2018 GNYADA Membership Directory

disclosures that are “an integral part of the claim.” For example, disclosures about added fees and costs that consumers must pay to purchase the product should really be in close proximity to the price claims, and not on a separate screen or page. Any elements of the ad that detract from the effective communication of a disclosure should be removed or altered. Pop-up disclosures typically do not comply because many consumers block pop-ups. A disclosure should be made in the same manner as the claim it qualifies and may need to be included each time the claim is presented. The content of the disclosures should be clear, simple, and straightforward.The test for whether a disclosure is effective is the extent to which consumers can actually read, perceive, and understand it. Rapidly scrolling pages of text are likely to fail the test for acceptability. Prequalifying Customers Dealers can use their websites to market credit terms and prequalify customers even before taking a full credit application. Whether a prequalification is treated as merely an inquiry or a credit application depends on what you communicate to the consumer. Please note that the distinction between inquiries and applications in the prequalification context is complicated and fact-specific. Dealers should work with legal counsel to ensure that their communications with consumers in the prequalification process do not inadvertently cross over from an inquiry into a credit application. A consumer can securely provide personal information (e.g., name, address, birth date, Social Security number) over a secure webpage (an https page or by using encrypted data transfer) and give consent allowing the dealer to access their credit report, including their credit score, for prequalification purposes. If you respond by indicating the types of credit programs you offer for which the consumer may qualify and indicate how the consumer can submit a complete credit application, the prequalification process can be treated as an inquiry that does not trigger any risk-based pricing or adverse action notice requirements. You can also communicate to the consumer that your dealership has many credit programs available and that you need additional information from the consumer to be able to prequalify them for one of the programs. Either way, suggest that the consumer come to the dealership or call your Internet sales manager. If you respond that there are no programs for which the consumer can qualify, then you may be considered as having made a credit decision instead of treating it as an inquiry. In that case, you will need to send the consumer an adverse action notice. If you respond with information that indicates the consumer qualifies for specific financing, you have also made a credit decision and must provide the Risk-Based Pricing Notice or alternative Credit Score Disclosure Notice. In addition to the challenges posed by making disclosures on electronic devices, the FTC has identified two other major issues with online and social media advertising: • Native Advertising (“sponsored content”). Promotional messages that blur the lines between advertising and content are common on the Internet, but may be deceptive. The FTC has issued an enforcement policy statement on “deceptively formatted advertisements,” defined as promotional messages that are integrated into and indistinguishable from non-promotional content, such as news, featured articles, or product reviews. The policy statement states that advertising and promotional messages that are not readily identifiable as such are deceptive, because they are likely to mislead consumers into believing the messages are independent and impartial. In these situations, the advertiser must clearly and conspicuously disclose that the embedded message is an advertisement, for example by putting the phrase“Paid Advertisement”at the top of the message.

2 0 1 8 MEMBERSHIP DIRECTORY Hot TOPICS

162