What California's CARS Act means for auto dealerships

This post is for informational purposes and isn’t legal advice. Check with your counsel about how the CARS Act applies to your dealership. 

When a law changes how dealers talk to customers, the real work happens in the BDC, on the sales floor, and in the F&I office, not in a legal memo. California’s Combating Auto Retail Scams (CARS) Act, SB 766, took effect on October 1, 2026. I want to walk through where it touches communications, because that’s the part many dealerships are still working out. 

The law traces back to the Federal Trade Commission, which finalized a national CARS Rule to crack down on bait-and-switch pricing and junk fees at dealerships. After a federal appeals court vacated that rule, California lawmakers stepped in with similar state-level protections. 

California often sets the pattern for other states, and industry observers expect more consumer-leaning legislatures to consider similar bills. While nobody can predict the timing or scope, a dealer group with stores in several states has good reason to build processes that work beyond California. 

Here are five key requirements for dealerships: 

1. Total price in the first written communication. The total price must appear in the first email, text, document, or form that mentions a specific vehicle, any dollar amount, or financing terms. Think about how many text or email conversations start with “Is the Civic still available?” A friendly reply without a price could be the problem. 
2. No material misrepresentation. This covers costs, availability at the advertised price, add-on terms and benefits, trade-in and down payment terms, and the remedy if an advertised price isn’t honored. Most of that is said out loud and rarely written down. 
3. Optional add-ons disclosed as optional, in writing, during negotiations. Warranties, GAP, and theft protection fall here, and dealers can’t charge for add-ons that do not confer a benefit on the buyer. How a product was described in conversation matters as much as the form. 
4. A three-day cancellation right. This applies for used vehicles valued at $50,000 or less, with conditions such as 400-mile limits and restocking fees. The window runs on calendar days, and if the last day falls on a day the dealership is closed, it extends to the next open day. 
5. Two years of records. Dealers must keep a record of ads, first communications, pricing disclosures, add-on consents, and cancellation notices. 

The DMV page is a summary, so check the statute and talk to counsel about your specific situation. 

Let’s make it more concrete. It’s a Friday at 6pm. A customer who bought a used car on Tuesday decides they want to cancel. They call Friday evening. The showroom is closed. 

Without a plan, the call goes to voicemail, someone sees it Monday, and nobody can say exactly when the customer first reached out. With a plan, an AI virtual receptionist answers, captures the reason for the call, and emails the details. The call is tagged as a cancellation request, and a report shows when it came in. On Monday, the right person starts with a timestamped record. The three-day window runs on calendar days, so those hours matter. 

Look at that list and a pattern emerges. Each requirement depends on a conversation: what was sent, what was said, when, and by whom. The CARS Act makes every customer conversation a compliance event, and dealers need to control, capture, and retain those conversations. 

• Control. A shared inbox for texts, email, and chat with pre-saved messages helps every first reply start from approved language. Managers can see what each rep sent. Automated texts and AI messaging need the same care: if a message mentions a specific vehicle, any dollar amount, or financing terms, the template should include the total price. Role-based permissions help you decide who can send what content. 
• Capture. Call recording and AI transcripts of every inbound call turn spoken conversations into something you can review. Content-based keyword alerts can help you spot issues and coach a rep before a small concern escalates. Say a customer insists they were promised a trade-in value. With a recording, you don’t have to guess. 
• Retain. GoTo Connect for Auto allows admins to keep recordings, transcripts, texts, and voicemail for up to seven years, with export capabilities, and ties activity to your CRM/DMS. That’s well beyond a two-year requirement. If a complaint arrives, a full history per customer helps you show what happened or find and fix a problem early. 

If you use AI to talk with customers, the same rules apply to it. An AI that misstates price or availability is still a misrepresentation. That’s why guardrails matter: rules for how the AI responds, a knowledge base for consistent answers, and observability into how it performs. Ask any vendor, including us, how you’d see what the AI said to a customer last Tuesday. 

GoTo Connect supports your compliance process by helping you create the records that show your compliance efforts. It doesn’t replace your counsel, your policies, or your signed disclosures. Those stay in your DMS and deal jacket. 

One more practical note: California generally requires all parties to consent to call recording. Make sure your greeting and disclosures are set up the way your counsel recommends. 

If your group operates in more than one state, one consistent process is easier than several. First-reply templates, recorded and reviewed calls, and long-term retention help with customer trust, training, and dispute resolution no matter what any legislature does. If similar rules come to your state, much of the groundwork will already be done.

Pick one real scenario and walk through it. Who sees it? Where does it live? Could you pull it up in two years? A good first-week checklist:

• Review your first-reply templates. Is the total price in them? 
• Walk through a Friday-evening cancellation call. Who picks up? 
• Find a customer thread from a year ago. How long did it take? 

 

Does the 2026 CARS Act cover phone calls? 

The first-communication rule is framed around written channels: email, text, documents, and forms. The ban on material misrepresentation applies to what’s said in any conversation. 

Does the CARS Act apply to fleet sales? 

Fleet sales, wholesale, sales to commercial buyers of 5+ vehicles per year, and auctions are generally exempt. Confirm with counsel how this applies to your stores. 

Does GoTo Connect make my dealership compliant? 

No. We help you control, capture, and retain conversations that support your own compliance process.