Washington, D.C. — In two consecutive days, the United States Court of Appeals for the Fifth Circuit struck down two commonsense, pro-consumer rules from the Federal Trade Commission and Department of Transportation. On Monday, the Fifth Circuit voted 2-1 to strike down the FTC’s Combating Auto Retail Scams (CARS) rule in a case brought by the National Automobile Dealers Association (NADA), and yesterday, the court sided with airline lobbyists to block a DOT rule that would have mandated the disclosure of junk fees. The American Economic Liberties Project released the following statement in response.

“The Fifth Circuit has become a reliable corporate protection racket and is actively costing hardworking Americans billions of dollars,” said Lee Hepner, Senior Legal Counsel at the American Economic Liberties Project. “People are frustrated by the sheer prevalence of scams across our economy. Both the FTC’s CARS rule and the DOT’s airline junk fees rule resulted from years of study, advocacy, and tens of thousands of public complaints from Americans seeking basic fairness when buying a car or booking travel. Public servants like Lina Khan and Pete Buttigieg sought to correct many of these wrongs, and it’s a demoralizing cliche that activist judges are so thoroughly undermining that progress.”

The Combating Auto Retail Scams (CARS) Rule was finalized in December 2023 to curb deceptive practices in auto sales, such as misleading pricing, bait-and-switch financing, and hidden junk fees. The rule was supported by consumer advocates and law enforcement officials, as car sales complaints are the number one source of fraud reports to the FTC. However, the National Automobile Dealers Association (NADA), a powerful trade group, sued to block the rule, and the Fifth Circuit struck it down in a 2-1 ruling this week. In a dissenting opinion, Circuit Judge Higginson cites evidence that the rule “would spur billions of dollars in economic benefit for U.S. consumers.”

The Department of Transportation’s junk fee disclosure rule would have required airlines to disclose baggage, change, and cancellation fees upfront, preventing consumers from being blindsided by hidden charges. The rule was a key part of the Biden administration’s crackdown on junk fees and was designed to foster competition and transparency between air carriers. Yet, just as they did with the CARS rule, industry lobbyists turned to the Fifth Circuit, where corporate interests routinely find a friendly audience, and successfully blocked the rule from taking effect — on grounds that the agency did not get sufficient feedback from the airlines themselves. The Department of Transportation estimated that the rule would save consumers $500 million annually that they currently pay in hidden fees.

The latest developments add to the below (not comprehensive) list of Biden-era administrative rules struck down by unelected and unaccountable judges within the 5th Circuit, including the following:

• Unfair Discrimination in Banking Rule (CFPB) – blocked by E.D. Tex. Judge Barker*
• Greenhouse Gas State Tracking Rule (DOT/FHWA) – blocked by N.D. Tex. Judge Hendrix*
• Expanded Student Loan Forgiveness (DOE) – blocked by N.D. Tex. Judge Pittman*
• Student Loan Forgiveness for Students Defrauded by Colleges (DOE) – upheld by W.D. Tex. Judge Pitman (Obama appointee), blocked on appeal by 5th Circuit Justice Jones
• $15 Minimum Wage for Federal Contractors (Biden E.O.) – blocked by S.D. Tex. Judge Tipton*
• Joint Employer Rule (NLRB) – blocked by E.D. Tex. Judge Campbell Barker*
• Credit Card Late Fee Cap (CFPB) – blocked by N.D. Tex. Judge Pittman*
• Noncompete Rule (FTC) – blocked by N.D. Tex. Judge Brown*
• Expanded Overtime Eligibility Rule (DOL) – blocked as to Texas employees only by E.D. Tex. Judge Jordan*
• Combating Auto Retail Scams Rule (FTC) – blocked by 2-1 Opinion of the 5th Circuit
• Airline Junk Fees Ban (DOT) – remanded to DOT by 5th Circuit

*indicates rulings by Trump-appointed judges

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