3. The APR: The annual percentage rate must be clearly stated using that exact term or the abbreviation “APR.” 4. Credit Approval: Since credit approval is required, you must disclose that the offer is “on approved credit.” Furthermore, under the CARS Act, any advertisement containing these financing terms for a specific vehicle must also prominently disclose that vehicle’s total price. Deep Dive: Leases and Regulation M Leasing advertisements are governed by Regulation M, which operates on a “trigger” logic similar to Regulation Z but with its own set of specific requirements. Because leases are complex, regulators require more detailed disclosures to prevent consumers from being misled about their financial obligations. The trigger terms of Regulation M: • The amount of any payment (e.g., $399 per month) • A statement of any capitalized cost reduction, or other payment, required when the lease starts, or that no payment is required (e.g., $1,500 down, or $0 due at signing) • Any mention of a required capitalized cost reduction. 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. EPICBROKERS.COM ©2026 Edgewood Partners Insurance Center. All rights reserved. | CA License: 0B29370 EPIC Insurance Brokers & Consultants is proud of its partnership with more than 300 California dealerships and is the CNCDA’s only licensed broker for health insurance and employee benefits. As the dealers’ consultant, experience what EPIC can do for you, including: • A team producing significant results with decades of experience understanding the specific needs of dealerships • Fully insured and unique alternative funding options to best fit your dealership’s needs and provide the most significant savings • Full compliance services and HR support for your team FOR A BENEFIT COST ANALYSIS AND COMPLIANCE CONSULTATION, PLEASE CONTACT: Alison McCallum (949) 422-6431 alison.mccallum@epicbrokers.com 21
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