Consumers form their first impressions of dealers through advertisements. The majority of dealers advertise through the internet, allowing dealers the ability to change and update their advertising in real-time, several times a day. Advertising compliance is critical for not only federal and state regulators but consumers. The FTC and state regulators have certain objectives for advertising compliance, which are: (1) the advertising must be truthful and not misleading; (2) advertisers must have evidence to substantiate (i.e., back up) their claims; and (3) advertisements may not be unfair. These objectives are not new and are well-known to dealers. Under Regulation Z (which governs consumer credit sales) and Regulation M (which governs consumer leases) of the Truth in Lending Act (TILA), dealers’ advertisements must provide additional mandated disclosures for vehicle financing and leasing that contain “trigger terms.” An FTC hot-button item is properly advertising the price of a vehicle. Now more than ever, consumers are looking for a certain vehicle at an affordable price. Based on the publicity surrounding the FTC’s CARS Rule and actions against dealers by the FTC and state regulators, consumers are on high alert, and the internet has made everyone a “lawyer.” Dealers do not want the headaches associated with legal actions because salespeople did not sell vehicles at the advertised price and overcharged the consumers. A screenshot of an improper advertisement or selling the vehicle at a price over the advertised price is a “gotcha” by a regulator and/or a consumer. Dealers need to follow the roadmap of proper advertising to avoid very costly advertising violations. PRICE The price advertised must be available to everyone. The failure to sell the vehicle at the advertised price is the cardinal sin of bait and switch. Even if a consumer does not know of the advertised price at the time of purchase, the failure to give that advertised price can still lead to a bait-and-switch claim or regulators launching an investigation. The advertised price shall not include any manufacturer incentives or rebates that are not available to everyone. Some dealers believe that advertising a price that is not available to everyone may be solved by a disclaimer. That is a wrong belief, and such a disclaimer is used It’s Time to Use a Microscope to Examine Your Advertisements By Barrie Charapp, Beaty, Charapp & Weiss LLP vada.com 11
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