California CARS Act (SB 766) Requirements for Dealers and Auto Brokers (2026)

The California Combating Auto Retail Scams Act, known as the CARS Act or SB 766, took effect on October 1, 2026. It changes how California dealers advertise prices, talk about payments, sell add-ons, and handle used car returns. It also adds a new 3-day right to cancel on many used vehicles and a 2-year record keeping rule.

If you broker cars in California, this applies to you too. California has no standalone broker license. Brokers hold a retail dealer license with an autobroker endorsement, and the Act covers licensed California dealers. Our California auto broker guide explains that licensing path.

Below is a plain-English summary of the requirements, what they mean for brokers, and a checklist. This article is not legal advice. Read the bill text, the DMV industry notice, and the CNCDA compliance guide, and have your attorney review your process.

The Act applies to licensed California dealers in connection with the retail sale, lease, or financing of a vehicle. That includes franchise dealers, independent used car dealers, and autobrokers.

Some transactions are outside the Act: wholesale sales, vehicles that don't need California registration, fleet sales of more than one vehicle in a single business deal, sales to commercial buyers who purchase five or more vehicles a year from the dealer, and vehicles rated at 10,000 pounds GVWR or more. A single light-duty vehicle sold to a small business is generally still covered.

Brokers who deliver cars out of state should note one open question. The CNCDA guide says there is a strong but untested argument that a car sold for registration in another state falls outside the transaction rules. That argument can't help with advertising, which reaches everyone, so your listings and ads still need a total price.

The total price must be shown clearly and conspicuously in any ad that references a specific vehicle, in any ad that shows a dollar amount or financing term for a specific vehicle, and in your first written communication with a consumer about a specific vehicle or a payment.

Under the Act, total price means the full sale price of the vehicle, excluding the taxes, fees, and charges listed in Vehicle Code section 11713.1(e). It includes any dealer price adjustment and anything installed on the vehicle at the time of the ad or message. It can't be reduced by a rebate. You can show rebates separately, but not inside the total price.

Keep a copy of that first written communication for at least two years, and give the customer a copy if they ask for it in writing.

The CNCDA updated its guidance after the FTC staff FAQs of September 15, 2026. It now recommends including the dealer document processing charge, the electronic filing charge, and any emission testing charge in the advertised total price, with taxes, registration, title, and the tire fee left out. It also says never to label the total price "out-the-door." If you charge any of those dealer fees, ask your attorney how to show them.

An add-on is any product or service the manufacturer didn't provide or install and that you charge the customer for. Service contracts, GAP, paint protection, and dealer-installed accessories all count.

When you put anything in writing about an add-on during the negotiation for a specific vehicle, you must disclose at least once, in writing, that the add-on is not required and the customer can buy or lease the car without it. That usually means the menu, worksheet, or quote, not just the final contract. If the deal is negotiated mainly in Spanish, Chinese, Tagalog, Vietnamese, or Korean, the disclosure must also be given in that language.

You can't charge for an add-on the customer wouldn't benefit from. The Act lists examples: nitrogen tire fills under 95 percent purity, oil changes on an electric vehicle, catalytic converter markings on a car with no catalytic converter, a service contract that is void because of a preexisting condition, GAP that doesn't comply with state law, and paint protection that voids the factory paint warranty.

You must also pay the add-on provider within 10 days of signing, unless you have an agreement for later payment that doesn't affect the customer's coverage.

If you put a monthly payment in writing while negotiating a specific vehicle, you must also show, at least once, the total the customer will pay after making every scheduled payment. If that total assumes cash down or a trade-in, show that amount too.

If you compare payment options in writing and one of them lowers the monthly payment, you must disclose that lower monthly payments often increase the total amount the customer will pay. Online tools that let a shopper adjust the terms themselves don't violate this rule.

For brokers who text payment options all day, this is the rule most likely to trip you up. A quick text with three payments and no totals is the kind of message to fix first.

The Act replaces the old 2-day contract cancellation option (for used cars under $40,000) with a free 3-day right to cancel. It covers used vehicles sold or leased at $50,000 or less. The CNCDA guide says to measure the $50,000 on the vehicle price in the contract, not on the advertised total price.

The window is three calendar days, starting the day after signing. If the third day falls on a day you are closed, it runs to the next day you are open, and it ends at close of business. The right doesn't apply once the car has been driven more than 400 miles, and it doesn't apply to lease-end buyouts or used cars sold at auction.

You can't charge for the right itself, and a customer can't waive it. You may charge a restocking fee of 1.5 percent of the sale price (at least $200 and no more than $600), plus $1 per mile over 250 miles, capped at $150. You must cancel the contract and refund the customer, minus allowed deductions, within 48 hours. If the customer cancels, return the trade-in and keys, unless the trade has already been sold, in which case special refund rules apply.

