CARS Rule Goes Off Road

In National Automobile Dealers Assoc. v. FTC, the Fifth Circuit vacated the FTC’s “Combating Auto Retail Scams Trade Regulation Rule” (CARS Rule) because the FTC failed to to issue an advance notice of proposed rulemaking (ANPRM) as required by its own regulations.

The court rejected the FTC’s argument that the Dodd-Frank Act exempted it from the ANPRM requirement.  While the Dodd-Frank Act allows the FTC to use regular APA procedures for rulemaking concerning auto dealers, it does not eliminate the FTC’s internal procedural safeguards. A dissent argued that the petitioners failed to show prejudice from the lack of an ANPRM, given their extensive participation in the rulemaking process. No. 24-60013, Jan. 27, 2025