Dealer Market Adjustment and Forced Add-Ons: Your Rights

A dealer market adjustment, also called ADM or additional dealer markup, is an amount a dealer adds on top of the sticker price. It is generally legal because MSRP is only a suggested price, as long as the markup is disclosed and you agree to it. Charging for add-ons you did not agree to, or calling optional products mandatory when they are not, can violate federal and state law.

The rules changed twice in two years. The FTC’s national CARS Rule was struck down in January 2025, and California’s own CARS Act took effect on October 1, 2026. Everything here reflects the rules as of November 2026.

What is the difference between a markup and an add-on?

A markup is a higher price for the car itself. It usually appears on a second window sticker, often labeled “market adjustment” or “ADM,” next to the factory label. Markups are most common on new, popular or limited models when demand exceeds supply.

An add-on is a product or service sold with the car. Common examples are paint and fabric protection, nitrogen-filled tires, wheel locks, window etching, door edge guards, service contracts and GAP coverage. Some are physical items already installed on the car. Others are contracts.

The legal questions differ. A markup is a pricing choice the dealer must disclose. An add-on raises questions of consent: did you agree to it, was it presented as optional, and does it do anything for you?

Is a dealer market adjustment legal?

Yes, in general. No federal law caps what a dealer may charge for a new car, and state dealer franchise laws generally keep automakers from dictating a dealer’s selling price. The markup must be disclosed before you sign and cannot be hidden in other line items. Advertising one price and then refusing to sell at it can violate state advertising laws.

Some automakers discourage markups and say so publicly, and some have threatened to limit allocations to dealers that charge them. Those are business policies, not legal limits, and they change from year to year.

What happened to the FTC CARS Rule?

The FTC’s Combating Auto Retail Scams (CARS) Rule would have banned misrepresentations about price and add-ons nationwide and required clear consent for every charge. On January 27, 2025, the U.S. Court of Appeals for the Fifth Circuit vacated the rule on procedural grounds, before it took effect. It is not in force.

The FTC can still act against deceptive or unfair practices under Section 5 of the FTC Act, which existed long before the CARS Rule. It has used that authority against dealer groups over add-on charges, including a December 2024 case brought with the Illinois attorney general against Leader Automotive Group, a Chicago-area dealer group. You can report a dealer at ReportFraud.ftc.gov.

What do state laws say?

Every state has a consumer protection law against deceptive and unfair practices, and state attorneys general enforce them against dealers. Many states also have dealer advertising rules on how prices must be shown. The details vary, so the state attorney general’s consumer division is the place to check or complain.

California now has the most specific rules. According to a California DMV notice on the CARS Act, since October 1, 2026, dealers selling or leasing light-duty vehicles in the state must:

• Disclose the total price in ads that mention a specific vehicle or financing terms, and in their first written communication with you, such as an email, text or quote.
• State that every add-on is optional, both out loud and in writing in at least 12-point type.
• Avoid selling add-ons that give no real benefit, such as oil change plans for electric vehicles or nitrogen fills with no benefit.
• Give used-car buyers an automatic three-business-day right to cancel on vehicles priced at $50,000 or less, subject to mileage and condition rules.
• Keep records of ads, price quotes and add-on consents for two years.

How can buyers push back on markups and add-ons?

The most effective tool is a written out-the-door quote before you visit. It forces the dealer to put the vehicle price, every add-on and every fee on paper.

1. Email several dealers for an itemized out-the-door price on the exact trim you want.
2. Ask in writing whether each add-on is optional. If it is, ask for it to be removed and the price lowered.
3. If an add-on is already installed, such as wheel locks or etching, offer to take it at no charge or buy a car from a dealer that has not added it.
4. Read the buyer’s order and the finance contract line by line before signing. Products such as GAP and service contracts often appear in the financing paperwork.
5. For a model in short supply, ask about a factory order at MSRP with a deposit, or widen your search to other regions.
6. If you find a charge you did not agree to after the sale, write to the dealer first, then file a complaint with your state attorney general and the FTC.

Two charges are often confused with markups. The destination fee is set by the automaker and printed on the factory sticker; our guide to the car destination fee explains it. The documentation fee is a dealer charge that some states cap; see our table of dealer doc fees by state.

Bottom line

A markup over MSRP is legal if it is disclosed, and you can decline it by shopping elsewhere. Contract add-ons such as service plans and GAP are optional products, so get every price in writing and remove what you do not want before you sign. Californians have stronger, specific rules as of October 2026.

This is general information, not legal advice. For a dispute about a specific sale, contact your state attorney general’s office or a licensed attorney.

FAQ

Can a dealer refuse to sell me a car at MSRP?

Yes. MSRP is a suggested price, and dealers can set their own. They must disclose the price they are asking and honor prices they advertise under state law.

Can a dealer require me to buy GAP or a service contract to get financing?

These products are optional, and federal lending rules do not require them. Some lenders may require certain insurance on a loan, but if a dealer says an add-on is mandatory, ask for that requirement in writing from the lender.

Is the FTC CARS Rule coming back?

As of November 2026 it is not in effect after the January 2025 court ruling. California’s state CARS Act is in force for California dealers, and other states may pass similar laws.

What should I do if I find an add-on I did not agree to?

Write to the dealer and ask for removal and a refund, and keep copies. If that fails, file complaints with your state attorney general and at ReportFraud.ftc.gov.