Dealers Just Got New Rules on AI and Used Car Returns

“If your pricing, trade valuations, or financing decisions are made or influenced by AI, you are now required to notify the customer, explain how the decision was made, and allow for human review.”

CURRENT EVENTS

Colorado cracks down on AI in lending and pricing

Colorado’s new AI law takes effect in early 2026, and it is one of the first to directly regulate how dealers and lenders use artificial intelligence. The law requires any high-risk AI system, meaning any tool that impacts a consumer’s access to credit, pricing, or terms, to notify the customer, allow human review, and explain how the decision was made.

If you are using any software that influences finance structure, lender selection, payment quotes, or vehicle valuations, it may fall under this rule.

What this means

This is not just about your vendor. You are responsible for the tools you use. Ask your tech providers now: does this product qualify as high-risk? If it does, you need written documentation, a customer-facing explanation, and a process that includes a real person reviewing AI-generated decisions before they reach the customer.

👉 Read the law

California just passed mandatory used car returns

Under the new CARS Act, California dealers must allow used car buyers to return vehicles under $50,000 within three days, with no reason required. As long as the car has fewer than 400 miles added and is returned in good condition, the dealer must take it back.

There are guardrails: you can charge a restocking fee between $200 and $600, and if the buyer drives more than 250 miles, you can charge $1 per extra mile, up to $150. But you cannot deny the return.

The law also introduces stricter disclosure requirements and tighter rules on how add-ons are presented. Buyers now have 10 days to pay for products like GAP or service contracts, instead of having to include them in the initial deal.

What this means

This law changes the game for California dealers. You will need new paperwork, new reconditioning strategies, and a clear plan to manage buybacks without taking losses. Even if you are not based in California, it may affect inventory sourcing and out-of-state sales.

👉 Read the law

AutoAcquire AI raises $4 million to help dealers buy inventory

AutoAcquire AI, a Florida startup, just raised $4 million to expand its platform for sourcing and pricing used inventory. Their product focuses on real-time pricing signals, better transport routing, and helping buyers act faster with fewer mistakes.

This is one of several AI companies aiming to make inventory acquisition more efficient. Expect more vendors promising better margins and faster turns.

What this means

The flood of AI tools is not slowing down. Some will help. Some will burn your time and budget. Ask what data powers the platform, how the tool handles pricing, and whether your buyers would actually use it. Funding does not equal results. Test everything.

👉 Read the news

THE BOTTOM LINE

You do not need to follow every startup, but you do need to know the laws. These regulations are no longer theoretical. They are coming from attorneys general, consumer protection agencies, and state legislatures—and they come with real fines.

Audit your processes. Ask how your pricing and finance decisions are made. And if you cannot explain your AI tools to a customer or a regulator, you are exposed.

Thanks for reading. Hit me up and let me know what you think I should cover next week!

— Adam