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Alain Kinaly 1/26/26 Alain Kinaly 1/26/26

New Protections for Used Car Buyers – Introducing the California Auto Retail Scams Act (CARS)

Despite being the state that sells the most used cars in the nation, California’s used car laws have left a lot to be desired over the years. Besides some basic required minimum disclosures, car dealers could sell a vehicle, the engine could drop out as the buyer was pulling off the lot, and so long as the vehicle was sold “As Is,” there was little to no legal recourse to protect the consumer. Well, that is drastically changing later this year.

On October 6, 2025, Governor Newsome signed Senate Bill 766, known as the California Combating Auto Retail Scams Act. (CARS) (Civ. Code Sections 1784.1 et seq.) SB 766 represents the most significant modification to the vehicle sale process since California's Car Buyer's Bill of Rights in 2005 (can you believe that was 20 years ago already) and enacts sweeping consumer protections aimed at eliminating deceptive practices in the retail sale and lease of motor vehicles.

SB 766 introduces consumer protections intended to:

Prevent bait-and-switch pricing and misleading advertising;
Ensure full transparency of total purchase or lease costs before contract signing;
Eliminate valueless or forced add-on charges that provide no benefit to buyers; and
Provide a first of its kind three-day review period for used car purchases.

While most bills take effect immediately the year after they are signed, the implementation of CARS was delayed until October 1, 2026 (Civ. Code § 1784.28), to give dealers time to adapt to the new requirements, change their paperwork, amend their contracts, conform their advertisements and update their signage.

So, what’s in the new bill?

Prohibited Conduct and Consumer Rights (Civ. Code § 1784.40)

Under the new law, it is a violation of the CARS Act for any dealer to make misrepresentations about:

· The costs or terms of purchasing, financing, or leasing a vehicle.

· Any costs, limitation, benefit, or any other aspect of an add-on product or service.

· Whether the final contract is for the lease or sale of a motor vehicle (but does not restrict the ability of a dealer to present multiple financing and lease payment options to the customer prior to the sale or lease of a motor vehicle).

· The availability of vehicles at a total price communicated by the dealer.

· Whether any consumer has been or will be preapproved or guaranteed for any product, service, or term.

· Information on or about a consumer’s application for financing.

· Whether the dealer will keep cash downpayments or trade-in vehicles, charge fees, or initiate legal process, or any action if a transaction is not finalized or if the consumer does not go forward with the transaction.

· Whether, and if so, when, a dealer will pay off some or all of the financing or a lease on a consumer’s trade-in vehicle, and what happens if a dealer fails to pay off the trade-in vehicle within the time period required by law

· The remedy available if a dealer fails to sell or lease a vehicle at the total price.

· Whether, or under what circumstances, a vehicle may be repossessed.

· Whether a vehicle can be moved outside of California or outside of the United States.

Mandatory Disclosures (Civ. Code § 1784.41)

The act now makes it a violation for any auto dealer to fail to disclose clearly and conspicuously a vehicle’s total price in any advertisement that references a specific vehicle for sale.

Dealers must disclose the total price of a vehicle in advertising and initial written communications. This must include all non-optional charges and fees but may exclude statutorily permitted items such as government taxes, title, and license fees.

Dealers must conspicuously disclose that add-on products and services — such as service contracts, insurance offerings, or GAP coverage — are optional and not required to purchase or lease the vehicle.

When referencing monthly payments, dealers are required to disclose the total cost over the life of the financing or lease agreement and make clear any cost increases associated with lower monthly payments. These requirements are intended to prevent low monthly payment advertising from obscuring the true cost of credit. If the total amount disclosed assumes the consumer will make a cash downpayment or has a trade-in vehicle, the dealer must disclose the amount of that downpayment or the trade in value to be provided by the consumer. This disclosure has to be in writing and be clear and conspicuous.

If the dealer makes any written comparison between payment options during the negotiation to purchase or lease a specific vehicle that includes discussion of lower monthly payments, the dealer must also disclose that lower monthly payments often increase the total amount the consumer will pay to purchase or lease the vehicle.

