Top 10 U.S. Auto Dealer Rules for 2025 Compliance

What if a single misstep in your dealership’s operations could lead to hefty fines, revoked licenses, or lasting damage to your reputation? 

In 2025, U.S. auto dealers face an evolving legal landscape with stricter regulations and higher penalties. For instance, General Motors paid a $145.8 million penalty for exceeding emissions limits across 5.9 million vehicles. Additionally, the National Highway Traffic Safety Administration (NHTSA) has delayed updates to the five-star safety rating program, citing automaker requests for more time. These developments underscore the importance of staying informed and compliant. This guide outlines the top 10 dealership laws you must know to navigate the complex regulatory environment and protect your business.

Key Takeaways

• Implement the FTC Safeguards Rule with encryption, risk assessments, and breach reporting to protect customer data.
• Follow clear pricing, credit terms, and add-on product disclosure rules to avoid deceptive practices.
• Keep OFAC records for 10 years and strengthen identity verification to reduce fraud and identity theft risks.
• Stay compliant with state privacy statutes, conduct regular risk assessments, and ensure vendor oversight for continuous adherence to regulations.

The Importance of Car Dealership Laws

Understanding car dealership laws helps you protect your license, avoid costly penalties, and maintain customer trust consistently. To stay compliant across federal and state regulations, you need clear internal systems and processes for daily operations.

Here are the key reasons why staying updated matters and what you should focus on:

• Failing to follow federal rules can result in multi-million-dollar fines that directly impact your dealership’s profitability.
• State-specific regulations vary widely, requiring you to monitor each state where your dealership conducts sales and service.
• Clear documentation of sales, financing, and advertising practices ensures you can pass audits without facing penalties.
• Implementing internal compliance systems reduces errors, streamlines reporting, and protects both your staff and your customers.
• Staying compliant builds trust with buyers, increasing repeat sales, and strengthening your dealership’s market reputation.

To keep your dealership protected and efficient, let’s take a closer look at the rules you’ll need to follow in 2025.

Top 10 U.S. Auto Dealer Rules for Compliance

Managing the complex landscape of auto dealership regulations is essential to protect your business from legal risks and maintain customer trust. Staying informed about federal and state-level laws ensures that your dealership operates within the legal framework, safeguarding your license and reputation.

Here are the top 10 rules you must follow in 2025 to maintain regulatory compliance and safeguard your dealership:

1. Data Privacy and the FTC Safeguards Rule

Dealers must implement comprehensive written information security programs under the FTC’s amended Safeguards Rule, which now includes a mandatory data breach reporting requirement for incidents affecting over 500 consumers. 

To ensure compliance, consider the following steps:

• Encrypt Customer Data: Implement encryption protocols to protect sensitive customer information.
• Conduct Risk Assessments: Regularly assess potential risks to data security and address vulnerabilities.
• Implement Multifactor Authentication: Enhance access controls by requiring multiple forms of verification.
• Oversee Service Providers: Ensure that third-party vendors adhere to data protection standards.
• Train Employees: Educate staff on data security policies and procedures.
• File Breach Notifications: Report data breaches to the FTC within 30 days of discovery.

2. Consumer Protection and Transparency

Although the FTC’s Combating Auto Retail Scams (CARS) Rule was vacated in early 2025, dealers remain subject to Unfair and Deceptive Acts or Practices (UDAP) laws. Federal Trade Commission Transparency in pricing, add-on products, and credit disclosures remains mandatory under the Truth in Lending Act (TILA) and state UDAP equivalents.

To maintain transparency and avoid deceptive practices, consider the following:

• Provide Clear Pricing Information: Ensure that all pricing details are prominently displayed and easily understandable.
• Disclose Add-On Products: Clearly inform customers about optional add-on products and their costs.
• Offer Transparent Credit Terms: Present credit terms in a straightforward manner, avoiding hidden fees.
• Comply with TILA Requirements: Adhere to the Truth in Lending Act’s disclosure requirements.
• Stay Informed on State Laws: Keep abreast of state-specific UDAP laws and ensure compliance.

Also read: Managing and Organizing Car Dealership Operations: Best Practices and Techniques

3. Aftermarket Product Disclosures

Aftermarket items (e.g., service contracts, protection products) must be presented as voluntary and separately priced. Dealers should ensure truthful advertising, consistent pricing online and in-store, and no credit surcharges unless fully disclosed under federal financing laws.

