The Required Disclosures. If any trigger term appears, the ad must also disclose: 1. The Nature of the Transaction: You must explicitly state that the transaction is a lease. 2. Total Due at Start: The full amount the consumer must pay at the beginning of the lease. 3. Payment Schedule: The number of payments, the amount of each and their due dates. 4. Security Deposit: Whether or not a security deposit is required. 5. Mileage Terms: The mileage limitation and the specific charge for any excess mileage. 6. Tax and License: The statement “plus tax and license” if amounts due for use tax, license and registration fees are not included in the advertised lease payments, which is typical. 7. Credit Approval: Like financing, an “on approved credit” disclosure is mandatory. The Equal Prominence Rule: If you advertise “$0 down” or a specific component of the total due at the start of the lease (other than the monthly payment amount), it cannot be more prominent than the total amount due at lease signing. The Third-Party Myth: Why You Can’t Outsource Liability A dangerous misconception is that external partners, such as advertising vendors or manufacturers, will handle the legal heavy lifting. If your dealership runs an ad that violates applicable law, you are responsible for it. Relying on a third party for compliance is typically not a valid legal defense. The Vendor Gap. Many advertising vendors lack a deep understanding of California’s heightened compliance standards, which are often stricter than those in other states. The Manufacturer Gap. Manufacturers often require ads to go through their own compliance processes for co-op reimbursement purposes. However, these compliance reviews are typically intended to protect the manufacturer’s brand and its advertising requirements, not to ensure the dealership meets all legal requirements. Furthermore, OEM-provided ad copy and disclosures are usually written for a national audience. They are often not tailored to California’s specific legal requirements or the unique needs of an individual dealership. In fact, disclosures that are perfectly legal for a manufacturer to use may not be legally compliant for a dealership. The Price of Non-Compliance The consequences of cutting corners on advertising compliance are severe. Beyond the immediate financial hit, a single misleading ad can trigger: • Time-Consuming Lawsuits: These can drain resources and focus away from sales. • FTC Consent Decrees: These can place a dealership under federal supervision and restrict its advertising, often for up to 20 years. • DMV Actions: The DMV has the authority to suspend or revoke a dealership’s license for compliance failures. • Criminal and Other Penalties: In extreme cases, fines, injunctions and even criminal charges are possible. • Reputational Erosion: Misleading ads destroy customer trust and satisfaction, which are the lifeblood of a sustainable business. Action Plan for 2026 and Beyond To protect your dealership in this evolving environment, implement these three compliance strategies: 1. Establish Internal Accountability: Appoint a management-level employee to oversee and be personally accountable for all advertising law compliance. 2. Invest in Training: Ensure every employee involved in the creation or approval of advertisements is trained in current legal requirements. 3. Leverage Legal Counsel: There are many other advertising laws, and this article only scratches the surface. Work with experienced legal counsel to audit your existing materials, develop compliant advertising templates and provide a review of new campaigns. The California New Car Dealers Association also provides resources to help dealerships with legal compliance, including the California Auto Dealer Advertising Law Manual, authored by Manning, Leaver, Bruder & Berberich LLP. The author of this article is a partner at Manning, Leaver, Bruder & Berberich LLP, a Los Angeles law firm that practices throughout California and has been in existence for over 100 years. It has a strong automobile dealer practice covering all areas related to the automobile dealer industry, including dealership buy-sells, real estate transactions, business and consumer litigation, regulatory compliance, dealer advertising law, dealer association law, new motor vehicle board matters and franchise law. See www.manningleaver.com for more information and areas of practice. Nothing in this article may be considered as legal advice. Contact legal counsel for legal advice. 15 California New Car Dealer Quarterly
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