Why the CARS Rule Stalled – And Why Dealerships Should Be Worried in 2025

Car dealerships are in for a turbulent 2025. The Federal Trade Commission’s (FTC) Combating Auto Retail Scams (CARS) Rule was designed to crack down on shady dealership tactics like bait-and-switch pricing and hidden fees. It was supposed to bring much-needed transparency to auto sales. But in early 2025, the Fifth Circuit Court of Appeals vacated the rule, citing procedural issues.

With the rule now stalled, unethical dealers might see this as a green light to revert to deceptive practices. But here’s the thing—relying on bait-and-switch tactics or third-party auto retailing sites to bring in customers is a short-term strategy with long-term consequences.

Dealerships that want to survive (and thrive) need to shift their focus toward first-party leads—leads generated directly by the dealership, without relying on third-party platforms. Here’s why the stalled CARS Rule is a wake-up call and why first-party leads are the key to success in 2025.


What Was the CARS Rule?

The CARS Rule was meant to make auto transactions clearer and fairer for consumers. Some of its key provisions included:

  • Upfront Pricing – Dealers had to disclose the full price of a vehicle, including fees, right away.
  • No More Junk Fees – Hidden add-ons and unnecessary costs were prohibited.
  • Consumer Consent – Customers had to agree in writing before dealers could add optional extras.

This rule was supposed to hold dealerships accountable for misleading practices, forcing them to operate with more transparency.


Why Did the CARS Rule Stall?

In January 2025, the Fifth Circuit Court struck down the CARS Rule, arguing that the FTC didn’t follow proper rulemaking procedures. Specifically, the court found that the agency failed to issue an advance notice of proposed rulemaking—essentially skipping a critical step in the process.

With the rule overturned, dealerships are back in a gray area. There’s no immediate federal crackdown on shady practices, meaning unscrupulous dealers may try to exploit the situation.

For ethical dealerships, this creates a dilemma: Do you follow the old-school tactics that could now go unchecked, or do you take the high road and focus on sustainable, trust-building strategies?


Bait-and-Switch Tactics: Why This Hurts Dealerships in the Long Run

One of the biggest issues the CARS Rule aimed to tackle was bait-and-switch pricing—advertising cars at a low price online, only to hit customers with hidden fees or claim the car is “no longer available” once they arrive at the showroom.

This tactic might generate foot traffic, but it’s also a huge trust killer.

  • Customers Are Getting Smarter – Online reviews, social media, and watchdog organizations make it easy for consumers to call out deceptive dealerships.
  • Negative Reviews Kill Sales – One bad experience can spread like wildfire, driving away future buyers.
  • Regulation Isn’t Gone Forever – Just because the CARS Rule stalled doesn’t mean similar laws won’t be reintroduced later.

Short-term gains from misleading ads are not worth the long-term damage to a dealership’s reputation.


Why Relying on Third-Party Auto Sites Is Risky

Many dealerships depend on third-party auto listing sites (like Autotrader or CarGurus) to bring in leads. But this comes with its own set of problems:

  1. Low-Quality Leads – Many customers browsing these platforms are just price-shopping, not necessarily ready to buy.
  2. Increased Competition – Your listings are placed alongside hundreds of other dealerships, making it harder to stand out.
  3. Fee-Based Model – These platforms charge for leads, cutting into your profits.
  4. Lack of Control – You don’t own the customer relationship—the listing site does.

In a world where consumer trust is shaky, dealerships need more control over their lead flow. That’s where first-party leads come in.


The Power of First-Party Leads

A first-party lead is a customer who engages directly with your dealership—through your website, social media, or in-store visits—without going through a third-party platform.

These leads are more valuable for a few key reasons:

  • Higher Conversion Rates – Customers who visit your website or showroom directly are more serious buyers.
  • Better Customer Relationships – Direct interactions allow you to build trust and personalize the experience.
  • Cost Savings – No more paying third-party sites for overpriced leads.
  • Full Control – You own the data and can market directly to potential buyers.

If your dealership isn’t focusing on first-party leads, you’re leaving money on the table.


How to Generate First-Party Leads in 2025

Want to build a strong pipeline of first-party leads? Here are some effective strategies to implement today:

1. Optimize Your Website for Lead Capture

Your website should be more than just an online business card. It should be a lead generation machine.

  • Live Chat & AI Assistants – Use chatbots or live agents to engage visitors and capture leads in real-time.
  • Lead Forms on Every Page – Make it easy for visitors to contact you with simple, mobile-friendly forms.
  • Exclusive Offers – Offer special discounts or free vehicle history reports in exchange for customer info.

2. Dominate Social Media Marketing

Customers spend hours on social media—meet them where they are.

  • Facebook & Instagram Ads – Target potential buyers with hyper-focused ad campaigns.
  • Engaging Video Content – Post vehicle walkarounds, customer testimonials, and dealership updates.
  • Community Engagement – Respond to comments and messages quickly to build trust.

3. Implement a Strong CRM System

A Customer Relationship Management (CRM) system helps you:

  • Track customer interactions
  • Send personalized follow-ups
  • Identify high-intent buyers

The right CRM ensures no lead slips through the cracks.

4. Focus on Customer Experience & Referrals

Word-of-mouth is still one of the best marketing tools for dealerships.

  • Offer Outstanding Service – Make the buying process easy, transparent, and hassle-free.
  • Ask for Reviews – Happy customers will gladly leave positive feedback online.
  • Create a Referral Program – Reward customers who send new buyers your way.

Satisfied customers become your best salespeople.


The Future: Ethical Dealerships Will Win

With the CARS Rule in limbo, some dealerships will continue using deceptive tactics. But this is a short-sighted approach.

The dealerships that will thrive in 2025 and beyond are the ones that:

  • Commit to transparency
  • Prioritize first-party leads
  • Leverage technology to connect with customers
  • Deliver a top-tier buying experience

By shifting your focus away from third-party listing sites and bait-and-switch tactics, you future-proof your dealership and build a loyal customer base.


Final Thoughts

The stalling of the CARS Rule may feel like a win for shady dealerships, but ethical dealerships have the real advantage. Customer trust is everything. If your dealership is still relying on third-party leads and questionable pricing strategies, it’s time to pivot.

The solution? First-party leads.

  • Own your customer relationships
  • Build a transparent, trustworthy brand
  • Invest in digital marketing and CRM tools

By focusing on long-term growth instead of short-term gimmicks, your dealership will stand out—even in a changing regulatory landscape.

Auto Leads, Subprime Auto
Leads, & 1st Party Leads for Dealerships.

Discover unparalleled Auto Leads that convert into sales with Arbor Advertising, your partner in driving MEASURABLE traffic and sales for both Independent and Franchise Dealerships.

Join our Guaranteed Car Sales Program

Leave a Reply

Your email address will not be published. Required fields are marked *