These transparency measures are designed to curb the “hidden fee” tactics previously prevalent in auto retail negotiations.

Unlawful Add-Ons (Civ. Code § 1784.42)

The Act makes it unlawful for dealers to charge for certain items unless those products provide clear consumer benefit. Examples of such “junk” add-ons included in the Act are:

(1) Nitrogen-filled tire-related products or services that contain less than 95-percent nitrogen purity.

(2) Products or services that do not provide coverage for the vehicle, the consumer, or the transaction.

(3) A GAP agreement that is not in compliance with Section 2982, 2982.2, or 2982.12.

(4) A service contract if the service contract is void due to preexisting conditions, including prior damage from a crash or flood or preexisting mechanical conditions.

(5) Oil changes for electric vehicles.

(6) Catalytic converter markings for a vehicle that does not have a catalytic converter.

(7) Surface protection product that renders the manufacturer’s warranty for the paint job void.

Right of Cancellation & Cooling-Off Period for Used Vehicles (Civ. Code § 1784.41)

A hallmark feature of SB 766 is its creation of a three-day right to cancel for used vehicle purchases and leases for vehicles that cost $50,000 or less. This “cooling-off” period for used cars is a, first in the nation, protection intended to address issues that may not be apparent during a brief test drive, such as hidden damage, mechanical problems, or unexpected financing outcomes.

This provision replaces the prior contract cancellation option agreement with a mandatory cancellation right that cannot be waived by the buyer.

The new cancellation period must not end earlier than the dealer's close of business on the third calendar day after the vehicle is purchased. Therefore, a vehicle bought on a Monday, the end of the third day would be the close of business on Thursday.

The dealers are, however, allowed to charge a restocking fee equal to 1.5% of the vehicle price, with a $200 minimum and a $600 maximum. Additionally, the customer may not drive more than 400 miles during the three-day period. If the customer drives more than 250 miles during the three-day period, the dealer may charge an additional $1 per mile over that amount (for a maximum of $150). This is in addition to the restocking fee.

SB 766 adds new cooling-off language for the retail installment sale and lease contracts and requires dealers to update the cooling-off signage posted in their offices and any other cubicle or room where written terms are discussed and contracts are regularly executed. The updated signage must be in 36-point font and read the following:

"CALIFORNIA DOES NOT HAVE A COOLING-OFF PERIOD FOR NEW VEHICLES. BUT IF YOU PURCHASED OR LEASED A USED VEHICLE FOR $50,000 OR LESS, YOU HAVE 3 DAYS TO CANCEL THIS CONTRACT FOR ANY REASON. ADDITIONAL RESTRICTIONS MAY APPLY, INCLUDING A RESTOCKING FEE. ASK THE DEALER FOR MORE INFORMATION ABOUT HOW TO EXERCISE THIS RIGHT."

Recordkeeping (Civ. Code § 1784.44)

SB 766 mandates that dealers create and retain all records necessary to demonstrate compliance with the Act for a period of two years from the date the record is created.

The California Combating Auto Retail Scams Act represents one of the most comprehensive state-level efforts to reform auto retail practices in the United States. By making clear prohibitions on deception, mandating transparent pricing and disclosures, and creating a meaningful right of cancellation for used car buyers, the Act aims to align dealer conduct with consumer expectations of fairness and clarity.

With an operative date of October 1, 2026, California will become a national leader in consumer protection within the automotive marketplace.

Alain Kinaly 8/10/23 Alain Kinaly 8/10/23

The Risks Of Purchasing A Used Car In California: Buyer Beware!

