Starting off the year, the compliance landscape for auto dealerships includes both regulatory and enforcement shifts as well as some important best practices aimed at fraud prevention. As Robert Newman, Director of Performance Management and an auto retail compliance specialist at Cox Automotive says, “Compliance isn’t just about checking a box—it’s about building a foundation of trust and transparency that supports long-term success.”
Dealers need practical, actionable strategies to protect their business and their customers, ensuring confidence and reliability in an increasingly digital and regulated landscape. With that in mind, here are some of the key trends you should take into consideration for deal compliance this year:
1. Consumer Protection
The Fifth Circuit Court of Appeals recently overturned the FTC’s Combating Auto Retail Scams (CARS) Rule on procedural grounds. The legislation was designed to protect consumers from unfair and deceptive practices with a focus on add-on products, vehicle pricing and advertising, and hidden junk fees.
The CARS Rule aside, laws prohibiting unfair and deceptive practices remain in place across various jurisdictions. Dealers should be aware of the significant rise in state legislation aimed at banning junk fees, hidden fees, and promoting pricing transparency. In addition, deceptive practices including material misrepresentations and hidden fees remain prohibited under federal and state UDAP regulations.
What You Can Do: Prioritize compliance measures including consistent disclosures and consumer notices to protect consumers from unfair and deceptive practices. Ensure that your advertising remains transparent, truthful, and fully compliant with TILA requirements and other UDAP standards, as these unlawful practices are still subject to legal action and reflect on their reputation with consumers.
2. Aftermarket Financing Scrutiny
In recent years, aftermarket items must be disclosed separately, and a dealer must clearly disclose that their purchase is voluntary and not required to obtain financing. Many states also have detailed regulations about how various aftermarket items must be separately disclosed to the consumer.
What You Can Do: Be aware of state laws that require specific notices to be given to consumers regarding certain aftermarket products. Pay special attention to parts of the finance process like unwanted add-on products (such as payment insurance and paint protection), inconsistent contract language, inaccurate reporting to credit companies, and more. Charge the same price for each product and each grouping of products, online or in-store. Do not surcharge credit customers, as the surcharge is considered part of the “finance charge” under TILA and must be calculated into the APR and disclosed in the RISC.
3. Privacy and Data Security
Federal regulators and at least twenty states—including California, Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee, Texas, Utah, and Virginia—have enacted new data privacy and security laws. Several other states are considering similar legislation.
What You Can Do: Make sure you are protecting your dealership, employees, and customers from the rising number of data and other security breaches through appropriate technology and training. Familiarize yourself with your state’s privacy regulations because they can vary from one state to the next.
4. Fraud Prevention
Fraud accounted for $7.9 billion in losses for the auto lending industry in 2023 according to Point Predictive. Sophisticated exploits such as synthetic identity fraud represent a growing percentage of this criminal activity.
What You Can Do: Make sure your compliance processes and staff training reflect this growing risk. Don’t hesitate to add ID verification steps such as out of wallet questions whenever there’s uncertainty—and consider using compliance tools for ID verification such as red flag alerts and OFAC checks, as well as fraud detection technology designed to detect ID fraud or synthetic ID fraud attempts.
5. Building and Executing Your Compliance Program
Every dealership needs a robust compliance program that should include appropriate resource allocation, training, monitoring, assessments, updates, oversight, and disciplinary measures.
What You Can Do: To make sure your program is comprehensive, be sure work with your legal counsel to review enforcement actions, reports, and updates issued by federal and state regulators to develop policies that will help you avoid unlawful and discouraged practices.
Take Charge of Compliance in 2025
Learn more about the latest compliance trends and get a handy reference all year long when you download the free Dealertrack Compliance Guide.
To get some useful compliance tips at a glance, download our Best Practices for Compliance at Every Stage of the Deal infographic.
If you don’t have Dealertrack Compliance to safeguard your deals, schedule a demo with a compliance specialist today.
Disclaimer: This is not meant as legal advice, and we do not purport to provide any legal or regulatory analysis. Consult with your attorney for any legal, regulatory, or compliance questions you may have.