California car buyers will soon enjoy stronger consumer protections thanks to a sweeping new law signed by Governor Gavin Newsom this week. He California Anti-Auto Retail Scams (CARS) ActPart of a broader package aimed at reducing families’ living costs, it is seen as one of the biggest auto retail overhauls in decades.
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Under the new law, distributors face stricter requirements regarding advertising, sales practices and complementary products. The legislation prohibits misrepresenting key facts about the sale, lease or financing of a vehicle and requires that all advertisements and price quotes clearly show the total cost of the vehicle. Dealers can no longer charge for add-ons that provide no tangible benefit to customers and must disclose that extras such as GAP insurance or service contracts are completely optional.
The law also changes the way consumers pay for add-ons. Buyers now have 10 days make payment for any optional products or services – a major change from the previous rule that required payment in full at the time of purchase.
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Perhaps the most consumer-friendly addition is a new three day return rule for used cars priced under $50,000. Buyers can now return a vehicle within that period if it is undamaged and has less than 400 miles added since purchase, a right long sought by consumer advocates and watchdog groups.
Beyond consumer protection, the CARS Act imposes strict compliance obligations on dealers. Companies must retain all records related to advertisements, contracts, add-ons and return documentation to at least two yearsgiving regulators more tools to monitor misconduct and resolve disputes.
The law will come into force on October 1, 2026giving distributors time to update sales systems and procedures before enforcement begins.
Industry observers say the CARS Act could reshape the way vehicles are sold in California, marking a major victory for transparency in one of the country’s most complex and expensive auto markets.
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