As the legal environment for consumer financial services continues to shift through 2025, regulatory activity in the automotive sector has emerged as a fast-evolving area of focus for industry stakeholders. Recent developments at the Federal Trade Commission, Consumer Financial Protection Bureau, and multiple state legislatures have added complexity to compliance, underscoring the importance for institutions to remain agile and prepared during times of uncertainty.
The following key takeaways examine recent Federal Trade Commission (FTC) enforcement actions, evolving state-level initiatives, key compliance risks related to credit reporting, and the shifting regulatory posture of the Consumer Financial Protection Bureau (CFPB or the Bureau) in the automotive finance space.
While the FTC’s primary role as an agency is to enforce consumer protection and competition laws in the United States, it has also engaged in rulemaking efforts when necessary. In January 2024, the agency finalized the Combating Auto Retail Scams (CARS) rule, a significant legislative proposal designed to prohibit deceptive practices and misrepresentations in the consumer car buying process.
The rule was later stayed by litigation and eventually vacated by the US Court of Appeals for the Fifth Circuit, with the court asserting procedural missteps by the FTC in its rulemaking process. Since then, the agency has not provided an update. However, the court’s decision not to address the rule’s substantive provisions could signal that, if proper procedures are followed, a revised version may have a viable path forward.
The FTC is also actively litigating in multiple automotive consumer protection cases, several of which involve allegations of deceptive add-on fee practices. In these cases, the FTC has worked in partnership with state attorneys general (including in Maryland and Illinois) to back consumers against automotive groups that have allegedly overcharged and misrepresented whether add-on features were required at the time of purchase.
Given the FTC’s longstanding focus on the automotive market, the expectation is that acting Chairman Andrew Ferguson will continue to pursue more consumer protection cases going forward.
As the CFPB’s pause on supervision and enforcement activity continues, consumer advocates have urged state AGs to step in to fill the void. In addition to the active cases involving Maryland and Illinois, the AGs in Massachusetts, Colorado, and New York have also represented consumers in litigation related to auto lending, underwriting practices, and practices related to after-market products. As with the FTC, state AGs are expected to continue to litigate on behalf of consumers and advance enforcement of issues in banking and automotive finance.
Elsewhere in state-level efforts, California introduced its own CARS Act legislation in February 2025, aimed at implementing many of the same provisions proposed in the aforementioned FTC CARS rule. Though not yet implemented, the legislation is advancing swiftly through the legislature and could become law later this year. Conversely, California’s Data Protection and Privacy statute has been in effect since 2020 and allows consumers to opt out of precise geolocation sharing with third parties—a practice that has become increasingly common in the automotive industry.
Similarly, Massachusetts’ Vehicle Data Law went into effect in February 2025 despite multiple legal and regulatory challenges, allowing consumers to grant independent repair shops access to their vehicle telematics data. How legislative efforts continue to develop at the state level will be an important area to monitor for the automotive industry in the coming months.
For auto lenders, the current legal environment around loan pricing and consumer reporting is an increasingly high-risk compliance area due to the extensive reach of industry statutes and severe penalties for violations. The federal Fair Credit Reporting Act (FCRA), initially enacted in 1970, regulates how consumer credit information is collected, used, and shared. For furnishers—such as creditors, lenders, and service providers—the law imposes several regulatory obligations related to credit reporting, including the duty to avoid inaccurate reporting information and to promptly and reasonably investigate disputes submitted by consumers.
When it comes to FCRA enforcement, there are two primary avenues: private rights of action, which can be brought by individual consumers for incorrect credit reporting or failure to investigate a dispute, and administrative enforcement actions, which are brought by agencies like the CFPB and FTC and address systemic or institutional discrepancies.
Recent private litigation has highlighted compliance pitfalls for furnishers, including failures to flag disputes to credit bureaus and furnish accurate delinquency dates. Courts have also scrutinized unauthorized credit pulls by dealers post-sale, reinforcing the need for robust procedures to avoid FCRA violations in both reporting and permissible use contexts.
The CFPB continues to play a central role in overseeing auto finance, with its authority extending to large nonbank lenders and banks with assets over $10 billion. While its supervision spans several statutes such as the FCRA, Truth in Lending Act, Equal Credit Opportunity Act, and Fair Debt Collection Practices Act, recent actions have increasingly focused on unfair, deceptive, or abusive acts or practices, particularly in areas like auto debt collection and electronic payments.
However, the Bureau’s recent operational retreat—characterized by the revocation of over 60 guidance documents in May 2025 (see our June 4, 2025 LawFlash)—has created regulatory uncertainty. Although many advisory and compliance materials were rescinded, key enforcement signals remain available through Supervisory Highlights, which continue to provide insight into areas of scrutiny, including annual percentage rate marketing and furnishing-related FCRA violations.
With the CFPB’s current posture in flux, oversight from prudential banking regulators, in addition to state attorneys general and the FTC, is expected to expand. For financial institutions, maintaining robust compliance management systems and proactively auditing consumer-facing operations will be critical to navigating a more fragmented regulatory environment.