COUNSELOR’S CORNER “HARD LESSONS LEARNED” Two recent Federal Trade Commission (FTC) decisions drive home prior Counselor’s Corner articles on the importance of advertising compliance. Motor vehicle dealers are approached by many vendors who promote their mailers and advertising programs as used in many states without complaints, but that does not translate into being legally compliant. More than likely, these advertising vendors have simply not been caught in the errors of their ways. Given advertising vendors’ cavalier attitudes and an increasingly aggressive Federal Trade Commission, hard lessons can occur. It is also important to reiterate that advertising compliance is easy to detect. An FTC attorney can simply review advertisements sitting at a desk while watching Facebook, YouTube or other internet sites in order to determine your compliance. Unfortunately, the following two examples are “what not to do” and are hard lessons learned by the parties. By way of background, in October 2021, the Federal Trade Commission issued a summary judgment against Traffic Jam Events, LLC for contest mailers they produced. The mailer used a concocted official government status by having the Great Seal of the United States as a watermark on the envelope and referred to the mailer as a “COVID-19 Economic Automotive Stimulus Program.” The mailer also violated the Truth In Lending Act by improper use of “trigger terms” by promoting only 0% APR for 60 months and no money down. Last, the Federal Trade Commission found using a simulated check or voucher to be deceptive. The second case was even more recent, March 31, 2022, in which Napleton Automotive Group was fined $10 million for violations of the Federal Trade Commission’s deceptive act and practices, Truth In Lending Act and the Equal Credit Opportunity Act. The FTC found that Napleton advised customers that voluntary protection products such as GAP, etching, and service contracts, were mandatory, and Napleton did not obtain the consumer’s “express informed consent” when selling these products. The Federal Trade Commission further found that Napleton had charged minorities a higher interest rate and had violated Truth In Lending Act by advertising motor vehicles with the simple phrase “$90 down.” Obviously, the mention of a down payment is a trigger term requiring the disclosure of other financing terms. Last, Napleton engaged in the deceptive use of a $3,000 gift card in its advertisement. The Federal Trade Commission found this similar to the voucher or simulated check used in the Traffic Jam Events case. What lessons can we learn to avoid the pitfalls of advertising motor vehicles? First, it is quite clear that training in proper disclosure is extremely important. Voluntary protection products can be very helpful and useful for a customer. It is quite proper to offer products for sale to a buying consumer. However, voluntary protection products are not mandatory, and I caution about adding any voluntary protection product to a bill of sale prior to the customer consenting to its purchase. The Napleton decision spoke of requiring “express informed consent” from the consumer. The customer had Johnnie E. Brown, Esq. Pullin, Fowler, Flanagan, Brown & Poe, PLLC wvcar.com 32 WVADA
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