California’s CARS Act (SB 766) takes effect October 1, 2026. For dealers, it means itemized written disclosure of every F&I add-on, proof that each add-on was voluntary, a ban on add-ons that give the customer no real benefit, and a new three-day right to cancel on many used-vehicle sales. It arrives after the FTC withdrew its own federal CARS Rule.
This post is a plain-language summary, not legal advice. Review the law and your process with your compliance counsel.
Why California moved on its own
The Fifth Circuit vacated the FTC’s CARS Rule in January 2025 on procedural grounds, and the FTC formally withdrew it in February 2026. Federal enforcement didn’t stop. In March 2026 the FTC warned 97 dealership groups that advertised prices must include every required fee. California chose to write its own rules into state law, and Governor Newsom signed SB 766 in October 2025.
What the law requires in the F&I office
Itemized, written add-on disclosure
Every F&I add-on must be clearly itemized and disclosed in writing, including in the language used to negotiate the deal. A bundled payment that hides product costs won’t pass.
Add-ons must be voluntary
Customers must knowingly choose each product. A menu that shows every product, its price, and the customer’s decision on each is the simplest way to show that.
No add-ons that provide no benefit
The law bans add-ons that give the customer no real benefit, including GAP waivers that wouldn’t meaningfully help the buyer and products that would void the vehicle’s warranty. It also sets standards for specific items. Nitrogen tire fill, for example, must contain at least 95% nitrogen.
A three-day right to cancel on many used vehicles
Buyers of qualifying used vehicles priced at $50,000 or less can return the vehicle within three days, as long as it’s been driven no more than 400 miles. The law caps the restocking fee and requires a refund within 48 hours. This replaces California’s older contract cancellation option, which buyers had to purchase.
Paying product companies on time
Dealers must pay F&I product providers within 10 days of the sale unless another arrangement is agreed.
Two years of records
Dealers must keep evidence of compliance, such as advertisements and required communications, for two years.
What to change before and after October 1
- Audit your menu. Confirm every product appears individually with its price, and that the customer’s accept or decline is recorded for each one.
- Review your product lineup. Work with your agent or TPA to confirm each product delivers real value for the vehicles and customers you sell to.
- Plan for returns. Decide who handles three-day returns, how refunds get issued within 48 hours, and how product cancellations are processed.
- Organize your records. Make sure disclosures and signed menus can be pulled for any deal in the last two years.
- Train every F&I manager. A compliant process only works if every manager runs it the same way on every deal.
Where a digital menu helps
Paper menus and verbal pitches make consistency hard. One manager skips a product when the customer looks tired. Another bundles a price into the payment. A digital F&I menu presents every product the same way on every deal and keeps the customer’s choices with the deal file. AmpliFI pairs that consistent menu with e-contracting, so what the customer chose is what ends up on the contract.
For the federal picture, including the FTC’s warning letters and the 100% rule, see our post on F&I menu compliance in 2026.
Frequently asked questions
When does California’s CARS Act take effect?
October 1, 2026. It was signed in October 2025 with a delay to give dealers time to prepare.
Does the CARS Act apply to every vehicle sale?
It applies to retail sales to consumers. It doesn’t apply to vehicles with a gross vehicle weight rating of 10,000 pounds or more. The three-day return right applies to qualifying used vehicles priced at $50,000 or less.
Is the federal CARS Rule still in effect?
No. The Fifth Circuit vacated it in January 2025 and the FTC withdrew it in February 2026. The FTC still enforces against deceptive pricing and add-on practices under its general authority, and states like California are adding their own rules.
If your menu process still depends on paper and each manager’s habits, now is the time to fix it. Ask your agent or TPA about AmpliFI, or book a demo.
