2015 GNYADA MEMBERSHIP DIRECTORY

substantially all of the vehicles meet those criteria. If your ad says “factory authorized,” be prepared to produce the written “factory authorization” that supports that statement. Be wary of advertisements promising credit to subprime borrowers (e.g., “bankruptcy not a problem”). If you use an advertising agency, try to get the agency to indemnify you if the ads it produces lead to litigation or an FTC or Attorney General action. Be very careful with footnotes to headlines or inviting copy text in your ads. Fast-talking TV or radio disclaimers are also problematical. The CFPB specifically cited fast-talking telemarketers as part of the deceptive selling process. The FTC has also warned about running ads where every statement is literally true on a stand-alone basis but the “sting” or impression of the entire advertisement collectively is deceptive or misleading. The FTC looks at an ad in totality of its impression and not just the literal accuracy of all statements. 4. Be specific in listing in the Used Car Buyer’s Guide the vehicle systems covered by any warranty. “Powertrain” is not adequate for this purpose. If you give a warranty in connection with the sale of a used car, always offer a“limited warranty”and not a“full warranty”. The obligations that accompany the description of a full warranty are detailed and onerous. 5. Understand your state’s law on a dealer’s ability to disclaim warranties and make sure it is clear in service contracts you sell. If you have “entered into” a service contract, you cannot disclaim implied warranties under the MMWA. Service contracts and insurance contracts to cover the obligations can be structured in a number of different ways, each of which has different tax and liability issues. Two examples are “retro” policies and “reinsurance” policies. In “retro” policies, a portion of the customer premiums is sent by the dealer to an insurer who deposits it into an account to pay claims. When contracts expire or at predetermined times, the dealer receives a portion of the earned premiums. In reinsurance policy programs, the dealer sends a fixed amount to an insurance company who in turn cedes the amount to a reinsurance company that may be affiliated with the dealer. The insurer offsets claims payments against sums paid to the reinsurance company. When National Warranty went bankrupt, reinsurance companies were deemed to own the reserves, which remained available for customer claims. Retro accounts were considered part of National Warranty’s bankruptcy estate and not available to satisfy consumer claims. State insurance laws also contain requirements for insurance and reinsurance for service contracts. State laws also determine whether the sale of GAP is an insurance product (requiring a license from the state Insurance Department) or not. Review how your service contracts are structured and insured with your lawyer and accountant. 6. Adopt a Social Media Policy in accordance with the guidelines described above and in consultation with your attorney or compliance professional. Remember that advertising online must be considered from the perspective of the devices that will be used to review it, including cell phones and tablets. If you cannot be clear and conspicuous in a medium like Twitter, do not

HOT TOPICS 2015 GNYADA Membership Directory 109

advertise on Twitter but simply put an invitation to come to your website. Make sure that your Social Media Policy does not inhibit employee communications to the point where your policy could be held by the National Labor Relations Board to violate rights of employees to engage in “concerted activities”under federal labor law.