Car buyers will have greater protections from junk fees and unethical sales tactics under a new regulation set to take effect in July – a rule which includes additional safeguards for servicemembers.

The Combating Auto Retail Scams (CARS) Rule could save consumers $3.4 billion, according to the Federal Trade Commission (FTC), which announced the rule last month. It will take effect July 30.

Military-specific portions of the rule will target younger servicemembers, 20% of whom will have $20,000 or more in auto-related debt by age 24, per the FTC. Among the provisions, dealers would be prohibited from:

• Falsely claiming affiliation with DoD or any other federal, state, or local government entity.
• Providing inaccurate information on how and when a car can be repossessed – existing laws, such as the Servicemembers Civil Relief Act, prevent repossession of servicemembers’ vehicles in many cases.
• Lying about restrictions on out-of-state moves, which disproportionally affect servicemembers who may face PCS considerations.

[RELATED: VA: Beware of Scams Connected to Disability Benefits Questionnaires]

The rule “will help fight predatory practices that target our men and women in uniform,” Ashish S. Vazirani, acting DoD under secretary for personnel and readiness, said in the FTC release announcing the rule. “The Department is pleased to see the FTC issue the CARS Rule and believes it will contribute to service members’ overall economic security and readiness.”

Other Protections

Along with military-specific provisions, the rule would prevent dealers from misrepresenting prices, require them to ask for “consumer consent” before altering contracts, and stop them from charging for add-ons that do not provide added value – an extra warranty that duplicates the manufacturer’s warranty, for instance. It would also require dealers to provide an “offering price” – how much the buyer can pay for the vehicle without optional extras.

These protections may not prevent all types of auto-related fraud. The next time you’re in the market for a new car, consider these scam-prevention tips (and other useful car-buying guidance) from Lila Quintiliani, ChFC, AFC, MOAA’s program director for financial and benefits education and counseling:

• Do Your Homework: Research the fair market value of the car ahead of time. Don’t be suckered in by a dealer’s mark-up due to local “demand” or other factors – other vendors, in person or online, may be much closer to the suggested retail price.
  
  
• Make the Call: Phone the dealer and ask if the car featured in their ad is, in fact, on the lot. Beware of bait-and-switch tactics luring customers to the dealership to look at more expensive models.
  
  
• Be Ready to Walk Away: Appeals to “act now” may be part of a standard sales pitch, but also could signal a fraud threat. Don’t allow yourself to be talked into a rushed decision, or into skipping out on comparison shopping.
  
  
• Finance for Yourself: Reach out to your bank or another financial institution before visiting the dealer to get an idea of what interest rates may be available. This will help set expectations for any dealer financing offers – as with all financial products, if the financing deal on the lot sounds too good to be true, it probably is.
  
  
• Don’t Get Personal: Car buyers will need to provide a license and other personal information during the purchase, but be wary if you’re asked for too much, too fast. This is especially true for any online shopping: Scammers may use fake car ads, or even fake dealer websites, to collect (and sell or use) your personal data.
  
  
• Trade Smart: Your used car may be worth more than you think. Consider selling it elsewhere if the dealer isn’t offering enough as part of the new-car negotiation.

[RELATED: Prevent a Future Financial Headache With These 6 Checkups]

Want more scam-prevention ammunition? Keep up with the latest news on service-connected fraud at MOAA.org/Finance.