to undertake an affirmative act to purchase, and the motor vehicle dealer had to communicate unambiguously about what the customer was going to be charged along with a description of a product or service, its fees or costs and whether it was optional or required. The Napleton decision also spoke of matters needing to be clearly and conspicuously disclosed, which they defined as difficult to miss or easily noticeable and easily understandable by the consumer. It is extremely important to ensure that documentation such as the bill of sale and specific documentation for each voluntary protection product be clear, concise, and clearly show the price and benefits to the consumer. Many of these problems can be overcome by using current, available NADA Driven guides on Fair Credit Compliance and their more recent Driven guide on voluntary protection products. However, I strongly caution against simply copying the policy without consulting with counsel to assist in properly drafting the policy. Generally, following the guidelines of the policies can be very helpful, but mistakes can still be made if proper training and implementation are not followed. Also, form language from a policy may work for one dealership but not another. While mailers can be used, contest mailers are fraught with legal complexities. In the Traffic Jam Events case, the Federal Trade Commission reminded us of some principles we must apply when considering contest mailers. First, the Federal Trade Commission clearly stated that fine print disclaimers cannot overcome a “net impression” of deception created by an advertisement. Many of you have used mailers, and mailers can certainly be done properly. But please do not rely upon a vendor to provide legal opinions about its appropriateness and compliance. The mailer used by the Traffic Jam Events in the Louisiana case was one that I referred to as a two-step mailer. The mailer stated that everyone was a winner, which I have found is usually accomplished by giving everyone a $5.00 awards card. Consequently, that is true; everyone does win if they go to the dealership to pick up the card. However, the mailer then clearly has a number that matches a tab for a more expensive prize making the customer initially believe that they have won the expensive prize, i.e., television or a large sum of cash. However, a second step is required by the customer. The contest then requires the consumer to go to the dealership and be matched with a more unique number on the mailer, which is hard to find and is printed in fine print in an inconspicuous location. The FTC was highly critical of this practice. If you decide to use a mailer in the future, I strongly recommend a legal review. What was interesting about the Traffic Jam case is that their practices had already been suspended in the states of Kansas and Indiana prior to the Louisiana decision, but Traffic Jam Events kept continuing their practices outside of Kansas and Indiana. The Federal Trade Commission was highly critical of the company’s actions and ruled that Traffic Jam events could Last, please be careful of any language or image supporting official governmental status. not use this type of mailer in the future for any products, not just motor vehicles. Other lessons learned is the use of vouchers or simulated checks. These are highly susceptible to being illegal. In the Traffic Jam case, the disclaimers for the voucher of the simulated check were placed on the back of the simulated check, which would also be in clear violation of the West Virginia advertising laws. Also, the mailer did not clearly disclose the odds of winning the various products in a clear and conspicuous manner as is required under West Virginia law. Consequently, I strongly encourage that if a mailer is going to be used, it be reviewed by legal counsel who is experienced with advertising requirements of both the Federal and the West Virginia laws. Please do not simply rely upon the vendor’s representations. Last, please be careful of any language or image supporting official governmental status. I believe that the best practice would simply not use such images in any manner to avoid confusion and legal exposure. Again, it is extremely important to be cautious with advertising. The penalties can be very significant. There was a $10 million fine in the Napleton decision and they also required Napleton to employ a fair lending compliance officer to engage in annual training, placed caps on the lending margin and required very stringent annual reporting by Napleton to the Federal Trade Commission for many years. Individuals were found to be personally liable by the Federal Trade Commission. Consequently, an individual who has approved these advertising types could find themselves personally liable for legal violations. Advertising can certainly be done correctly, and the sale of optional, voluntary protection products to customers is very legitimate and valuable to consumers. Nevertheless, we have to be diligent so that these types of abuses and violations do not occur. The failure to make your advertising compliant can be expensive and create long-term stringent limitations and requirements. These exposures can be significantly limited by simply taking the time to consult with qualified individuals. As always, your Association stands ready to assist you to help maintain your compliant advertising programs. t Issue 1 2022 33 WVADA
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