California DMV Certified Auto Dealer License Educator #CCC0028

California Law AB68 - "Car Buyer's Bill of Rights"

December 8th, 2021 by Jessica Biarbe

Woman proudly standing in front of car and sunset

This article will cover sections the Car Buyers Bill Of Rights as it pertains to the purchase contract for a buyer from a retail dealership. There are several requirements for a retail dealer to remain in compliance with this law. Each section will address the specifics of each segment. This article will discuss when the law came into effect and the forms vehicle dealers will need to conduct their day to day business operation.

The violations of these provisions would result in a misdemeanor crime for the holder of a dealer license.

The AB68 Bill was approved and filed with the Secretary of State July 26, 2005 regarding the sales contract on motor vehicles. The effective date of July 1, 2006 enacted this bill.

Contract Cancellation Agreement

This bill modified the “No Cooling Off Period” and allowed a buyer to return the vehicle two days after their purchase for any reason and receive a full refund. However, there are conditions that the retail dealer must comply with:

  • The customer must be offered the Contract Cancellation Agreement
  • The purchase price is $40,000 or less
  • The vehicle is purchased for personal or household use
  • The law is not provided to the purchase of motorcycles, off road vehicles or recreational vehicles
  • It is not offered to a buyer who previously purchased a vehicle and exercised their rights under a contract cancellation within the preceding 30 days.
  • The dealer is not required to notify the next purchase of said vehicle subsequent to the return of the vehicle.

The next step: What does it cost the consumer?

The vehicle price does not include fees for: registration, transfer, titling, license California tire and optional business partnership automation. The cost to the buyer are as follows should they wish to purchase a Contract Cancellation Agreement:

  • $75 or less for a vehicle price of 5,000 or less
  • $150 or less for a vehicle price of 5,000 to 10,000
  • $250 or less for a vehicle price of 10,000 to 30,000
  • 1% or less for a vehicle price of 30,000 to 40,000

What Information Is On the Contract Cancellation Form?

  • Name of the Buyer and Seller
  • Year, Make, Model and Vehicle Identification Number
  • Information specifying the time the buyer must return the vehicle to the dealer. A dealer shall not specify less than 2 days at the close of business following the day the vehicle was delivered to the buyer.
  • Total amount of the restocking fee to cancel the purchase.
  • The number of miles the buyer may drive to remain eligible to return to vehicle.

The contract Cancellation gives the buyer the right to cancel the purchase and obtain a full refund minus the purchase price for the contract cancellation. The right to cancel shall apply only when:

  • A written notice exercising their right to cancel the contract signed by the buyer Payment of the restocking fee
  • All documents that were signed at the time of purchase need to be returned
  • The vehicle is free of liens and encumbrances other then those created at the time of purchase.
  • The vehicle is in the same condition at the time of delivery except for reasonable wear and tear.
  • The buyer cannot have exceeded the permissible mileage allowed on the agreement.

The Contract Cancellation Form is given to the buyer in duplicate, thereby allowing the buyer to return the signed cancellation notice and retain a copy for their records.

The buyer has the option on Declining or Accepting the Contraction Cancellation Option. Either way the customer receives a copy of this form.

Returning a vehicle under the Contract Cancellation Agreement

Restocking Fees: As previously discussed the customer will be required to pay a restocking fee if they chose the option to cancel the purchase under the Contract Cancellation Agreement. Those fees are as follows:

  • $175 or less for a vehicle price of $5,000 or less
  • $350 or less for a vehicle price of $5,000 to $10,000
  • 500 or less for a vehicle price of $10,000 and not more than $40,000.

The money paid for the Contract Cancellation is credited to the restocking fee amount.

If the vehicle was leased – A dealer is allowed to increase the restocking fee for excess mileage, un-repaired damage or excessive wear and tear.

Additional items the buyer is required to comply with to cancel the purchase:

  • The vehicle is in the same condition as the date of delivery.
  • The buyer must not have exceeded the allowed mileage.
  • The buyer must return all documentation that was signed/given to them at the time of purchase
  • The vehicle is free of liens or encumbrances other than those created at the time of purchase.

After the buyer has fulfilled their obligation in the return of the vehicle, the dealer shall refund no later than the second day following the day the buyer returned the vehicle.

What if the buyer traded in a vehicle? The dealer shall retain the trade in until the contract cancellation expires. If that vehicle was sold, then the dealer shall give the buyer a full refund that shall include the retail market value of the vehicle left as a down payment or trade in, or its value as stated on the contract or purchase order – whichever is greater.

Vehicle Return Rejection:

If the buyer has not complied with the terms for returning the vehicle, then the dealer shall give written documentation as to the reason.

