SB 766 restocking fee, 400-mile limit and refund deadline explained

SB 766 restocking fee: 1.5 percent of the sale price, minimum $200, maximum $600, plus $1 per mile over 250 miles capped at $150, and a 48-hour refund.

When a buyer cancels a used-vehicle purchase or lease under SB 766, the dealer may keep a restocking fee of 1.5 percent of the sale price (no less than $200, no more than $600), plus $1 for every mile over 250, capped at $150, and must refund everything else within 48 hours. These numbers apply to every used vehicle sold or leased at retail for $50,000 or less in California from 1 October 2026, under Civil Code 1784.31(g) and 1784.43. They replace the fee tables in Vehicle Code 11713.21, which is repealed the same day.

Who has the right, and how the three days are counted, is covered in /california-sb-766/sb-766-three-day-right-to-cancel/. The advertised price that decides whether a vehicle is at $50,000 or less is defined in /california-sb-766/sb-766-total-price-advertising-rules/. This guide is only about the money after a cancellation.

The restocking fee: 1.5 percent, $200 floor, $600 cap

Civil Code 1784.31(g)(1)(A) defines the first part of the fee:

One and one-half percent of the sale price of the vehicle, but not less than two hundred dollars ($200) and not more than six hundred dollars ($600).

The floor bites on any vehicle below $13,334 and the cap on any vehicle at $40,000 or more. In between, it is simple arithmetic.

"Sale price of the vehicle" is not defined for this purpose. The same question that hangs over the $50,000 eligibility line applies here: the statute does not say whether taxes, government fees, a document fee or add-ons are part of the sale price. The DMV had not published guidance as of September 2026. The conservative approach for the fee is to compute it on the vehicle's cash price alone, which produces the lowest number and the smallest chance of the overcharge violation in 1784.43(c)(2).

The mileage charge: $1 per mile from 251 to 400

Civil Code 1784.31(g)(2) adds the second part:

If the vehicle has been driven over 250 miles, the dealer may also charge the buyer or lessee an additional one dollar ($1) for each mile over 250 miles, but this amount shall not exceed one hundred fifty dollars ($150).

Because the right ends at 400 miles under 1784.43(a)(1)(B), the $150 cap and the 400-mile cut-off meet at the same point.

The miles are counted "between the execution of the sale or lease agreement and the date on which the buyer or lessee attempts to exercise the right." A vehicle delivered days after signing still counts from signing, so record the odometer on the contract date and again at return. The cancel notice must describe how both parts of the fee are calculated (1784.43(b)(4)), so put the percentage, the floor, the cap and the per-mile rule on that document in plain words.

Shipping cost instead of the percentage fee

Civil Code 1784.31(g)(1)(B) offers an alternative to the 1.5 percent fee for vehicles you shipped to the buyer:

In lieu of the fee in subparagraph (A), a dealer that charged the buyer or lessee a shipping fee for transporting the vehicle may retain the cost the dealer actually incurred for shipping, provided that the amount retained does not exceed the amount that would otherwise be permitted under subparagraph (A). The dealer shall refund to the buyer or lessee the balance, if any, between the amounts charged and retained.

Three conditions: you charged the buyer for shipping, you keep only what shipping actually cost you, and the amount is capped at what the 1.5 percent fee would have been for that vehicle (not a flat $600). If you charged $800 for delivery of a $20,000 vehicle and the carrier invoiced you $450, you may keep $300 (the 1.5 percent figure) and must refund $500. Several dealer summaries describe this as "shipping cost up to $600"; the statute ties the cap to the vehicle's own fee, which is $600 only at $40,000 and above.

The mileage charge in paragraph (2) is written as an addition ("may also charge") and is not tied to which paragraph (1) option you use, so on the face of the text it can be added to the shipping alternative as well.

When and how you collect the fee

Civil Code 1784.43(a)(2) sets the mechanics. You may collect the restocking fee on the date the buyer exercises the right. If the buyer is owed a refund, the fee is deducted from it. If the refund does not cover the whole fee, the balance is due at the time of cancellation. The buyer must personally deliver the fee (unless deducted) together with the vehicle during business hours (1784.43(b)(6)(A)).

Overcharging the restocking fee is a listed violation (1784.43(c)(2)). Do not round up, do not add a "processing" or "detail" charge on top, and do not charge for damage unless it goes beyond reasonable wear and tear and you can document it (1784.43(c)(7)).

For sales tax, SB 766 rewrites Revenue and Taxation Code 6012.3 from 1 October 2026 so that "gross receipts" and "sales price" do not include "that portion of the sales price returned to the purchaser of a used motor vehicle or any restocking fees pursuant to Section 1784.43 of the Civil Code." As of September 2026 no CDTFA notice on the new wording had been published; treat the refunded portion as a returned sale on your return and keep the cancellation receipt with your tax records.

