SB766 - California Combating Auto Retail Scams (CARS) Act.

Senate Bill No. 766 CHAPTER 354 An act to amend, repeal, and add Sections 2982 and 2985.8 of, and to add Title 1.5B (commencing with Section 1784.20) to Part 4 of Division 3 of, the Civil Code, to amend, repeal, and add Section 6012.3 of the Revenue and Taxation Code, and to amend and repeal Section 11713.21 of, and to amend, repeal, and add Section 11709.2 of, the Vehicle Code, relating to civil law. [ Approved by Governor October 06, 2025. Filed with Secretary of State October 06, 2025. ] LEGISLATIVE COUNSEL'S DIGEST SB 766, Allen. California Combating Auto Retail Scams (CARS) Act. Existing law governs motor vehicle conditional sale contracts, as defined, and requires a seller, prior to the execution of a conditional sale contract, to make certain disclosures to the buyer, including a description and the price of each item sold if the contract includes a charge for the item, and the sum of all of those charges. Existing law prohibits a dealer from selling specified used vehicles at retail to an individual for personal, family, or household use without offering the buyer a contract cancellation option agreement that allows the buyer to return the vehicle without cause. Existing law sets forth certain requirements for the contract cancellation option agreement, including prescribing the purchase price for the contract cancellation option and requiring specified disclosures. This bill would enact the California Combating Auto Retail Scams (CARS) Act. The bill would define the terms “vehicle” and “used vehicle” for these purposes. The bill would make it a violation of the act for a dealer to make any misrepresentation regarding material information about specified matters relating to the vehicle sale, including the costs or terms of purchasing, financing, or leasing a vehicle, the availability of vehicles at a total price communicated by the dealer, and the remedy available if a dealer fails to sell or lease a vehicle at the total price, as defined. The bill would also make it a violation of the act for a dealer to fail to make certain disclosures clear and conspicuous, including specified information relating to the total price and any add-on products or services, and would exempt from that provision a used vehicle sold at an auction, as defined. The bill would make it a violation of the act for a dealer, in connection with the sale or financing of a vehicle, to charge for certain items, including an add-on product or service if the vehicle purchaser or lessee would not benefit from the add-on product or service. The bill would repeal the above-described contract cancellation option agreement requirement and would instead prohibit a dealer from selling or leasing specified used vehicles without providing the purchaser or lessee a 3-day right to cancel the purchase or lease, as provided. The bill would require a dealer to create and retain, for a period of 2 years from the date the record is created, all records necessary to demonstrate compliance with the act, including specified records. The bill would make its provisions operative on October 1, 2026. The bill would make related conforming changes. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Title 1.5B (commencing with Section 1784.20) is added to Part 4 of Division 3 of the Civil Code, to read: TITLE 1.5B. California Combating Auto Retail Scams (CARS) Act CHAPTER 1. General Provisions 1784.20. This title shall be known, and may be cited, as the California Combating Auto Retail Scams (CARS) Act. 1784.21. Any waiver by a consumer of the provisions of this title is contrary to public policy and is unenforceable and void. 1784.22. The provisions of this title are not exclusive. The remedies provided in this title for a violation of this title or for conduct proscribed by this title shall be in addition to any other remedies available under other law. This title does not limit or alter the remedies and liabilities set forth in other laws that may apply. 1784.23. If any provision of this title or the application of this title to any person or circumstance is held to be unconstitutional or otherwise deemed to be invalid, the remainder of the title and the application of the provision to other persons or circumstances shall not be affected. 1784.28. This title shall become operative on October 1, 2026. CHAPTER 2. Construction and Definitions 1784.30. This title shall be liberally construed and applied to promote its underlying purposes, which are to protect purchasers and lessees of new or used motor vehicles against unfair and deceptive business practices and to provide efficient and economical procedures to secure that protection. 