It’s a good idea to have documentation showing the condition of the vehicle at the time of sale, this also applies if the buyer is trading in a vehicle, in the event the buyer opts to cancel the purchase. This could be in the form of digital photos or any other method you have for documentation. The buyer and seller should both sign and date these documents acknowledging the condition of the vehicle(s).


In this Segment of the AB 68 Law – “Car Buyers Bill of Rights” will be a discussion of application for credit by the buyer.

When a dealer uses a credit score from a consumer reporting agency the dealer will give the following information on a form that is separate from the sale or lease contract.

Again this does not apply to Motorcycles or Off Highway motor vehicles subject to identification:

  • Name of Dealer and Consumer
  • Credit Score – The source – The date
  • What you should know about Credit Scores – Credit History explained
  • How we use your credit score – how the credit score affect if you can obtain credit and how much you have to pay for that loan
  • The range of scores – The high and low numbers of your credit score – The higher the score the better the credit terms.
  • How your score compares to the scores of other consumers-How your score ranks among U.S consumers
  • What if there are mistakes in your credit report – Indicates the right to dispute inaccurate information.
  • How can you obtain a copy of your credit report. – Information on where to order a free annual credit report.
  • How can you get more information – Information to the Federal Reserve’s Boards website

This document outlines all the items listed above and details each item.

Pre-Contract Disclosure - Retail Installment Sale Contract:

The provisions under this law required the sellers of motor vehicles to disclose to their buyer, including that existing law does not provide for a cooling off period. The disclosures must contain information under the label itemization of amounts financed.

Before the execution of a conditional sales contract the dealer will give to the buyer a written statement that has the following information, breaking down the cost of each item that will be optionally charged on the contract. This way the buyer shall have full disclosure of anything additional that will be charged on their contract for the purchase of a motor vehicle:

  • Service Contracts
  • Insurance Product
  • Debt Cancellation Agreement (Gap)
  • Theft deterrent device
  • Surface Protection Products
  • Contract Cancellation Option Agreement

Other item disclosures:

  • Cash Price of Additional Accessories
  • Electronic Vehicle Registration transfer charge
  • Document processing charge
  • Emissions testing charge
  • Prior credit or lease balance
  • Other

The customer signs this document acknowledging:

  • The charges on this document will be included in the retail installment sale contract accompanying the purchase of the vehicle
  • The goods and services are not required as a condition to obtaining financing terms.
  • The document was presented to the buyer prior to signing the retail installment sale contract and by signature, you consent to the charges in the retail installment sale contract.


This segment discusses prohibitions of a seller receiving consideration in excess of that which is permissible by law.

When a dealer assigns a conditional sales contract, the seller shall not accept a finance charge that doesn’t exceed 2 ½ % for a contract with a term of 60 or less monthly payments or 2% for a contract with a term of more than 60 monthly payments.

The following are the exceptions to these circumstances:

  • an assignment under full recourse or other terms requiring the seller to bear the risk of the performance by the buyer
  • an assignment that is more than 6 months following the date of the conditional sale contract
  • isolated instances from bona fide errors that would otherwise be in violation if the seller guards against any errors, and remits to the assignee consideration received in excess of permissible amounts.
  • Conditional sales contracts involving the sale of motorcycles or off highway motor vehicles.


This segment discusses California Vehicle Code that imposes mandatory requirements for all vehicle dealers that sell as “Certified” pre-owned vehicles, or are describing using any similar terms.

Dealers advertising the sale of used vehicles as “certified” must meet specific requirements. The dealer must give the buyer a completed inspection report indicating all the components inspected.

Dealers are prohibited from advertising a vehicle as “certified” if the:

  • Odometer does not indicate the actual mileage of the vehicle.
  • Vehicle was reacquired by the manufacturer or dealer under state or federal warranty law (i.e. “lemon law”).
  • Vehicle was damaged by a collision, fire, or flood unless repaired to safe operational condition prior to sale.
  • Title was branded as a lemon law buyback, manufacturer repurchase, salvage, junk, nonrepairable, flood, or similar designation.
  • Vehicle has frame damage or was sold “as is”.
  • Seller failed to provide the buyer with a complete inspection report of all components inspected.

This section does not apply to the advertisement or sale of a used motorcycle or used off highway motor vehicle subject to identification. Violations of the provisions regarding advertisement of certified used vehicles may give cause for legal action under The Consumer legal Remedies Act, Unfair Competition Law, Business and Professions Code regarding false or misleading advertising, any other applicable state or federal law.

Posted in: Auto Dealer Business

Information within this publication is not intended to give legal advice or compliance with any Federal, State, or local laws and/or regulations. It should be noted that laws, regulations and standards are subject to revisions, additions or deletions at any time. If legal advice or assistance is required, the services of a competent professional should be obtained.