When you need a car, buying a used car can make sense for a lot of reasons. In California, a state known for its car culture, the used car market is thriving. However, what might seem like a good deal, can be hiding significant dangers that potential buyers should be aware of:

1. Salvage Titles and Flood-Damaged Vehicles

One of the most significant dangers when buying a used car in California is the risk of unknowingly buying a vehicle with a salvage title or flood damage. Salvage titles indicate that the car has been deemed a total loss by an insurance company due to being stolen, severe damage, or a major collision. Flood-damaged vehicles can have hidden issues, and even if they look fine initially, problems can pop up the road, leading to costly repairs.

2. Odometer Rollback Fraud

Odometer rollback is the illegal tampering with the vehicle's mileage to make it appear less used than it actually is. A lower odometer reading can trick buyers into thinking they are getting a better deal, but this can lead to premature mechanical failures and unexpected repairs.

3. Lemon Law Issues

California's Lemon Law is designed to protect consumers who unknowingly purchase defective vehicles. However, navigating the complexities of the Lemon Law can be challenging, and some sellers may exploit it by selling problematic cars without disclosing their issues, leaving buyers with a legal battle on their hands.

4. Safety Recalls

Used cars can still have safety recalls, and buying a vehicle with open recalls can put you and your passengers at risk. Always check the National Highway Traffic Safety Administration (NHTSA) website for any outstanding recalls on the vehicle you want to buy and make sure they are fixed before purchasing the vehicle.

5. Hidden Mechanical Problems

While a used car may appear flawless on the surface, it could be hiding a lot of mechanical problems underneath. Issues with the engine, transmission, suspension, or other other parts may not be immediately apparent during a test drive, leading to expensive repairs shortly after the purchase. If you buy the car AS IS, you could be stuck. ALWAYS ask to have a used vehicle inspected by your own mechanic before buying it. If the dealer refuses that’s a BIG RED FLAG.

6. Unreliable Vehicle History Reports

Although vehicle history reports can provide valuable information about a car's past, they are not foolproof. Some incidents, such as crashes or maintenance, may go unreported, leading buyers to believe they are getting a clean and problem-free vehicle when that might not be the case.

7. Title Transfer and Paperwork Issues

Improperly completed title transfers and missing or forged paperwork can lead to legal problems down the road. Buyers must ensure that all necessary documents are appropriately filled out and legitimate to avoid future headaches.

While buying a used car in California can be a cost-effective option, it comes with risks that buyers must be aware about. To minimize the dangers, always do your due diligence, conduct a comprehensive vehicle inspection, obtain a reliable vehicle history report, and have a trusted mechanic inspect the car before finalizing the purchase. By doing so, you can protect yourself and enjoy a smooth ride with your used car purchase.

In the used car market, it's essential to be cautious and remember the old adage: buyer beware!

Alain Kinaly 10/1/20 Alain Kinaly 10/1/20

What To Do If You've Been Involved In A Hit And Run

You’re stopped in traffic…WHAM! Someone rear-ends you.

Then the person that hit you takes off!

What should you do?

DO NOT CHASE AFTER THEM. It’s dangerous and could lead to more problems than the ones you are stuck with now.

IF you can do so SAFELY:

Take a picture of the other vehicle’s license plate before it gets away.
- If you cannot, try to remember the license plate number and write it down as soon as possible.
Try to remember the color, make and model of the vehicle that hit you.
IF your car is drivable, carefully move it to a safe area.

Call the police or highway patrol and file a report:

Tell them your location; describe the vehicle that hit you - including the license plate number and what happened.
Make sure you write down the police report number and the name and number of the officer or keep the card they give you. If the police find the person that hit you, you may be able to get them or their insurance company to pay for your damages.

After you have file a police report, call your auto insurance company and open a claim.

If the person that hit you cannot be found, you may still be able to get your injuries, medical treatment, and wage losses covered through your own auto insurance if you have Uninsured Motorist coverage. However, the law requires the following in order for you to be covered under your Uninsured Motorist insurance policy:

1. There must be physical contact between the hit and run vehicle and either you or your vehicle.

If someone cuts you off causing you to swerve and hit a tree, it wouldn’t kick in since the other vehicle did not actually hit your vehicle.