1784.31. The following definitions apply for purposes of this title: (a) “Add-on” or “add-on product or service” means any product or service not provided to the purchaser or lessee or installed on the vehicle by the vehicle manufacturer and for which the dealer, directly or indirectly, charges a purchaser or lessee in connection with a vehicle sale, lease, or financing transaction. (b) “Auction” means a sale transaction conducted by means of oral, written, or electronic exchanges whereby offers are solicited from one or more potential purchasers in the form of bids in an effort to advance the amount of the bids to obtain the highest and most favorable offer. (c) “Dealer” means a licensed California motor vehicle dealer or a dealer as defined in Section 285 of the Vehicle Code. (d) “GAP agreement” means an agreement for either of the following: (1) To indemnify a vehicle purchaser or lessee for the difference between the actual cash value of the vehicle in the event of an unrecovered theft or total loss and the amount owed on the vehicle pursuant to the terms of a loan, lease agreement, or installment sales contract used to purchase or lease the vehicle. (2) To waive the unpaid difference between money received from the purchaser’s or lessee’s vehicle insurer and some or all of the amount owed on the vehicle at the time of the unrecovered theft or total loss, including products or services titled “guaranteed automobile protection agreement,” “guaranteed asset protection agreement,” “GAP insurance,” or “GAP waiver.” (e) “Material” or “materially” means likely to affect a person’s choice of, or conduct regarding, goods or services. (f) (1) “Motor vehicle” or “vehicle” means a motor vehicle as defined by Section 415 of the Vehicle Code. (2) Notwithstanding paragraph (1), “motor vehicle” or “vehicle” does not include any of the following: (A) Vehicles that are sold wholesale. For purposes of this subparagraph, “wholesale” means sale of a vehicle that does not constitute a retail sale, as defined in Section 6007 of the Revenue and Taxation Code. (B) Vehicles that are not required to be registered under the Vehicle Code. (C) Fleet sale transactions. For purposes of this subparagraph, “fleet sale” means the sale of more than one vehicle as part of a single transaction for use primarily for business or commercial purposes. (D) Sales to commercial purchasers. For the purposes of this subparagraph, “commercial purchasers” means a person that purchases five or more vehicles from the dealer per year for use primarily for business or commercial purposes. (E) A vehicle that has a gross vehicle weight rating of 10,000 pounds or more. (g) “Restocking fee” means the following fees that the dealer may charge a buyer or lessee who exercises the three-day right to cancel: (1) (A) One and one-half percent of the sale price of the vehicle, but not less than two hundred dollars ($200) and not more than six hundred dollars ($600). (B) In lieu of the fee in subparagraph (A), a dealer that charged the buyer or lessee a shipping fee for transporting the vehicle may retain the cost the dealer actually incurred for shipping, provided that the amount retained does not exceed the amount that would otherwise be permitted under subparagraph (A). The dealer shall refund to the buyer or lessee the balance, if any, between the amounts charged and retained. (2) If the vehicle has been driven over 250 miles, the dealer may also charge the buyer or lessee an additional one dollar ($1) for each mile over 250 miles, but this amount shall not exceed one hundred fifty dollars ($150). (h) “Service contract” includes products that provide consumers with some type of benefit or payment for repair, maintenance, or service on the vehicle purchased or leased. (i) (1) “Three-day,” as used in the phrase “three-day right to cancel,” means the period in which a buyer or lessee of a used vehicle may exercise the right to cancel the purchase or lease as provided in Section 1784.43. Except as provided in paragraph (2), this period consists of the three calendar day period commencing the calendar day after the purchase or lease is executed. (2) If the third day in the three calendar day period described in paragraph (1) falls on a day the dealership is closed to the public, the three-day right to cancel period extends to the next day the dealership is open to the public. (3) The three-day right to cancel ends at the close of business on the last day of the period described in this subdivision. (j) (1) “Total price” means the total sale price of a vehicle, excluding the taxes, fees, and charges described in subdivision (e) of Section 11713.1 of the Vehicle Code. (2) “Total price” includes any dealer price adjustment and the cost of any item installed on the vehicle at the time of the advertisement or communication. (3) “Total price” does not include any deduction for a rebate. (k) (1) “Used motor vehicle” or “used vehicle” means a vehicle, as defined by subdivision (f), that also satisfies the definition of a “used vehicle” as defined in Section 665 of the Vehicle Code. (2) “Used motor vehicle” does not include a motorcycle, as defined in Section 400 of the Vehicle Code. CHAPTER 3. Prohibited Conduct and Consumer Rights 1784.40. It is a