The 48-hour refund deadline

Civil Code 1784.43(d) is the clock:

(1) No later than 48 hours after the buyer or lessee exercises the right to cancel pursuant to this section, the dealer shall cancel the contract and provide the buyer or lessee with a full refund, minus any deduction allowed by this section. The dealer is not responsible for any delays outside the control of the dealer, including delays attributable to the processing of a refund by a bank, credit card company, or other financial institution. (2) Notwithstanding paragraph (1), in the event the buyer or lessee made a payment through a method that does not result in an immediate verified transfer of funds to the dealer, such as a check, the dealer may delay providing the refund until two business days after the buyer or lessee's payment is verified. The dealer shall provide the buyer or lessee with documentation showing when the verification occurred.

The 48 hours run from the moment the buyer exercises the right, which is why the cancellation receipt must carry the date and time (1784.43(a)(3)(B)). "Full refund" covers the down payment and any other consideration the buyer gave; failing to refund the down payment on time is a separate violation (1784.43(c)(4)). If you refund a card payment to the card, the issuer's posting delay is not counted against you, but you should be able to show when you initiated it. For a check, the delay is allowed only after the check clears and only with a document showing the verification date.

Trade-ins: return it or pay the greater of three numbers

Civil Code 1784.43(a)(3)(A):

If the right to cancel is exercised, the dealer shall return the buyer's or lessee's trade-in vehicle and all keys the buyer or lessee provided, if any, unless the dealer has sold or otherwise initiated the process to transfer the title of the trade-in vehicle, in which case the refund for the trade-in vehicle is the greater of the following: (i) The agreed-upon value of the trade-in vehicle in the sales or lease agreement. (ii) The amount for which the dealer sold the trade-in vehicle. (iii) The fair market value of the trade-in vehicle.

The safe course during the three days is to leave the trade-in on the lot with its keys and title untouched. Once you sell it or start a title transfer, you owe the highest of the three figures, and you must give the buyer a copy of the sale document for the trade-in with the purchaser's personal information redacted (1784.43(b)(9) and (c)(6)).

From that amount you may deduct "the amount necessary to satisfy outstanding indebtedness secured by the trade-in vehicle" (1784.43(a)(3)(B)), which is the payoff you sent to the buyer's lender. You must give the buyer a receipt with an itemized breakdown of every deduction and the date and time of cancellation.

For fair market value, 1784.43(a)(3)(C) gives you a rebuttable presumption if you use either of two methods:

• A written offer to buy the trade-in that the buyer received and you honored, valid for at least seven days.
• The trade-in valuation at the time of cancellation from a nationally recognized pricing guide you select (as that term is used in Vehicle Code 11950(c)(2)), taking the vehicle's condition at trade-in into account.

Keep the printout. The old Vehicle Code 11713.21 rule required only the greater of fair market value or contract value; SB 766 adds the actual resale amount, so a quick flip at a profit now goes back to the customer.

A worked example

A $24,000 used SUV is sold on Tuesday with $3,000 cash down and a trade-in valued at $6,000 in the contract, on which the dealer paid off a $2,500 loan. On Friday, inside the window, the buyer returns the vehicle with 310 more miles on it. The dealer had already sold the trade-in on Thursday for $6,800; a pricing guide shows $6,400.

The receipt shows the date and time on Friday, the two deductions, the payoff, the three trade-in figures and which one was used, and comes with a redacted copy of Thursday's sale document for the trade-in.

What to keep on file

Civil Code 1784.44(a)(4) requires, for two years from creation, copies of all cancellation requests, proof of refunds of down payments or other consideration, and proof of return of trade-in vehicles. For each cancellation, keep:

• The cancel notice as handed over, with the odometer at signing.
• The odometer at return and the fee calculation.
• The cancellation receipt with date, time and itemized deductions.
• Proof of the refund (transfer record, card refund confirmation, check copy) and, for a check payment, the verification document.
• The trade-in return record, or the redacted sale document, the payoff statement and the fair market value printout or written offer.
• Any condition report or photos supporting a wear-and-tear claim.
• The shipping invoice if you used the shipping alternative.

The sign, the cancel notice and the contract wording that describe these fees are in /california-sb-766/sb-766-notice-wall-sign-contract-warning/, and the full retention schedule is in /california-sb-766/sb-766-compliance-checklist-independent-dealers/.

Frequently asked questions

Sources

• SB 766 (Chapter 354, Statutes of 2025), chaptered text, California Legislative Information
• Civil Code section 1784.31 (definition of restocking fee), California Legislative Information
• Civil Code section 1784.43 (refund, trade-in and receipt rules), California Legislative Information
• Vehicle Code section 11713.21 (old contract cancellation option, repealed 1 October 2026), California Legislative Information
• CARS Act (SB 766): major changes coming October 1, 2026, California Dealer Academy
• SB 766: California Combating Auto Retail Scams Act, California's Credit Unions compliance corner

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