California’s Combating Auto Retail Scams (CARS) Act takes effect this Thursday, Oct. 1, bringing sweeping new requirements for franchised dealers statewide, including the nation’s first mandatory cooling-off period for used vehicle purchases.

Signed by Gov. Gavin Newsom in October 2025, the law gives buyers and lessees of used vehicles priced at $50,000 or less three calendar days to cancel the transaction for any reason, subject to a restocking fee of 1.5% of the purchase price ($200 minimum, $600 maximum) and a 400-mile cap. The cancellation period begins the day after the purchase or lease is executed.

The law, modeled on the FTC’s CARS Rule, which was struck down by the Fifth Circuit Court of Appeals before it could take effect, also adds new price transparency, disclosure and record-retention requirements for all California dealers selling light-duty vehicles. Dealers are required to retain records for two years.

The California New Car Dealers Association has launched a compliance resource hub for its members. But in a statement, CNCDA President Brian Maas flags an apparent conflict between the state and federal frameworks.

“The devil is in the details, as the FTC’s practical implementation guidance is at odds with the adopted SB 766,” Maas writes. “How are California’s dealers expected to reconcile the two sets of guidelines?”

For a five-minute video overview of the California CARS Act by attorney Jim Ganther of ACE and Mosaic Compliance Services, click here.