Although much has been made of the Trump administration’s efforts to cull regulatory enforcement across the government, there have been exceptions. The U.S. Consumer Financial Protection Bureau has cut back substantially on regulation of the automobile business, but the Federal Trade Commission (FTC) has increased its scrutiny of dealers.
Three auto advertising areas where the FTC has been active in dealer compliance are with Truth in Lending, bait and switch, and internet advertising:
- Noncompliance with the Truth in Lending Act (TILA) and Consumer Leasing Act (CLA). The rules are simple: Use of a trigger term requires follow-up disclosures. Dealership personnel and the advertising agency must understand and apply the rules of advertising under these laws.
- Bait and switch.
The FTC expects advertised auto prices and offers to be available to all consumers unless the limitations are disclosed. If limitations make a price or offer unavailable to all, the ad must clearly disclose the terms the customer must meet to get the advertised benefits.
- Internet advertising.
Internet offers are advertising and must comply with advertising laws and regulations. Most FTC advertising cases in the past decade have involved internet advertising offers.
Two other auto dealer areas where the FTC has been active:
The FTC let dealers know last year that the only document that should be delivered to customers about recalls is the one that NHTSA requires automakers to send. Marketing campaigns built around recalls are inherently suspect. Dealers must take great care and seek legal advice when considering such marketing campaigns.
Misstatement of customer income
The FTC has indicated it will concentrate on misrepresentations that lead to consumer credit defaults. One of the most serious is overstatement of consumer income. Optimally, a dealer should get a handwritten credit application showing the customer’s income in the customer’s own writing and save the credit application in the deal file.
This article is for information only and does not constitute legal advice. Thanks to WANADA Kindred-line member Michael Charapp, Charapp & Weiss LLP, for contributing this information.Download Bulletin PDF