The Top 5 FTC Rules Every California Dealer Must Follow

California is one of the most competitive and heavily regulated automotive markets in the United States. Dealers here not only face intense competition but also some of the strictest compliance requirements in the country. The Federal Trade Commission (FTC) enforces several rules that directly impact how dealerships advertise, sell, finance, and lease vehicles. Failing to comply can result in fines, lawsuits, damaged reputations, and even license suspension.

At Torc Auto Consulting, we believe compliance should not be treated as a burden but as the foundation of sales optimization. When your dealership operates transparently and consistently, customers trust you more — and that trust leads to higher CSI scores, repeat business, and long-term growth.

Here are the five most important FTC rules every California dealer must understand and comply with.

1. The FTC CARS Rule (Combating Auto Retail Scams Rule)

Introduced in 2023, the CARS Rule is one of the most significant regulatory changes in years. It requires dealers to provide clear offering price disclosures, prohibits “junk fees,” and ensures that customers give express consent for add-ons.

For example, if your dealership advertises a car at $25,000, that must be the actual price a customer can pay, excluding only government fees and taxes. You cannot bury additional costs in the fine print. Likewise, any add-on products — such as service contracts, GAP insurance, or wheel protection — must be explained transparently and cannot be added without explicit customer approval.

Sales Optimization Link: By making pricing straightforward, you reduce customer pushback, shorten negotiation times, and increase closing ratios. A transparent process also builds trust, which leads to better online reviews and stronger long-term loyalty.

2. The Used Car Rule (Buyer’s Guide Rule)

The FTC’s Used Car Rule requires every dealer to display a Buyer’s Guide on all used vehicles offered for sale. This guide must clearly state whether the vehicle is being sold “as is” or with a warranty, list the major mechanical systems, and explain what the dealer will and will not cover.

California adds even more layers, with DMV requirements for smog certificates, cancellation options, and odometer disclosures. A missing or inaccurate Buyer’s Guide can result in serious penalties, and it often becomes evidence in lawsuits or disputes.

Sales Optimization Link: When your Buyer’s Guide is clear and consistent, customers feel informed and confident. Instead of questioning whether they’re being misled, they focus on the value of the vehicle and the service your dealership provides. Confidence speeds up the decision-making process and improves CSI scores.

3. Truth in Advertising Rules

The FTC requires all dealership advertising — online, print, radio, or television — to be truthful, clear, and substantiated. This means you cannot advertise a low payment or special APR without disclosing the key terms and conditions. “Bait and switch” tactics, hidden disclaimers, or misleading promotions are violations.

In California, advertising is especially scrutinized by both the FTC and the DMV. If a promotion misrepresents pricing, financing, or availability, it can lead to regulatory action and consumer lawsuits.

Sales Optimization Link: Transparent advertising attracts qualified leads instead of skeptical shoppers. When customers arrive knowing what to expect, sales teams spend less time defending promotions and more time closing deals. Honesty in advertising builds a reputation that drives sustainable traffic.

4. The Truth in Lending Act (TILA) and Consumer Leasing Act (CLA)

The Truth in Lending Act (TILA) and the Consumer Leasing Act (CLA) require dealers to provide accurate and standardized disclosures about credit and lease terms. This includes interest rates, payment amounts, total cost of financing, and any lease obligations. Customers must understand exactly what they are committing to before signing.

Errors or omissions in finance contracts are among the most common triggers for legal disputes. With California’s strict consumer protection laws, even small mistakes can have large consequences.

Sales Optimization Link: A compliant, transparent F&I process creates confidence and reduces cancellations. When customers see that your finance office is clear and professional, they are more likely to buy additional products, boosting per-retail-unit (PRU) profitability without creating risk.

5. The Gramm-Leach-Bliley Act (GLBA) and Safeguards Rule

While many dealers think of compliance only in terms of advertising or deal jackets, data security is now a major FTC priority. Under the Gramm-Leach-Bliley Act (GLBA) and the updated Safeguards Rule, dealerships must protect customer financial data through written policies, staff training, and secure systems.

This includes encrypting sensitive information, restricting access to customer records, and having a written plan for preventing and responding to data breaches. Non-compliance can result in heavy fines, lawsuits, and loss of customer trust.

Sales Optimization Link: Protecting customer data is not just about avoiding fines — it is about building a reputation for trustworthiness. Customers who feel secure are more likely to finance with your dealership and return for repeat business. A culture of data security reinforces a culture of customer care.

How Torc Helps Dealers Stay Compliant While Growing Sales

At Torc Auto Consulting, we specialize in turning compliance into a competitive advantage. Our Compliance Club provides quarterly deal jacket audits, monthly compliance digests, and on-demand advisory support to keep your dealership aligned with FTC and California DMV rules. Our Sales Performance Club builds compliant sales processes that optimize enquiry handling, showroom flow, and F&I profitability.

For dealers who want a complete solution, the Dealer Success Club integrates both, ensuring that every compliance obligation strengthens sales outcomes rather than slowing them down.

By embedding compliance into sales processes, Torc helps California dealers avoid penalties while increasing revenue, improving CSI scores, and building customer trust.

Conclusion

The FTC’s rules are clear, and California dealers cannot afford to ignore them. From the CARS Rule to deal jacket compliance and data security, every regulation carries both risk and opportunity. By approaching compliance as a foundation for sales growth rather than a separate burden, dealers can create a culture of transparency, trust, and performance.

At Torc Auto Consulting, we help dealers turn these rules into results. By aligning compliance with sales optimization, we give your dealership the structure to thrive today and the resilience to succeed tomorrow.