2. The hit and run must be reported to the police with 24 hours.

Don’t delay – call the police right away.

3. File a claim with your insurance company within 30 days of the hit and run.

Open a claim right after you file the police report.

THE SOONER YOU FILE THE POLICE REPORT AND OPEN A CLAIM WITH YOUR INSURANCE COMPANY - THE BETTER CHANCE THAT PERSON THAT HIT YOU MIGHT GET CAUGHT

Still unsure what to do? Not sure if you have Uninsured Motorist coverage? Forget to do one of the above?

We’ll answer your questions, give us a call.

The information on this website is for general information purposes only and nothing on this site should be taken as legal advice for any individual case or situation, including your own. The information contained on this website is not intended to create and receipt or viewing of it does not constitute an attorney-client relationship with Kinaly Law. Any submission of and/or our review of a submitted case or question may not be considered privileged or confidential and does not establish an attorney-client relationship.

Alain Kinaly 10/1/20 Alain Kinaly 10/1/20

What Is Uninsured And Underinsured Motorist Coverage & Do I Need It?

California law requires that every driver have liability insurance of at least $30,000 PER PERSON / $60,000 PER OCCURRENCE for Bodily Injury or Death and $15,000 for Property Damage.

Auto insurance companies in California are required to offer Uninsured Motorist/Underinsured Motorist coverage when someone buys liability insurance. You are not required to buy this coverage but you must sign a waiver if you choses not to.

So do you need Uninsured Motorist/Underinsured Motorist coverage?

Yes, and here’s why…

Even though the law requires it, not everyone driving has liability insurance. An estimated 15.2% of drivers in California do not have car insurance. [3] That’s over a 1 in 7 chance if someone hits you they may be uninsured!

If someone without insurance hits you, they may not always personally be able to pay for the damage they cause you. When this happens, having Uninsured Motorist coverage is crucial to cover yourself.

In California, Uninsured Motorist coverage and Under Insured Motorist coverage is the same. You don’t purchase each separately - you’re covered in both situations.

Uninsured vs. Under Insured Motorist Coverage

UNINSURED MOTORIST (UM)

When a driver that doesn’t have insurance hits you OR you are a victim of a hit and run your own insurance may step in and cover your medical treatment, lost wages, pain, and inconvenience, among other things – up to your PER PERSON Uninsured Motorist limits.

The PER OCCURRENCE limit is the most the insurance company will pay out for the entire collision when there is more than one person in your vehicle. Similar to liability limits, each injured person or individual killed cannot get more than the PER PERSON amount. That is the same whether there were 2 or 7 people in your vehicle.

This may also cover you if you are a passenger in someone else’s car that gets hit.

UNDERINSURED MOTORIST (UIM)

Underinsured Motorist coverage is similar to Uninsured Motorist coverage, but it only kicks in when the person that hit you has insurance and it’s not enough to fully cover your injuries/death. Your Underinsured Motorist coverage may also cover you when you are a passenger in someone else’s car that gets hit.

HOWEVER, for your Underinsured Motorist coverage to kick in, your Underinsured Motorist limits must be higher than the liability limits of the person that caused the crash.

For example, if the person that hits you only has a minimum liability policy of $30,000.00, your Underinsured Motorist coverage must be more than $30,000.00 for it to apply. If you only have $30,000.00 in Underinsured Motorist coverage it does not apply because it is the same amount, not more.

For your Underinsured Motorist coverage to kick in, the full PER PERSON or PER OCCURRENCE – if there are multiple people involved – liability limits must be fully paid out by the at fault person’s insurance company. You CANNNOT use your own Underinsured Motorist coverage unless ALL the available insurance limits that cover the person that caused the collision are completely paid out.

Still unclear about what underinsured motorist coverage is? Not sure if you have underinsured motorist coverage?

Let us know and we’ll answer your questions.

Alain Kinaly 9/27/20 Alain Kinaly 9/27/20

What Is Liability Insurance?

