public, the deadline extends to the next open day and ends at close of business.²

The buyer or lessee must personally return the vehicle to the dealer during business hours, along with any other cash or items received in the transaction and any restocking fee not covered by the refund. The vehicle must have been driven no more than 400 miles since signing and be free of liens other than those created by or incidental to the transaction. Reasonable wear and tear, and defects or mechanical problems that become evident after delivery without being caused by the customer, do not defeat the right.⁶

The permitted restocking fee is 1.5 percent of the sale price, with a $200 minimum and a $600 maximum, plus $1 per mile beyond 250 miles, capped at $150. A dealer that charged for shipping may retain its actual shipping cost instead of the percentage-based fee, up to the amount otherwise allowed under the 1.5-percent formula, and must refund any excess shipping charge.²

The dealer must cancel the contract and issue the refund within 48 hours after the right is exercised, less permitted deductions. The law allows for delays beyond the dealer’s control. For payments without an immediate verified transfer of funds, such as a check, the refund may be delayed until two business days after verification, with documentation showing when verification occurred.⁶

Every qualifying deal needs the separate “3-Day Right to Cancel Used Car Purchase or Lease” disclosure, with the required contents and translation where applicable, plus the notice on the first page of the agreement.⁶ The physical notice must use at least 36-point type and appear in each sales office or cubicle where written deal terms are discussed and each room where contracts are regularly signed. Locations also selling motorcycles or off-highway vehicles need the additional statutory notice language.⁷

The cancellation right does not cover a lease buyout by a lessee already in possession of the vehicle. Qualifying auction sales are also excluded under Section 1784.43(i). This Act does not create a cooling-off period for new vehicles, but other legal grounds for rescission or a dealer’s more generous return policy may still apply.⁶

The trade-in

If the customer cancels, return the trade-in and its keys unless the vehicle has been sold or its title transfer has begun. In that case, refund the greatest of the agreed trade value, the sale proceeds, or fair market value, less permitted secured-debt deductions. Provide an itemized cancellation receipt with the date and time. If the trade was sold, provide the required sale document with the other purchaser’s personal information redacted.⁶ I would hold the trade until the customer’s actual cancellation deadline passes. That is an operating recommendation, not a statutory hold requirement. Assign an owner and make the release deadline visible to the wholesale desk.

05 · Records and enforcementRecords, and who can ask for them

Section 1784.44 requires two years of compliance records from creation. These include advertising and listing records, signed transaction documents and the related customer communications, add-on records and proof of provider payment, cancellation records, and the specified complaints and written inquiries. The signed-document requirement applies even if financing is not finally approved or assigned.⁸ A narrow exception covers records generated solely by qualifying interactive financing-estimate tools that do not alter or misrepresent the advertised total price.

Separate requirements still apply. Section 2984.5 requires specified finance records to be kept for at least seven years or the conditional sales contract’s length, whichever is longer. These include the contract, documents used to assess creditworthiness, and terms of any sale, assignment, or transfer of the contract.¹¹ A two-year CARS Act requirement does not shorten that period.

The enacted CARS Act does not establish a standalone private cause of action or its own per-violation fine schedule. It preserves remedies under other law.¹ Conduct may support a claim under the Unfair Competition Law or the Consumers Legal Remedies Act if the requirements of that law are met. The DMV can also act on applicable dealer-licensing grounds, including specified Vehicle Code violations or fraud.¹⁴ A flagged message needs review of the facts and applicable law. Repeated use of an incorrect template is a reason to widen that review.

06 · Remote reviewWhat a remote shop can document

Dealers already had advertising and disclosure obligations before this Act.¹³ The new requirements give managers specific items to check in a listing, first reply, payment discussion, or written add-on pitch. A remote mystery shop captures the communication the customer receives, including its wording and timing.

Argus360 runs controlled mystery shops by text, email, and web form, reviews the exchanges against applicable requirements, and sends the dealer principal the findings with the transcript and timestamps. This can identify missing disclosures and statements that warrant further review. It cannot establish complete dealership compliance or confirm the truth of every claim without supporting records.

Reviewing posted notices requires an on-site check. Contracts, cancellation handling, refunds, provider payments, and trade-in accounting need transaction or internal-record review. I would use the remote shop to identify issues, then have the responsible manager investigate the underlying process and retest after a correction.

07 · PreparationFour things to do before October 1

1. Test your automated replies and price feeds.Send vehicle and financing inquiries through your web, email, and text channels. Check the actual first response, including its total price, mandatory charges, and formatting. Have counsel approve the pricing approach across channels.
2. Review the add-on menu and written pitches.Check the optional-product disclosure, applicable translations, and whether each product would benefit the customer and vehicle involved. Confirm who owns the provider-payment deadline and records.
3. Build and test the cancellation process.Prepare the separate disclosure, contract notice, required signs, calendar rule, and refund workflow. Include the lease-buyout and auction exclusions, fee calculations, receipts, and trade-in handling. Tie any recommended trade hold to the actual deadline.
4. Confirm the record can be retrieved.Save the inquiry and response with their timestamps, then test retrieval. Check the other required records and retention periods with the CRM, DMS, and accounting teams. Do not assume a vendor’s default settings match the law.

08 · Follow-throughCheck the reply, then check the process

Start with a vehicle inquiry through your own website. Read what comes back, check the price and disclosures, and confirm that the message can be retrieved. Then test the cancellation and accounting steps with the people responsible for them. Those checks will show you where the store still needs work before October 1.

Reviewed against the cited sources on September 29, 2026. Sample messages, vehicle details, stock number, and prices are illustrative. This article is general information, not legal advice or a complete compliance checklist. Have California counsel review the store’s forms, pricing, communications, and return procedures. Argus360 is a product of AI Assist, Inc.; its findings support review and do not certify compliance.