FTC Issues Dealer Advertising FAQs BY BRAD MILLER, CO-CEO & CHIEF LEGAL OFFICER, COMPLYAUTO Letters from the Federal Trade Commission (FTC) to 97 dealer groups earlier this year put dealers on notice about price advertising, and while the letters gave clear direction in some respects, they also raised several important unanswered questions for dealers. The FTC has now issued its long-awaited “Frequently Asked Questions” document, which it promised would address open issues for dealers and further clarify what the FTC wants from dealers in their advertisements. The bottom line remains that the FTC is laser-focused on dealer advertising, and dealers must ensure that price advertising is clear, complete, and not misleading, and that their ads (in whatever medium they appear) are consistent and meet all other federal and state requirements. The FAQs provide further clarification on several open questions. However, they also leave several key questions unanswered and, in some cases, introduce new ones that dealers need to address. The key issues addressed in the FAQs are outlined in the following. Clarification #1: All Non-Mandated Government or Quasi-Governmental Fees Must Be Included in the Price The FAQs clarify that government-required charges such as state tax may be excluded from the advertised price. The key in determining if a required amount may be excluded is whether a federal, state or local government agency requires the consumer to pay that amount directly to the government. That means that any other fee the dealer requires must be included in the advertised price. This expressly includes dealer-required fees that (a) governments authorize but do not mandate and (b) governments require the dealer to pay but that the dealer passes on to the consumer. The bottom line is that certain non-tax-related fees paid to the state or quasi-governmental charges — such as electronic titling fees, smog and emissions fees, etc. — may NOT be excluded from the advertised price. Note that we will be issuing another document soon that addresses the status of these specific charges in greater detail, on a state-by-state basis. Clarification #2: The Rules Apply to Ads in Any Medium It has been clear for some time that the FTC applies the same rules to any advertisement, regardless of where or how it appears. Advertisements that appear in a dealership or third-party website, on social media, in print advertising or even on a roadside sign must comply with all of the advertising requirements under state and federal law. The FTC notes for internet advertising specifically, any webpage that states an amount a consumer may pay — including inventory search pages and individual vehicle listing pages — must display the actual price as the most prominent amount. Notably, the FTC states in the FAQ that even phone calls and text messages from dealership staff are considered to be advertisements. That means dealers must ensure that, if these communications include a price, the price is truthful and transparent. This was not a prominent focus of the FAQs, but it represents a potentially new and important compliance focus for dealerships. Clarification #3: MSRP Can Be Displayed or Referenced The FAQs clarify that dealers may reference the MSRP or advertise discounts and rebates, but only if the actual price remains the most prominently displayed amount and consumers understand what they would need to pay. 8 UTAH AUTO DEALER
RkJQdWJsaXNoZXIy MTg3NDExNQ==