To align with regulatory standards, implement the following practices:

• Clearly Separate Pricing: Display prices for aftermarket products separately from vehicle prices.
• Advertise Truthfully: Avoid misleading claims about the benefits or necessity of aftermarket products.
• Maintain Consistent Pricing: Ensure that prices are the same online and in-store.
• Disclose Credit Surcharges: Clearly inform customers about any additional charges related to credit.
• Comply with Federal Financing Laws: Adhere to all relevant federal laws regarding financing and disclosures.

4. Expanded OFAC Record Retention Requirements

From March 12, 2025, new OFAC (Office of Foreign Assets Control) retention rules require dealerships to keep OFAC compliance records for 10 years, doubling the former five-year requirement. This applies nationwide to any screening or sanctions documentation.

To ensure compliance with these expanded requirements, consider the following actions:

• Update Record Retention Policies: Revise policies to reflect the new 10-year retention requirement.
• Implement Secure Storage Solutions: Utilize secure digital or physical storage methods for compliance records.
• Regularly Review Records: Conduct periodic audits to ensure all records are complete and up-to-date.
• Train Staff on Retention Policies: Educate employees about the importance of record retention and compliance.
• Stay Informed on OFAC Regulations: Keep abreast of any further changes to OFAC rules and adjust practices accordingly.

5. Fraud and Identity Verification Controls

With auto lending fraud losses exceeding $7.9 billion annually, dealers are expected to employ strict ID verification, use Red Flags Rule systems, and monitor synthetic identity fraud trends. Federal Trade Commission: Integrating OFAC checks and biometric or multifactor authentication enhances compliance.

To strengthen fraud prevention measures, implement the following strategies:

• Utilize Red Flags Rule Systems: Implement systems to detect and address potential identity theft indicators.
• Adopt Biometric Authentication: Incorporate biometric verification methods to enhance identity confirmation.
• Conduct OFAC Checks: Regularly screen customers against OFAC lists to ensure compliance.
• Monitor Fraud Trends: Stay informed about emerging fraud tactics and adjust practices accordingly.
• Train Staff on Fraud Prevention: Educate employees on recognizing and preventing fraudulent activities.

6. State-Level Privacy Statutes

At least 20 states, including California, Texas, Florida, Maryland, and Virginia, enforce comprehensive data privacy acts governing consumer disclosure, consent, and opt-out processes. Dealers must adjust their compliance programs to each jurisdiction’s specific requirements.

To manage these state-specific regulations, consider the following steps:

• Identify Applicable State Laws: Determine which state privacy laws apply to your dealership.
• Implement State-Specific Policies: Develop policies that align with each state’s requirements.
• Obtain Consumer Consent: Ensure that consumer consent is obtained where required by law.
• Provide Opt-Out Options: Offer consumers the ability to opt out of data collection practices.
• Regularly Review Compliance: Conduct audits to ensure ongoing adherence to state privacy statutes.

7. Written Risk Assessments and Training

The Safeguards Rule mandates documented risk assessments, annual penetration and vulnerability testing, and continuous staff training on information security and consumer privacy procedures.

To comply with these requirements, implement the following practices:

• Conduct Regular Risk Assessments: Identify and address potential security vulnerabilities.
• Perform Penetration Testing: Simulate cyberattacks to evaluate system defenses.
• Provide Ongoing Training: Offer continuous education on security and privacy best practices.
• Document All Assessments: Maintain records of risk assessments and training sessions.
• Review and Update Policies: Regularly update security policies to reflect current threats and regulations.

8. Vendor and Service Provider Oversight

Dealers must contractually ensure that third-party vendors safeguard customer information. This includes verifying that partners maintain encryption, access controls, and other privacy protections.

To strengthen vendor compliance, consider the following actions:

• Establish Clear Contracts: Include data protection clauses in vendor agreements.
• Assess Vendor Security Practices: Evaluate the security measures implemented by third-party vendors.
• Monitor Vendor Compliance: Regularly review vendor adherence to data protection standards.
• Provide Vendor Training: Educate vendors on your dealership’s data protection expectations.
• Maintain Documentation: Keep records of vendor assessments and communications. 

9. Incident Response Planning

A written incident response plan is required, detailing internal procedures, communication chains, corrective actions, and reporting timelines in case of data breaches or security failures.

To prepare for potential incidents, implement the following strategies:

• Develop an Incident Response Plan: Create a comprehensive plan outlining response procedures.
• Establish Communication Protocols: Define clear communication channels for incident reporting.
• Identify Corrective Actions: Determine steps to address and rectify security breaches.
• Set Reporting Timelines: Establish timeframes for reporting incidents to relevant authorities.
• Conduct Regular Drills: Simulate incidents to test and refine response procedures.

