California Senate Bill 766 (SB 766), a significant new automotive consumer-protection law, will take effect in October 2026. The Senate Bill directly affects how dealerships train their staff, advertise vehicles, structure sales, document and retain disclosures, and manage post-sale risk. The statute centers on shifting post-sale risk and accountability onto dealerships, most notably through a mandatory 3-day right to return for used vehicles, while also tightening requirements around price transparency, optional product legitimacy, and long-term documentation and record retention. For dealerships, understanding SB 766 (CARS Act) is largely about aligning advertising, sales conversations, and written documentation with how pricing is actually presented and charged.
The most important takeaway: Compliance failures that were once operational issues will now carry consumer-law exposure. The issue is no longer as simple as whether the vehicle was a lemon or not, or whether the vehicle’s prior history was disclosed or not. You can sell a perfectly good vehicle and still be sued for technical violations. Dealers must adapt by employing low-cost AI-driven solutions and specialized software, as attempts to comply without such tools and without trained staff and proper legal guidance is impossible.
SB 766 (CARS Act) is a California statute that reshapes used vehicle sales by shifting more risk and accountability onto dealerships, most notably by creating a mandatory 3-day right to return for most used vehicles under $50,000. It also tightens consumer-protection standards by strengthening how pricing must be presented in advertising and early communications, restricting certain optional products, and expanding documentation and record-retention requirements. The intent of the law is to reduce consumer confusion and prevent dealerships from relying on pricing inconsistencies, misleading add-ons, or weak recordkeeping later in the transaction process.
SB 766 generally applies to any dealership advertising and selling vehicles to California consumers, including:
If a dealership advertises a price to the public, SB 766 (CARS Act) should be considered part of that advertising framework.
From a practical standpoint, SB 766 (CARS Act) issues will likely arise from:
Enforcement attention will likely center on whether advertised prices, mandatory disclosures, return rights, and transaction records all tell the same, verifiable story.
For the first time, California will impose a statutory return policy on used vehicle sales.
Key rules:
This represents a fundamental shift in risk allocation, moving return risk squarely onto the dealer.
Under SB 766 (CARS Act), dealerships are expected to ensure that advertised prices:
Fees that may typically be excluded from the advertised price when properly disclosed generally include:
The focus is not on eliminating fees, but on how and where they are presented.
Dealers must now disclose the true total price much earlier in the sales process.
What’s required:
Pricing errors will no longer be marketing issues, they will be compliance violations.
SB 766 directly targets optional products that do not provide a real, lawful benefit to the consumer.
Products that may no longer be sold include:
Used-car F&I menus, especially for subprime or older inventory, will face increased scrutiny.
Dealers must retain extensive documentation, including:
Expect audit-style enforcement, not just complaint-driven investigations.
California is moving towards a retail-style return model for used vehicles. At the same time, dealers and their staff must take steps towards complying with the law and establishing verifiable processes and records ahead of time, as technical violations are sure to invite plaintiff’s attorney’s and consumer lawsuits. This places significantly more risk on used car dealers with every sale.
The strategic reality:
We expect that used car prices will increase as Dealers implement cost increasing operational and compliance procedures. Dealers who adapt early, by employing AI driven solutions and specialized software will be far better positioned to survive and compete in this new environment.
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SB 766 reshapes used-vehicle sales and dealer advertising by requiring a truthful “total price” in advertising and the first written communication (with limited exclusions for government-imposed fees), imposing a mandatory 3-day right to return for qualifying used vehicles, tightening rules on optional products, and expanding documentation and two-year record-retention requirements for audit-style enforcement.
Yes. It applies to both new and used dealers. For used vehicles priced $50,000 or less, the law creates a statutory 3-business-day return right for buyers.
Generally no. Dealer-added charges must be included in the advertised “total price.” The main limited exceptions are government-imposed fees (sales tax, DMV/registration, etc.) if properly disclosed. The document (doc) fee may be excluded, but most other dealer fees must be rolled into the advertised total.
Yes. It covers dealership websites, third-party listing platforms, and in-store displays. Listings must be removed promptly once a vehicle is unavailable (48-hour window).
Risks include consumer complaints, regulatory inquiries, enforcement actions (including audit-style reviews), required refunds/returns, and reputational and financial penalties for inconsistent pricing, improper add-ons, or poor recordkeeping.
No. Verbal statements must match written pricing and disclosures. The law prioritizes written, preserved communications (the “first written communication” is critical), and using personal phones/texts for price communications can be an automatic violation if records aren’t preserved.
Buyers of used vehicles priced at $50,000 or less have 3 business days to return the vehicle. This is a statutory buyer right that shifts return risk onto the dealer.
Dealers may charge a restocking fee equal to 1.5% of the purchase price (minimum $200, maximum $600). Mileage allowances and overage charges are permitted: the law contemplates mileage limits (commonly allowing up to 400 miles) and permits charging $1 per mile over 250 miles, capped at $150.
Dealers must follow and document the return process precisely (restocking fee calculation, mileage reconciliation, refunds). Return transactions, refunds, and any supporting documentation must be kept and be auditable.
Dealers must retain advertisements, all price communications (including the first written communication), signed deal jackets, proof of optional-product benefits, return/refund records, and written customer complaints for at least two years. Records should be kept in a way that survives personnel changes (so salesperson personal phones/texts as the first written communication are not acceptable).
Yes, but only if the product provides a real, lawful consumer benefit and is properly documented. SB 766 targets products that offer little/no lawful benefit (examples flagged by the law include certain nitrogen tire programs, GAP products that don’t comply with CA law, service contracts voided by pre-existing conditions, oil-change packages sold for EVs, and paint-protection products that void factory warranties). Dealers should document product benefits and compliance.
Listings should be removed promptly. The law expects removal within 48 hours after a vehicle becomes unavailable.
Ensure every advertised price reflects the dealer-added charges (or clearly explains allowed exclusions), include the “total price” in the first written communication and retain it, align verbal scripts to written pricing and return terms, stop relying on personal phones for official price communications, document optional-product benefits, and implement a documented process for the 3-day returns and record retention. Use AI driven solutions and specialized software and have experienced lawyers at the ready to answer questions.
Enforcement will look for a single, verifiable story across advertising, the first written communication, deal jackets, return records, and optional-product documentation. Pricing errors, undocumented add-ons, inconsistent verbal vs. written pricing, failure to honor return rules, or poor recordkeeping are likely triggers.
