by the FTC and regulators as proof that the dealer did not intend to sell vehicles at the prices advertised. No “Bait” Advertising “Bait” advertising is a deceptive sales tactic in violation of section 5 of the FTC Act which prevents unfair or deceptive acts or practices. However, many state laws also prevent bait advertising. For example, Va. Code §46.2-1581 states that “For purposes of this chapter, a violation of the following regulated advertising practices shall be an unfair, deceptive, or misleading act or practice …” Bait advertising, in which an advertiser may have no intention to sell at the price or terms advertised, shall not be used. By way of example, but not by limitation: 1. If a specific vehicle is advertised, the seller shall be in possession of a reasonable supply of said vehicles, and they shall be available at the advertised price. If the advertised vehicle is available only in limited numbers or only by order, that shall be stated in the advertisement. For purposes of this subdivision, the listing of a vehicle by stock number or vehicle identification number in the advertisement is one means of satisfactorily disclosing a limitation of availability. 2. Advertising a vehicle at a certain price, including “as low as” statements, but having available for sale only vehicles equipped with dealer added cost “options” which increase the selling price, above the advertised price, shall also be considered bait advertising. 3. If a lease payment is advertised, the fact that it is a lease arrangement shall be disclosed. MSRP If you list the MSRP only on the advertisement, the MSRP is the price of the vehicle and should be sold at that price (or lower). FTC does not look kindly at advertisements that have the MSRP for the vehicle but due to market conditions, the consumer pays over that price. If you want to charge over the MSRP, the “Dealer’s Price” must state the price you want to sell the vehicle at (even if it’s over MSRP). Listing a disclaimer that states you are charging $10,000 over MSRP due to market conditions is nothing more than evidence that you advertised a price you never intended to sell the vehicle at. Manufacturer Incentives that Require Qualifications Dealers should avoid telling a consumer that they are not eligible for the vehicle’s advertised price because they don’t meet the rebates or incentives that the advertised price includes. If there are rebates and incentives offered by manufacturers that are not available to everyone (i.e., not all consumers are qualified to receive it), or rebates are mutually exclusive (i.e., $1,500 loyalty rebate and $1,500 first-time buyer rebate), those incentives or rebates are deceptive and should not be included in dealer’s advertised price. There may be manufacturer rebates and incentives available based on specific criteria (i.e., military rebate), which can be listed but not subtracted from the advertised price since it may not be available to everyone. EV Tax Credits and Gas Savings A vehicle’s advertised price should not include the Federal EV tax credits that may not be available to everyone. Federal EV tax credits should be treated like manufacturer incentives that require qualifications, thus advertised as an additional item that can reduce the advertised price but is not included in the advertised price. Additionally, stating the advertised price of the vehicle includes estimated gas savings per month or year is a misrepresentation and deceptive. Saving on gas is an estimated cost (not verified) and does not bring down the actual price of the vehicle. It should not be included in an advertised price. Internet Price There is no such thing as an “Internet Price.” Advertising on the internet is the norm and is plain advertising. Under the law, if a dealership advertises a price for a vehicle, that price should be made available to customers whether or not they mention the internet-special advertising. That is why sales staff should understand what you are advertising. A sales manager who did not know that a vehicle was advertised at a price lower than which it was sold to a customer will not insulate the dealer from a lawsuit if a customer later discovers the lower advertised price. It makes no difference whether the customer knew of the lower internet price at the time of purchase or not. Geographic Price There is no such thing as a “Geographic Price.” Dealers shall only advertise the price of the vehicle that is available to ALL consumers/purchasers, whether the consumer lives in your PMA or not. The law does not differentiate between those purchasers in the dealer’s state from those that are out of the state. Dealers cannot give a disclaimer to disclaim the price they are advertising from one group of purchasers from another. This is similar to the violation of having a disclaimer that the advertised price is $X, but due to market conditions, the price may be increased at the point of sale. Dealers must be prepared to sell the vehicle at the advertised price regardless of the geographic location of the consumer. There is no disclaimer that can absolve a dealer from advertising a price that won’t be available to ALL consumers. 12 Virginia Auto Dealer
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