California law requires that every driver have liability insurance of at least:

$30,000 PER PERSON/$60,000 PER OCCURRENCE for Bodily Injury or Death

$15,000 for Property Damage

This means that if a driver causes a crash, that driver’s insurance will pay for any damage they cause up to liability policy limits.

The Bodily Injury limits cover: medical treatment, lost wages, pain, inconvenience, among other things, or in the worse case – death.

The PER PERSON limit is the max the insurance company will pay for per person injured/killed in the crash. Regardless of the actual value of their losses.
The PER OCCURRENCE amount is the max the insurance company will pay for the crash in total, if there is more than one person injured/killed.
- This limit applies regardless of how many people are involved.
  - However, each person injured/killed cannot get more than the PER PERSON limit.

The Property Damage limits cover:

Repairs to the vehicles that gets damaged
Car rental while the vehicles are being repaired
Personal property in the vehicles that is damaged
- This limit is the most that will be paid out in total, regardless of how many vehicles or property is damaged.

IF YOU ARE DRIVING AROUND WITHOUT INSURANCE: YOU MAY BE PERSONALLY RESPONSIBLE FOR PAYING THE DAMAGES YOU CAUSE IN CRASH.

Of course the limits above are just the minimums required. You should always get a policy that is higher. This is especially true if you have any assets, such as a house. The reason is that if you cause a crash and your liability limits are not enough to cover the damages you cause, you may be personally responsible for anything over the limits. Typically your insurance company is only required to pay up to your liability limits.

In addition to liability insurance, it is important to also have Uninsured Motorist/Underinsured Motorist coverage.

Are you more confused now? Still not exactly sure what liability insurance is?

Let us know and we’ll answer your questions.

Alain Kinaly 4/9/20 Alain Kinaly 4/9/20

Why You Need Car Insurance - Even If The Accident Is Not Your Fault

People ask me sometimes, “Do I reeeeeally need auto insurance?”

Short Answer: YES. The law requires it!

If you do not have auto insurance and you cause a collision, you will personally have to pay for the damages and injuries you caused the person you hit.

Ya, ya, ya but what if I drive carefully and don’t cause any crashes – do I really still need it? YES! Notice a theme here?

Here why: Let’s assume you have never caused an accident. You are a very good driver: you obey all the rules of the road and you drive defensively when you notice someone driving erratically. Then someone texting while driving, runs a red light and T-bones you or fails to notice you’ve stopped and rear-ends you.

It really sucks, but it’ll be okay because someone else caused the crash and that person or their insurance “should” pay for everything, right?

Not exactly. Even though the crash was not your fault, you were driving without auto insurance – so you are considered a Proposition 213 driver. What that means is you WILL NOT be compensated for any pain, inconvenience, or suffering.

You are still able to recover for the damage to your vehicle, a rental while your car undergoes repairs, medical bills and lost wages for time missed because the injuries caused by the crash.

That may not seem like a big deal, but if you are a Prop 213 driver who is injured for any period of time – you are not going to get a fair and full settlement. All the time you spend in pain, causing you to miss time with your family and friends, traveling, exercising, or going to school – you get NO COMPENSATION FOR.

Let that sink in. You WILL NOT get compensation for your pain and suffering.

Imagine not being able to pick up and play with your kids because your back is locked up and you’re stuck lying on the couch or bed in pain all day. Imagine you cannot workout or play sports for months because your arm or leg is broken. Sorry, not only is that scar going to remind you of the crash forever but your elbow will always be crooked. AND you get nothing for dealing with all this because you were driving without car insurance.

So do you really need auto insurance? ABSOLUTELY!

ONE MORE THING ABOUT PROP 213: If someone crashes into you but you’ve been drinking or are on drugs – You’re also considered a Prop 213 driver. Even if you had auto insurance at the time and someone else was at fault for the crash! Yet another reason you shoulder NEVER drive under the influence.

Still confused or have any questions? Give Kinaly Law a call right now: (949) 438-1546.