Last reviewed: 15 September 2026

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The federal rule written specifically for dealer add-on service contracts never took effect

Our Holder Rule, Used Car Buyers Guide, and Section 5 pages each cover an existing federal protection reaching a vehicle service contract. This page covers one that would have gone further than all three — and never got the chance to.

What the CARS Rule would have required

The Federal Trade Commission finalized its Combating Auto Retail Scams (CARS) Trade Regulation Rule in December 2023, with an effective date of July 30, 2024. Among its core provisions: a dealer would have needed a consumer's "express, informed consent" before charging for any add-on product — a category that squarely includes a vehicle service contract, GAP agreement, or theft-deterrent product — meaning an affirmative act of assent made only after clear disclosure of what the charge is for and its full cost over the financing term, conveyed in writing and, for an in-person sale, also spoken aloud. The rule additionally would have barred charging for any add-on that provides no real benefit to that specific consumer, with the FTC's own rulemaking record naming concrete examples: a service contract covering a repair a manufacturer's warranty already covers, a maintenance package covering gas-engine service on an electric vehicle, or a GAP agreement that wouldn't actually pay out on that consumer's specific loan-to-value situation.

Challenged before it ever took effect, then vacated entirely

National and Texas-based auto dealer trade groups petitioned the U.S. Court of Appeals for the Fifth Circuit to review the rule in January 2024, and the rule's effective date was stayed while that challenge was pending — meaning the CARS Rule's add-on-consent and no-benefit provisions were never actually in force for a single day. On January 27, 2025, the Fifth Circuit vacated the rule outright, in a 2–1 decision holding that the FTC had violated its own rulemaking procedure by skipping a required advance notice of proposed rulemaking step under Section 18(b) of the FTC Act before finalizing it — a procedural defect, not a ruling on whether the rule's substance was a good idea. The FTC went further still: on February 12, 2026, it formally withdrew the CARS Rule from the Code of Federal Regulations altogether, in the same Federal Register action that also conformed its Negative Option Rule and removed its Non-Compete Rule to match other federal court decisions. The CARS Rule isn't just unenforced — it no longer exists as a codified rule at all.

What that leaves in place today

Because the CARS Rule never took effect, none of its specific express-consent or no-benefit-add-on requirements currently bind a dealer. What's left is the same set of protections this Library already covers, each doing part of the job the CARS Rule would have consolidated into one rule: Section 5 of the FTC Act still reaches a deceptive add-on sales practice generally, without the CARS Rule's specific consent-and-disclosure mechanics; the Holder Rule still lets a buyer raise a problem with a financed service contract against whoever holds the loan; the Used Car Buyers Guide still governs what a used-car dealer's window sticker has to disclose; and a state's own consumer protection or unfair-and-deceptive-practices statute may separately reach a no-benefit add-on charge even without a CARS-Rule-style federal backstop.

What this means at the dealership

Nothing currently in force requires a dealer to get your affirmative written-and-spoken consent before adding a service contract's cost to your purchase, the way the CARS Rule would have. That makes it worth doing yourself what the vacated rule would have required a dealer to do automatically: ask for the add-on's cost broken out separately from the vehicle's price, ask whether it duplicates coverage you already have under a manufacturer warranty, and treat a refusal to itemize or explain an add-on's actual benefit to your specific situation as a reason to slow down, not a formality to sign past.