2018 GNYADA Membership Directory

MARKETING AND ADVERTISING VEHICLES AND CREDIT TERMS

The Federal Trade Commission (FTC) has enforcement authority over false or misleading advertising and other wrongful activity under the authority of Section 5 of the FTC Act to prevent unfair and deceptive acts and practices (UDAPs). And over the past four years, the FTC has revved up its enforcement of deceptive auto dealer advertising, starting with“Operation Steer Clear”in January 2014 and continuing with“Operation Ruse Control”in March 2015, in which the FTC partnered with 32 law enforcement agencies to bring hundreds of enforcement actions. The FTC can identify enforcement targets in many different ways. Although the agency does not need to receive consumer complaints to initiate an investigation, complaints sometimes trigger a closer look. In the case of auto dealers, many investigations arise from FTC staffers looking for problematic ads on the Internet. In this chapter, we discuss laws, regulations, and regulatory enforcement actions concerning marketing and advertising of vehicles and credit products, as well as best practices dealers should follow. Federal and state laws govern the methods and content of advertising and marketing in any medium of communication, including the Internet and social media. Basics of Deceptive Advertising A deceptive practice is typically defined as a representation, omission, or other practice that is likely to mislead consumers acting reasonably under the circumstances in a material way. Deception usually occurs through written or oral promotional messages (often referred to as“representations”or“claims”), but can also occur in other ways. For example, if the appearance of the product or even the nature of the product itself conveys a misleading message, it can be deceptive. Simply selling a vehicle conveys the message that the vehicle is fit for its intended purpose (driving), even if the seller says nothing about its capabilities. A practice can even be deceptive if it is likely to mislead reasonable consumers. The FTC can bring a case even without evidence that any consumers were actually misled. Determining whether an advertisement is making a deceptive claim requires a three-step analysis: (1) identifying the claims conveyed by the ad, (2) determining whether those claims are false, misleading, or unsubstantiated, and (3) considering whether the claims are material to consumers. You should consult with your attorney for specific guidance, but the following is a practical guide to help you draft your marketing materials. Claims Conveyed by the Advertisement In determining whether an advertisement is deceptive, an advertiser must first understand what messages the ad is likely to convey to reasonable consumers. To do that, the advertiser must consider the advertisement as a whole and the“net impression”it creates. Even if everything stated in the ad is true, it can create an overall message that is deceptive. Advertisements may convey both express and implied claims. An express claim is one that states a fact directly, while an implied claim is one that literally says one thing but suggests something else. Advertisements often can be subject to multiple interpretations, some of which are true and some not. An advertisement can be deceptive if any one reasonable interpretation is false or misleading, even if other interpretations are accurate, and even if the advertiser didn’t intend for the advertisement to be perceived that way. Note that“reasonable”does not mean sophisticated or highly educated, however.

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