The FTC's auto-dealer fee rule died in court. The warning letters didn't.

The FTC's Combating Auto Retail Scams (CARS) Rule, finalized in early 2024, would have required dealerships to advertise a single, all-in price for vehicles and banned bait-and-switch pricing tactics and unauthorized add-on fees. The Fifth Circuit Court of Appeals vacated the rule on January 27, 2025, and the FTC formally withdrew it from the federal rulebook on February 12, 2026, choosing not to appeal or re-propose it. As of today, there is no federal rule specifically banning dealer junk fees by name.

That doesn't mean the underlying pricing practices became legal. Deceptive and undisclosed pricing remains prohibited under Section 5 of the FTC Act regardless of the CARS Rule's fate, and the agency has kept enforcing on that basis: in December 2024, it secured a $20 million settlement against Leader Automotive Group — the largest monetary judgment the FTC has obtained against an auto dealer — over undisclosed add-ons and deceptive pricing. In March 2026, the FTC went further, sending warning letters to 97 dealership groups nationwide stating plainly that an advertised vehicle price must be the total price including every mandatory dealer-imposed fee (documentation fees, dealer prep, e-filing charges, "market adjustments") in all 50 states, with only government taxes and official registration fees excluded.

States have filled part of the gap the vacated federal rule left: roughly 22 states cap dealer documentation fees while about 28 don't, and California enacted its own state-level CARS Act in 2025 specifically targeting dealer fee practices.

The episode is a clean illustration of a pattern showing up across pricing regulation generally in 2025 and 2026: procedural vacaturs of specific rules (the CARS Rule, the click-to-cancel rule) are not the same as substantive permission to hide fees, and agencies have consistently continued enforcement under older, more general deceptive-practices authority even after a specific rule is struck down.