California Combating Auto Retail Scams (CARS) Act.

Senator Allen, joined by Coauthors Senator Stern and Assembly Member Kalra, advances the California Combating Auto Retail Scams (CARS) Act to reshape how motor vehicle sales and leases are disclosed and regulated, anchoring its framework in Title 1.5B of the Civil Code. The act states its underlying purposes as protecting purchasers and lessees from unfair and deceptive practices and providing efficient procedures to secure that protection, with the title designed to apply broadly to new and used motor vehicles.

The bill introduces a new 3-day right to cancel for certain used vehicles, replacing the prior contract cancellation option regime. Specifically, a dealer may not sell or lease a used vehicle at retail to an individual for personal use unless the buyer or lessee is offered a 3-day right to cancel, applicable to used vehicles priced at up to fifty thousand dollars and subject to a mileage limit of 400 miles (the right does not apply if the vehicle has been driven more than 400 miles). The right to cancel requires a separately disclosed contract cancellation Option document with specified items, including restocking fee details, timelines for cancellation, and conditions tied to trade-ins and refunds. Restocking fees are capped and structured by purchase price, and refunds may be adjusted for any outstanding indebtedness on the trade-in. The measure also requires maintaining records demonstrating compliance for two years and sets an operative date of October 1, 2026 for these provisions.

Beyond the cancellation right, the act imposes a comprehensive set of disclosures and prohibitions to curb deceptive practices. Dealers would be prohibited from misrepresenting material information about vehicle costs, financing terms, or add-ons, and would be required to disclose total price and related charges clearly and conspicuously in initial communications. Add-on products or services may not be charged if the purchaser would not benefit, and a set of standardized disclosures must accompany negotiations, including required language about the add-ons, monthly payments, and down payments. The bill also mandates retention of records related to advertisements, contracts, add-ons, cancellations, refunds, and complaints for two years or more, and would allow remedies under other laws in addition to those provided in the new title.

The CARS Act also updates related statutory provisions to align disclosure requirements with its consumer-protection goals. Civil Code sections governing conditional sale contracts would require a detailed “itemization of the amount financed,” including cash price components, service contracts, GAP or cancellation charges, and other line items, along with associated timing and formatting rules. The Revenue and Taxation Code would be amended to treat restocking fees as outside gross receipts, with operative dates tied to the new cancellation framework. Vehicle and lease disclosures, notice requirements, and related consumer protections would be further reinforced by updates to vehicle and regulation codes, including provisions around cooling-off period notices and compliance timelines, with several sections becoming operative on October 1, 2026.