California’s CARS Act takes effect October 1, 2026.
SB 766 changes how vehicles are advertised, how add-ons are sold, how used-vehicle deals can be unwound, and what a dealership has to be able to prove two years later. Most of that lands on the finance office and the back office — which is where we work.
Compliance is a legal question. Being able to prove it is an operations question.
There is no shortage of good legal analysis of SB 766, and there is capable compliance software that will scan your advertising and generate the required disclosures. Both are worth having. Neither one decides who owns which step on your floor, how a trade gets held for three days, or where a text message from a deal that fell through is going to live for the next two years.
That gap — between what the statute requires and how your store actually runs on a Monday — is the work. We come at it from inside dealership operations rather than from the outside, and we hand back a process your team can run without us.
Want to know what the statute actually says first?
Where does your store actually stand?
Two scored self-assessments, each about five minutes. One asks what your systems can do; the other asks how the store runs. Together they cover the readiness picture — and each ends with a breakdown of exactly where the gaps are.
DMS Readiness Assessment
Sixteen questions on what your systems can do: total price in every feed and first reply, logged communications, restocking math, a computed cancellation deadline, two-year retrieval.
CARS Act Operational Readiness
Eighteen questions on how the store runs: who owns each control point, training on the misrepresentation rules, posted notices, the trade-in hold, the 48-hour unwind drill.
Total price, in the first written communication
The total price of a vehicle has to appear in advertising that references a specific vehicle — and in the first written communication a customer receives about one. Advertising on MSRP alone with a disclaimer no longer works unless MSRP is the actual total price.
“First written communication” reaches well past your website. Email, text, chat, credit applications — every channel a salesperson can type into becomes a place where the disclosure has to have already happened. Someone has to own that control point, and the store has to be able to show it worked.
Add-ons have to demonstrably benefit the buyer
Charging for add-ons that provide no benefit is prohibited, and the dealer must hold records showing that the add-ons sold in fact benefit consumers. Written add-on representations have to disclose that the vehicle can be purchased without them, and payment discussions have to include the total amount the customer will pay.
The evidence requirement is the part that outlives the deal. The F&I menu now needs a maintained file per product — and an owner who keeps it current as products change.
A three-day right to cancel on used vehicles
Used vehicles sold or leased at $50,000 or less carry a no-charge, any-reason right to cancel within three days, provided the vehicle has not been driven more than 400 miles. The restocking fee is capped at 1.5% of sale price — no less than $200, no more than $600 — plus up to $1 per mile over 250 miles, to a maximum of $150.
This is the largest back-office change on the list. For three days a deal is not final, which touches funding, trade disposition, DMV submission and your unwind procedure. The trade-in provision deserves particular attention: if the trade has already been sold and the customer cancels, the dealer owes the greater of fair market value, the ACV on the contract, or what the trade actually sold for.
Two years of records — including deals that died
Records necessary to demonstrate compliance must be created and retained for two years from creation. That spans advertising accuracy, signed documents, add-on benefit evidence, cancellation and refund records, trade-in returns, customer complaints and responses — and written communications tied to transactions that were never completed.
Most stores retain paperwork on deals that closed and nothing coherent on deals that didn’t. The texts and emails from a deal that fell apart in March are now a two-year record. Where those currently live — personal phones, individual inboxes — is a document architecture problem, not a filing problem.
The first disclosure usually happens in your CRM — automatically.
When a customer first reaches out about a specific vehicle, the first written communication back is rarely a person — it’s the CRM’s auto-response, a BDC template, or a canned text or chat reply. Under SB 766 that first response has to carry the vehicle’s total price, and a copy has to be retained for two years and produced on request. Whether that happens is decided by the templates configured inside your CRM before a salesperson types a word.
Most stores run one of a handful of platforms — VinSolutions (Cox Automotive), Elead (CDK Global), DealerSocket (Solera), DriveCentric, or Tekion. Whatever your vendor ships at the platform level, the auto-responders, templates, and reply scripts in your store’s own tenant are your configuration: a platform update doesn’t rewrite them, and the first response a customer receives is judged on what your store actually sent.
We work with your CRM vendor on your behalf — auditing every first-touch template across email, text, and chat, getting the required disclosures into each one, and confirming the responses are logged where they can be retrieved two years later — so the first thing a customer reads from your store is already compliant.
From current state to a process that holds.
Scope depends on how many stores you run and how much has already been done. Most engagements include some version of the following.
Readiness assessment
A walkthrough of how a deal actually moves through your store today, mapped against what has to be true on October 1. We identify where disclosures currently happen, where they don’t, and which handoffs have no owner.
Control points and ownership
A written definition of who is responsible for each disclosure and each record, at which step, in which system. Compliance failures are almost never a missing rule — they are a step nobody owned.
Retention architecture
A practical answer to where two years of records live, how communications from open and dead deals get captured, and how someone retrieves a specific deal file under time pressure.
Cancellation-window procedure
A hold-and-release policy across funding, trade disposition and DMV submission, plus the restocking and unwind workflow, so a three-day cancellation is a routine event rather than an exception your team improvises.
Handoff and training notes
Documentation your team can run without us, so the process survives staff turnover — which, in this line of work, is the only test that matters.
Two other 2026 changes already affecting the back office.
Per-transaction sales tax
Since January 1, sales tax is due to the DMV transaction by transaction within 30 days, rather than monthly to CDTFA — with oversight from both agencies. It compresses cash-flow cycles and tightens documentation on every deal.
Revised REG 31 and REG 262
Updated versions are required, and submissions on outdated forms are rejected automatically. Stores without form version control absorb the rework.
