Revision of the Negative Option Rule, Withdrawal of the CARS Rule, Removal of the Non-Compete Rule To Conform These Rules to Federal Court Decisions
The FTC is withdrawing the CARS Rule (Combatting Auto Retail Scams) and revising the Negative Option Rule, while removing the Non-Compete Rule to conform to federal court decisions. This means auto dealers are no longer subject to the CARS Rule's specific prohibitions on deceptive advertising and add-on product sales, but must still comply with existing FTC Act prohibitions against unfair/deceptive practices. The Negative Option Rule revisions may affect subscription or automatic renewal programs.
Aforeworn detected this change in the Auto Dealer F&I Compliance space on July 6, 2026 and published this briefing so affected operators are forewarned rather than caught off guard. It is rated High urgency. All auto dealers (franchise, independent, BHPH) and F&I managers should confirm how it applies to their specific situation before acting. There is a time constraint attached: Effective upon publication in Federal Register (Feb 12, 2026). Immediate compliance recommended.. Acting after that point can mean penalties, a lapsed licence, or lost eligibility — exactly the kind of surprise Aforeworn exists to prevent. Aforeworn monitors Auto Dealer F&I Compliance continuously and turns every detected change into a plain-English briefing like this one, so you always know first. Forewarned is forearmed.
What changed
The CARS Rule is withdrawn, so its specific requirements (e.g., clear disclosure of add-on costs, prohibition on charging for unwanted items) are no longer enforceable as a standalone rule. However, the FTC retains authority to challenge deceptive practices under Section 5 of the FTC Act. The Negative Option Rule is revised, likely imposing new requirements for subscription or automatic renewal programs. The Non-Compete Rule removal means no federal ban on non-compete clauses (but state laws still apply).
Who it affects
All auto dealers (franchise, independent, BHPH) and F&I managers
What you must do
Review and update compliance programs to remove CARS Rule-specific policies, but ensure general FTC Act compliance. For negative option programs (e.g., automatic renewals), implement revised disclosure and consent requirements. No action needed on non-competes at federal level.
Deadline
Effective upon publication in Federal Register (Feb 12, 2026). Immediate compliance recommended.
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