violation of this title for any dealer to make any misrepresentation regarding material information about any of the following: (a) The costs or terms of purchasing, financing, or leasing a vehicle. (b) Any costs, limitation, benefit, or any other aspect of an add-on product or service. (c) Whether the final contract is for the lease or sale of a motor vehicle. This subdivision shall not be construed to restrict the ability of a dealer to present multiple financing and lease payment options to the customer prior to the sale or lease of a motor vehicle. (d) The availability of vehicles at a total price communicated by the dealer. A dealer is not in violation of this subdivision if the advertisement in question is withdrawn following the sale of the vehicle in compliance with subdivision (c) of Section 11713 of the Vehicle Code. (e) Whether any consumer has been or will be preapproved or guaranteed for any product, service, or term. (f) Information on or about a consumer’s application for financing. (g) Whether the dealer will keep cash downpayments or trade-in vehicles, charge fees, or initiate legal process, or any action if a transaction is not finalized or if the consumer does not go forward with the transaction. (h) Whether, and if so, when, a dealer will pay off some or all of the financing or a lease on a consumer’s trade-in vehicle, and what happens if a dealer fails to pay off the trade-in vehicle within the time period required by Section 11709.4 of the Vehicle Code. (i) The remedy available if a dealer fails to sell or lease a vehicle at the total price. (j) Whether the dealer or any of the dealer’s personnel or products or services is or was affiliated with, endorsed or approved by, or otherwise associated with the United States government or any federal, state, or local governmental agency, unit, or department, including the United States Department of Defense or its military departments. (k) Whether, or under what circumstances, a vehicle may be repossessed. (l) Whether a vehicle can be moved outside of California or outside of the United States. (m) Any of the required disclosures identified in this title. 1784.41. It is a violation of this title for any dealer to fail to make any disclosure required by this section clearly and conspicuously. (a) In connection with the sale or financing of a vehicle, a vehicle’s total price shall be disclosed as follows: (1) In any advertisement that references a specific vehicle for sale. (2) In any advertisement that represents any monetary amount or financing term for a specific vehicle. (3) In the first written communication with a consumer that includes a reference regarding a specific vehicle for sale, or any monetary amount or financing term for any vehicle. With respect to the first written communication, both of the following apply: (A) The total price for the vehicle shall be disclosed at least once in the dealer’s first response regarding that specific vehicle to the consumer. (B) A dealer shall retain a copy of the communication identified by this paragraph for at least two years and shall provide a copy of the communication to the customer upon written request. (b) When making any written representation during the negotiation to purchase or lease a specific vehicle about an add-on product or service, the dealer shall disclose at least once that the add-on is not required and the consumer can purchase or lease the vehicle without the add-on. This disclosure shall be in writing and shall be clear and conspicuous. If the transaction is negotiated primarily in a language identified by subdivision (b) of Section 1632, the disclosure required by this paragraph shall also be provided in that language. (c) (1) When making any written representation during the negotiation to purchase or lease a specific vehicle about a monthly payment for any vehicle, the dealer shall disclose at least once, clearly and conspicuously and in writing, the total amount the consumer will pay to purchase or lease the vehicle at that monthly payment after making all payments as scheduled. (2) If the total amount disclosed assumes the consumer will provide consideration, including in the form of a cash downpayment or trade-in valuation, the dealer shall disclose the amount of consideration to be provided by the consumer. This disclosure shall be in writing and shall be clear and conspicuous. If the transaction is negotiated primarily in a language identified by subdivision (b) of Section 1632, the disclosure required by this paragraph shall also be provided in that language. (d) If the dealer makes any written comparison between payment options during the negotiation to purchase or lease a specific vehicle that includes discussion of lower monthly payments, the dealer shall disclose that lower monthly payments often increase the total amount the consumer will pay to purchase or lease the vehicle. Use of an internet-based [Text truncated for display. Full text available on Congress.gov.]