The customer must get a separate disclosure titled "3-Day Right to Cancel Used Car Purchase or Lease" that explains the deadline, the restocking fee math, and the 400-mile limit.

Vehicle Code section 11709.2 requires a physical notice in at least 36-point type in each sales office and cubicle where deal terms are discussed, and in each room where contracts are signed. The required wording says California has no cooling-off period for new vehicles, but used vehicles bought or leased for $50,000 or less can be returned within 3 days, with possible restocking fees.

If you also sell motorcycles or off-highway vehicles at the same location, the sign needs one more sentence saying the cooling-off period doesn't apply to them. Take down any old sign that describes the 2-day contract cancellation option.

You must create and keep, for two years, the records that show you complied. That includes copies of ads and first written communications showing the total price, signed purchase orders and finance or lease documents (even on deals that never fund), and written communications with customers who signed.

It also includes add-on records (service contracts, GAP agreements, proof of timely payment to providers), cancellation requests with proof of refunds and trade-in returns, and written complaints and inquiries about sales, add-ons, and cancellations. Online reviews and survey replies don't count as complaints.

You can keep records in any legible form, in the same way you already keep business records. Missing records are a violation on their own. If you switch CRMs, export your history first.

Most CARS Act coverage is written for showrooms. Brokers work differently: you text, email, and send quotes long before the customer sees a dealership. That makes your written messages the main place the rules show up.

Your first quote is a first written communication. If you text or email a client about a specific car or a payment, include the total price in that first response, and keep a copy. Automated replies and lead follow-ups count too.

Show the total with every payment. Each written payment should be paired with the total of all payments and the cash down or trade it assumes.

Lease specials are ads. A lease special for a specific vehicle on your site, social media, or email needs the total price. The FTC has also said upfront lease fees belong in the advertised amount due at signing.

Keep your broker fee in writing. California autobroker law already requires a written agreement and a broker fee disclosed separately from the vehicle price. Ask your attorney whether your broker fee also needs to be part of an advertised total price. Either way, never hide it. Our guide to auto broker fees covers how brokers set and explain fees.

Agree on roles with the selling dealer. On many broker deals, the dealer writes the contract, gives the 3-day disclosure, and processes any cancellation. Know which dealer you're sending clients to, and make sure your quotes match what they will put in the contract.

The final version of the Act has no express private right of action, and the DMV has no direct authority to enforce it. That doesn't make it low risk. The CNCDA expects private lawsuits under the Unfair Competition Law, the False Advertising Law, and the Consumers Legal Remedies Act. The Attorney General and district attorneys can enforce it, and the DMV can still act on overlapping Vehicle Code advertising rules.

The FTC is watching too. Its September 2026 staff FAQs on pricing say no grace period applies and invite the public, including competing dealers, to report violations. Most enforcement starts with a customer complaint, so clear quotes and fast responses are your best protection.

Ads and listings for a specific vehicle show the total price, with no rebates inside it and no "out-the-door" label.

Text, email, and lead reply templates include the total price in the first response about a specific vehicle.

Every written monthly payment shows the total of all payments and any cash down or trade it assumes.

Payment comparisons that lower the monthly payment include the "lower monthly payments often increase the total amount" disclosure.

Menus, worksheets, and quotes say add-ons are not required, and no-benefit add-ons are removed.

Add-on providers are paid within 10 days of signing.

Used car deals at $50,000 or less include the 3-Day Right to Cancel disclosure, and staff know the 48-hour refund rule.

The 36-point sign is posted in every sales office and signing room, and old cancellation option signs are gone.

Ads, first communications, deal files, add-on records, cancellations, and complaints are kept for 2 years.

Broker agreements and fee disclosures are in writing and reviewed by your attorney.

When did the California CARS Act take effect? October 1, 2026. It applies to ads, communications, and deals from that date forward.

Does the CARS Act apply to auto brokers? Yes, in practice. California brokers hold a retail dealer license with an autobroker endorsement, and the Act applies to licensed California dealers.

Does the 3-day right to cancel apply to new cars? No. It only covers used vehicles sold or leased at $50,000 or less, driven no more than 400 miles since signing.

Can I charge for the 3-day right to cancel? No. You can only charge the restocking fee allowed by the Act if the customer cancels.

What is the restocking fee? 1.5 percent of the sale price, at least $200 and no more than $600, plus $1 per mile over 250 miles up to $150.

Can I call the total price "out-the-door"? No. The total price leaves out taxes and government fees, so it isn't what the customer pays at signing.

How long do I keep CARS Act records? Two years from the date each record is created.