2018 GNYADA Membership Directory

For example, a dealer luring prospective buyers onto the lot by advertising vehicles at a specific low price. But the advertised price is valid only after a $5,000 down payment, details of which are buried in a small-font footnote. 2. Deceptive teaser payments. This is where the dealer advertises interest rates that are only in effect for a short time, after which they increase substantially. For example, prominently advertising a new vehicle for $99 per month, but failing to disclose that after the first two payments, the payment amount increases to $525 for the remaining 70 months of the financing term. 3. Undisclosed Balloon Payments. This is where advertisements state a lowmonthly payment without clearly and conspicuously disclosing a large “balloon” payment at the end of term. A balloon payment is one that is more than two times the regular periodic payment. 4. False “$0 Down”Leases or Sales. Claims that consumers can lease or finance for “$0 down”are a particular area of concern with the FTC. If there are undisclosed fees or other charges due up front associated with the sale or lease (such as an acquisition fee or doc fee), or another requirement such as a particular credit score in order to obtain the no down payment treatment, the FTC may consider a $0 down claim to be deceptive. 5. Hidden rates. Claims of a low APR when the rate changes over time, or when most consumers won’t qualify for that rate, can be deceptive unless these facts are clearly and conspicuously disclosed. For example, advertising a “0% APR for 60 months” promotion when the rate only applies if customers bought a new car for up to a certain dollar amount. 6. Bogus Promotions or Sweepstakes. Dealers should not use so-called promotions or sweepstakes that are not genuine to bring customers to the showroom. FTC and state laws also require extensive disclosures in advertising contests or sweepstakes. This is discussed in more detail below. An example is when a dealer mails out scratch-off sweepstakes cards to promote car sales, where every card scratched off indicates that the consumer is a winner yet no one is awarded a prize. State Laws and Regulations State laws on unfair and deceptive acts and practices are often even stricter than Section 5 of the FTC Act and many State Attorneys General have guidelines for vehicle advertising in their state in both traditional and online media. You should check with your attorney to make certain you comply with applicable state laws and rules. Credit Advertising Federal Truth in Lending (TILA) and Regulation Z, and the Consumer Leasing Act and Regulation M, all contain advertising requirements relating to credit terms. Regulation Z permits creditors to state only those terms that actually are or will be arranged or offered by the creditor. Further, if an advertisement states a rate of finance charge, it must state the rate as an “annual percentage rate,” using that term. Similarly, Regulation M states that an advertisement for a consumer lease may state that a specific lease of property at specific amounts or terms is available only if the lessor usually and customarily leases or will lease the property at those amounts or terms. Advertising certain “triggering terms” about closed-end credit (down payment, number of payments or period of repayment, payment amount or amount of any finance charge in a credit sale) requires including other terms about the cost of credit as well (in a credit sale, the down payment, terms of repayment (which reflect the repayment obligations over the full term of the loan, including any balloon payment, and generally equate to the payment schedule), and the APR, labeled as such, and that the rate is subject to increase, if applicable). Similarly for consumer leasing, if a lessor provides a percentage rate in an advertisement, the rate may not be

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