Pub. 19 2020-2021 Issue 4

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 4 | 2 0 2 0 22 new jersey auto retailer 10. Comply with Reg M and Reg Z. There are two federal regulations, Reg M and Reg Z , describing certain “trigger terms” that, in turn, mandate the use of disclosures when advertising lease or credit transactions, respectively. Below is a brief explainer. Leases are governed by Regulation M, also known as the Con- sumer Leasing Act. The FTC has the authority to enforce its provisions. As an advertiser, you need to be mindful of disclo- sures that must be clearly and conspicuously stated when specif- ic trigger terms are used in a lease ad. Here’s what you need to know about staying compliant with Reg M requirements: If your lease ad contains one of these trigger terms: Then your ad must clearly and con- spicuously disclose: A statement of any capitalized cost reduction or other pay- ment required before or at lease consummation, or by delivery if delivery takes place after con- summation, or that no payment is required; or That the transaction is a lease, The total amount due before or at consummation, or by delivery if delivery takes place after consum- mation, The amount of any payment. The number, amounts and due dates or periods of scheduled payments under the lease, Whether or not a security deposit is required, and In leases where the consumer’s liability is based on the difference between the property’s residual value and its real- ized value at the end of the lease term, an extra charge may be imposed at the end of the lease term . Regul ation Z governs credit sale advertisements, often referred to as the Truth in Lending Act. The FTC has the authority to enforce its provisions. When advertising a credit sale, always ensure that the ad clearly and conspicuously includes specific disclosures when certain trigger terms appear. Here’s what you need to know about staying compliant with Reg Z advertising requirements: If your credit sale ad contains one of these trigger terms: Then your ad must clearly and con- spicuously disclose: The amount or percentage of any downpayment. The amount or percentage of the downpayment. The number of payments or period of repayment. The terms of repayment ref lecting the repayment obligations over the full term of the loan, including any balloon payment. The amount of any payment. The “annual percentage rate,” using that term or “APR,” and, whether or not the rate may be increased after consummation. The amount of any finance charge. In short, you must be vigilant to ensure that your advertising practices and advertising content comply with specific federal requirements. It’s never enough to simply say that you complied with the MVPA and weren’t aware of the federal regulations. Advertising is a critical component of any dealership’s success. Take time to regularly audit your advertising practices and maintain familiarity with state and federal requirements. Above all, don’t create advertisements that are deceptive and mislead- ing. This is especially true during the COVID era, where taking the humble approach when describing your dealership’s efforts will steer you clear of unwelcome regulatory scrutiny. Michael McMahan is a partner, and Christopher Koenig is an attorney, in Arent Fox’s Automotive Practice Group. They can be reached at 212-484-3900. ADVERTISING  continued from page 21 Advertising is a critical component of any dealership’s success. Take time to regularly audit your advertising practices and maintain familiarity with state and federal requirements.