What the CARS Act Means for Theft-Protection Add-Ons

California's Combating Auto Retail Scams (CARS) Act became operative on October 1, 2026. If you sell or lease vehicles in California, it changes how add-on products, including theft protection, are presented, charged for and documented.

There's also confusion about which "CARS" applies. The Federal Trade Commission's CARS Rule, a separate federal regulation, was vacated by a federal appeals court in January 2025. California's law is a state statute, and it is now operative.

This post walks through what the California law says about add-ons, quoting the statute, and how a theft-prevention product built to be optional, disclosed and real fits. It is general information, not legal advice.

The short version: California's CARS Act makes it a violation to misrepresent an add-on, to skip the written disclosure that the buyer can purchase the vehicle without it, or to charge for an add-on the buyer wouldn't benefit from, and it asks dealers to keep records for two years, so the easiest theft product to sell well is one that's optional, explained honestly and working on the car.

1. Which CARS Are We Talking About?

The federal rule was vacated. Two dealer associations challenged the FTC's Combating Auto Retail Scams Trade Regulation Rule. On January 27, 2025, the U.S. Court of Appeals for the Fifth Circuit found that the FTC had failed to issue an advance notice of proposed rulemaking, in violation of its own regulations, and ruled: "we GRANT the petition for review and VACATE the CARS Rule." (Fifth Circuit opinion, No. 24-60013)

California's law is the one in force. SB 766, the California Combating Auto Retail Scams (CARS) Act, was approved by the Governor on October 6, 2025, as Chapter 354 of the Statutes of 2025. Section 1784.28 of the Civil Code reads: "This title shall become operative on October 1, 2026."

Not every sale is covered. The act's definition of a vehicle excludes, among others, wholesale sales, fleet sale transactions, sales to commercial purchasers that buy five or more vehicles a year for business use, and vehicles with a gross vehicle weight rating of 10,000 pounds or more (Section 1784.31(f)(2)). Ask counsel how that maps to your sales mix.

2. What Counts as an Add-On

The definition is broad. Section 1784.31(a) defines an add-on as "any product or service not provided to the purchaser or lessee or installed on the vehicle by the vehicle manufacturer and for which the dealer, directly or indirectly, charges a purchaser or lessee in connection with a vehicle sale, lease, or financing transaction."

Theft protection sold by the dealer reads like that definition. A theft-prevention product integrated after the vehicle leaves the factory, and charged for in the deal, appears to fall within it. California's conditional sale contract rules in Civil Code Section 2982, which SB 766 also amends, list "A charge for a theft deterrent device" as its own item. Plan on treating it as an add-on.

3. Three Rules That Shape the Add-On Conversation

Describe it accurately. Under Section 1784.40(b), it is a violation to make any misrepresentation regarding material information about "Any costs, limitation, benefit, or any other aspect of an add-on product or service." For theft protection, that covers both what it does and what it doesn't do.

Say it's optional, in writing. Under Section 1784.41(b), when a dealer makes a written representation about an add-on while negotiating for a specific vehicle, the dealer must disclose at least once, in writing and clearly and conspicuously, that the consumer "can purchase or lease the vehicle without the add-on." If the deal is negotiated primarily in one of the languages listed in Civil Code Section 1632(b), the disclosure is also provided in that language.

Only charge where the buyer benefits. Section 1784.42(a) says: "A dealer may not charge for an add-on product or service if the vehicle purchaser or lessee would not benefit from the add-on product or service." Section 1784.42(c) adds that a dealer may still charge for an add-on "if the add-on product or service is selected by, and would benefit, the vehicle purchaser or lessee." Section 1784.42(b) also sets a 10-day window to pay the provider of the add-on, unless a later-payment agreement leaves the buyer's coverage unaffected.

4. Keep the Record for Two Years

What the statute asks for. Section 1784.44(a) says a dealer "shall create and retain, for a period of two years from the date the record is created, all records necessary to demonstrate compliance with this title." The list includes records showing that add-ons in a consumer's contract meet Section 1784.42, proof of timely payment for add-ons, written inquiries related to add-ons, and cancellation requests under the new three-day right to cancel for used vehicles priced at $50,000 or less (Section 1784.43).

What that suggests for theft protection. If the question is whether the buyer benefits, the useful evidence is that the product was on the vehicle and working. Keep the integration and test record, the delivery steps and the signed disclosure in the deal file.

5. Optional, Disclosed and Real

Optional. Present theft protection as a choice the buyer makes, with the written disclosure in place. Titan is designed as a theft-prevention product that's easier to explain than recovery-only systems, and a product that's easy to explain is easier to offer without pressure.

Disclosed. Explain what it does: when it's armed, the vehicle won't drive away, key or no key, with tamper alerts by app, email or SMS and live location over GPS and LTE. Explain the limits too: protection depends on the vehicle being armed, by phone, auto-lock or schedule, and Titan adds a layer alongside the factory immobilizer rather than replacing it. Our comparison of Titan and factory immobilizers lays out the difference.

Real. The benefit has to exist on the car. Titan fitment engineers integrate every unit, and every unit is tested before handover, with app and encrypted Bluetooth access configured. When the vehicle is sold, Titan stays integrated and the new owner gets the Titan Secure app.

Make the Honest Version the Easy Version

The CARS Act doesn't ban theft protection. It asks dealers to describe add-ons accurately, say in writing that they're optional, charge only where the buyer benefits and keep the records. A product that works on the car, and that a buyer can see working, makes each of those easier. Review your menus, scripts and deal-file checklist with counsel now.

See how Titan works for dealers, or estimate the F&I and reinsurance value with our ROI calculator, which is illustrative only, and walk through your own numbers with us.