Compounding workload
Individually each of these is small. Together, and arriving alongside the CARS Act, they land on the same few people in the same back office.
Common questions about the CARS Act
What the statute says, and what each answer means for the finance office. These are questions dealers actually ask us — several of them because a widely circulated summary got the answer wrong.
When does California’s CARS Act take effect?
October 1, 2026. SB 766 was signed on October 6, 2025, and there are no phased dates — the advertising rules, the finance-office disclosures, the add-on standard, the three-day cancellation right and the recordkeeping duty all become operative on the same day. Operationally that means the process has to hold on the first deal written that morning. There is no window in which a store is partly covered, and nothing to stage across a quarter.
Does the CARS Act apply to my dealership?
It applies to licensed California motor vehicle dealers, new and used alike. There is no franchised-versus-independent distinction and no size, volume or revenue threshold. What is narrower than most summaries suggest is the definition of the vehicles it reaches: wholesale transactions, fleet sales, sales to commercial purchasers buying five or more vehicles a year for business use, vehicles not required to be registered, and vehicles rated at 10,000 lbs GVWR or more all sit outside it. If a real share of your volume lands in those categories, scope that with your own counsel before rebuilding a process around every deal you write.
What has to be inside the advertised total price?
Everything the dealership charges, less a fixed list of exclusions carried over from existing Vehicle Code advertising law: taxes, registration fees, the California tire fee, the smog certificate fee, finance charges, two mobilehome-specific items, the dealer document processing charge, the electronic registration or transfer charge, and an emission testing charge capped at $50 plus the actual certificate fee. Note that the document processing and electronic registration charges are dealer-retained — the common claim that only government fees come out of the number is wrong. Accessories, additional dealer markup, dealer-installed add-ons and protection products all sit inside it. The term is also “total price”; “offering price” belongs to the vacated federal rule.
Where does the total price actually have to appear?
Three places: any advertisement referencing a specific vehicle; any advertisement representing a monetary amount or financing term for a specific vehicle; and the first written communication with a consumer that references a specific vehicle, or any monetary amount or financing term for any vehicle. The third is the one stores miss, because it is not an advertising problem — it is a CRM problem. Auto-responders, BDC templates, chat replies and text messages all become first written communications. The dealership also has to keep a copy for two years and produce it on written request, which is what turns personal-cell texting and other unlogged channels from a habit into a liability.
How long do CARS Act records have to be kept?
Two years from creation. A four-year figure circulates in vendor material and is not what the statute says. Five categories have to be retained: records showing that total-price communications and advertisements complied — expressly including internet listings the dealer disseminated — purchase orders and financing and lease documents, records showing that add-ons complied including service contracts and GAP agreements with proof of payment, cancellation requests and proof of refunds, and written complaints. Records may be kept in any legible form, so electronic retention is fine. The part worth designing around is that failing to keep them is itself a violation, independent of whether the underlying deal was clean.
What is the three-day right to cancel, and which vehicles does it cover?
Used vehicles at $50,000 or less. The buyer has three calendar days, counted from the day after the contract is executed and extended if the third day falls when the store is closed, and must not have driven more than 400 miles. The dealership may charge a restocking fee of 1.5% of the sale price with a $200 floor and a $600 ceiling, plus $1 for each mile over 250 capped at $150, and has 48 hours to refund. It does not reach new vehicles, motorcycles, vehicles over $50,000, or used vehicles sold at auction. It is a replacement rather than an addition: it supersedes the 2006 cancellation option that consumers had to buy, so that program has to be decommissioned rather than run alongside the new one.
Does the CARS Act require a separate signature on every add-on?
No. Per-add-on “express, informed consent” comes from the federal rule that was vacated in January 2025 and formally withdrawn in February 2026; it is not in the California statute, and the official form stack confirms it — one signature block over an itemized list, not a signature per item. What California requires is a written disclosure, at least once, that the add-on is not required and the vehicle can be bought or leased without it, plus a substantive standard: a dealer may not charge for an add-on the buyer would not benefit from. Seven examples are named, among them nitrogen products below 95% purity, oil-change coverage on an electric vehicle, catalytic converter marking on a vehicle that has no converter, and surface protection that voids the manufacturer’s paint warranty. Separately, the third party meant to provide the benefit generally has to be paid within 10 days of signing — an accounts-payable control, not a sales one.
How does M@B Consulting help a dealership get ready?
We work the operational side: the control points, the paperwork flow and the retention system that let a store show what it did on a given deal. In practice that means auditing where total price is calculated and how it reaches each listing feed, reworking first-response templates so the disclosure happens by process rather than by memory, building the two-year archive across all five record categories, folding the finance-office disclosures into the pre-contract form already in use, screening the F&I product portfolio against the enumerated prohibitions, and writing the cancellation-window procedure with the mileage and refund tracking it needs. We are not a law firm. For how the statute applies to your store, work with your own counsel or CNCDA — then bring us in to make their guidance operational.
M@B Consulting advises on operations and process. We are not a law firm and nothing here is legal advice or a legal interpretation of SB 766. For how the statute applies to your specific situation, work with your own counsel or your state association — and bring us in to build the process that makes their guidance operational.
SB 766 (Allen), Chapter 354, Statutes of 2025. Signed October 6, 2025; operative October 1, 2026. Adds Title 1.5B to the Civil Code, commencing with Section 1784.20. This page last reviewed August 18, 2026.
Want to know where your stores actually stand?
A short conversation is usually enough to tell whether you have a documentation problem, a process problem, or neither.