10. Compliance Program Governance

Every dealership should maintain a structured Compliance Management System (CMS) supervised by a qualified compliance officer. Regular board reporting, independent audits, and annual compliance reviews are now considered.

 Let’s break down the essential steps for setting up a comprehensive compliance system.

Also read: Seven Common Compliance Challenges for Car Dealerships and How VComply Addresses Them

Implementing a Compliance Program in Your Dealership

A structured compliance program helps you manage federal and state regulations, safeguard customer data, and reduce operational risks.

To set up an effective program, follow these practical steps:

• Appoint a Compliance Officer: Designate a qualified individual to oversee all compliance activities, monitor regulatory changes, and enforce policies.
• Develop Written Policies: Create clear, documented policies covering data privacy, consumer protection, and finance disclosure requirements.
• Establish Standard Operating Procedures: Define daily workflows for risk assessments, employee training, vendor oversight, and incident management.
• Conduct Regular Training: Train all employees on compliance obligations, highlighting specific state and federal dealership laws relevant to their roles.
• Implement Monitoring Systems: Use software or manual processes to track adherence to policies, identify gaps, and generate audit-ready reports.
• Schedule Periodic Audits: Perform internal audits and review compliance logs regularly to identify non-compliance and correct issues immediately.
• Document All Actions: Maintain detailed records of risk assessments, training sessions, audits, and incident responses for regulatory verification.
• Review and Update Policies: Continuously revise your compliance program to reflect new laws, updated FTC guidance, and state-specific requirements.
• Engage Vendors and Partners: Ensure third-party service providers follow your compliance standards through contracts, assessments, and ongoing monitoring.
• Communicate Program Expectations: Clearly inform staff at all levels about their responsibilities and consequences for failing to follow compliance procedures.

Now that we’ve covered the essentials of compliance management, we’ll show you how VComply can help make the process easier.

Simplify Compliance Operations Across Your Dealership Network

From financing disclosures and emissions reporting to add-on product transparency and OFAC checks, dealership compliance demands constant coordination between F&I, sales, and admin teams. Without a connected system, even small oversights can lead to violations or delayed audits.
Building operational compliance isn’t about paperwork; it’s about keeping every sale, credit approval, and vendor transaction audit-ready.

Here’s how VComply helps auto dealerships manage compliance operations more efficiently:

• Sales & Finance Documentation Control: Standardize TILA, UDAP, and credit disclosure workflows so every deal file meets federal and state requirements.
• Add-On Product Oversight: Track approvals, pricing disclosures, and consent logs for warranties, GAP, and protection plans to prevent deceptive practice violations.
• License & Permit Tracking: Automate renewal alerts for dealer licenses, salesperson certifications, and regional registrations to avoid lapses.
• OFAC & Identity Verification Records: Maintain buyer screening data, red-flag alerts, and sanctions documentation per the new 10-year retention rule.
• Emissions & Safety Compliance: Store EPA and NHTSA documentation for emissions certifications, recall notices, and safety checks in one place.
• State Privacy Compliance: Configure data privacy controls for customer records according to California, Texas, and Florida statutes.
• F&I Team Training Management: Assign and track recurring compliance training for finance and sales teams on lending, disclosure, and privacy laws.
• Audit Preparation Dashboard: Generate inspection-ready reports for FTC Safeguards Rule, GLBA, and sales audits instantly.

Unify all dealership compliance activities, documentation, and audits in one powerful ComplianceOps with real-time oversight and control.

Dealership Success Story with VComply

A multi-location U.S. car dealership struggled with manual compliance processes, siloed spreadsheets, and inconsistent risk management across six locations. VComply centralized compliance operations, automated reporting for GLBA and IRS 8300, and simplified F&I and policy management for all teams. As a result, the dealership increased operational efficiency by 74%, completed compliance activities 82% faster, and significantly reduced regulatory reporting time.

Start your free trial now and experience automated compliance management for your dealership firsthand.

Final Thoughts

Compliance with U.S. car dealership laws requires consistent attention to federal and state regulations, risk management, and employee training.  Failing to adhere can lead to significant fines, license suspension, and damage to customer trust and dealership reputation. By understanding and implementing these top 10 rules, your dealership can maintain legal compliance and operational stability throughout the year.

Implementing a structured compliance program becomes much simpler when supported by a dedicated platform like VComply. VComply helps your dealership stay updated with changing regulations, securely manage customer data, and track all compliance activities efficiently. With automated alerts, audit-ready documentation, and workflow management, VComply ensures your dealership remains inspection-ready while reducing operational risks.

See VComply in action, schedule your demo today, and simplify dealership compliance instantly.

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