A Refresher Quiz for 2024 — The Answers By Barrett “Barrie” Charapp Beaty, Esq., Charapp & Weiss LLP 1. True. The Federal Trade Commission is on the hunt for car dealers, and improper advertising is an easy find because it is public and very visible. Compliance with the Truth in Lending Act and the Consumer Leasing Act is critical because both laws are clear. The advertisement is correct so long as a dealer advertises an available rate as the annual percentage rate or APR, it is appropriate. And APR advertising is not a trigger term, so no follow-on disclosures are necessary. However, if you advertise a limitation on the duration of credit at the advertised APR (“3.25% APR available for up to 60 months”), the number of payments is a trigger term, and you then must make further disclosures under TILA. In advertising credit for a motor vehicle, any of the following is a trigger term: (1) The amount of the down payment (expressed as either a percentage or dollar amount); (2) The amount of any payment (expressed as either a percentage or dollar amount); (3) The number of payments or the period of repayment; or (4) The amount of any finance charge. If you use a trigger term, you then must disclose: • The amount or percentage of the down payment; • The terms of repayment; and • The “annual percentage rate,” using that term or the abbreviation “APR.” If the annual percentage rate may be increased after the consummation of the credit transaction, that fact also must be stated. 2. True. Often, dealers seek to equate lease rates to APR and advertise low rates in connection with leases and nothing more. Such actions are prohibited by the Consumer Leasing Act. In advertising a lease rate, you may not use the term “Annual Percentage Rate,” “Annual Lease Rate” or another equivalent term. In addition, if you do advertise a lease rate, the following statement must appear near the rate with no intervening language or symbols: “This percentage may not measure the overall cost of financing the lease.” 3. False. As you are aware from many of our articles on the subject, this is a hot item for the FTC. In addition to the FTC, private litigants, state attorneys general and the U.S. Department of Justice can all enforce equal credit laws. Moreover, practices in selling voluntary protection products are not only potential subjects of legal action by those enforcers, the Consumer Financial Protection Bureau is not prohibited from investigating VPP practices. If your dealership is not using a fair lending program and a program for the sale of voluntary protection products that requires offering finance rates and VPPs at uniform pricing levels, with deviations for nondiscriminatory reasons, and with results you can review and for which you can take corrective action for non-compliance, you are not adequately protecting your dealership. The “Fair Lending Program” and the “Program for Sale of Voluntary Protection Products,” published by the National Automobile Dealers Association, are comprehensive programs your dealership should implement and follow. The answers for the “Refresher Quiz for 2024” from page 6. vada.com 17
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