FTC crackdown on advertising
The first topic in last weekês WANADA Dealer Law Briefing was the ramping up of law enforcement for deceptive auto sales ads by the Federal Trade Commission. Eight rounds of consent orders from the FTC involving 25 dealerships in 15 states have gotten the industryês attention, Charapp said. The trigger terms in dealer advertising are very clear, and dealers must know the rules.
Some dealers today have unwittingly engaged in what the FTC considers bait and switch advertising, said Charapp, who then cited examples. For instance, an ad that does not disclose that the stated price includes incentives with limited availability, or an ad that features deals that are not available. Another problem: advertising programs based on automaker programs not available to everybody.
According to the Briefing Panel, one phrase that should never appear in a dealerês advertising is this: Not all customers will qualify. Virginia has a specific disclosure for dealers to use that details savings and qualifications. If a dealer is offering a discount to members of the military or first-time buyers, the ad should specify exactly what that means.
Another phrase never to use in advertising: Pay off your trade, no matter how much you owe.
All it is, is negative equity, Charapp pointed out. But the FTC doesnêt like this and has come down on dealers for it.
Charapp advises against advertising certified pre-owned vehicles that are under open recall unless that fact is disclosed. If it has an open recall, you canêt claim itês safe, he said.
Dealers cannot relegate all advertising questions to their ad agency, attendees were told. The agency is likely not to be up-to-date on every FTC action and does not have the same legal exposure as the dealer. The Briefing Panel recommended A Dealer Guide to Federal Advertising Requirements, on NADAês website as an indispensable frame of reference.Download Bulletin PDF