2020Directory_FNL_FlippingBook

MARKETINGANDADVERTISINGVEHICLES ANDCREDIT TERMS

2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE HOT TOPICS

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, deceptive acts and practices (UDAPs). Within the past few 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 Topic, 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, both offline and online, 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. An act is deceptive where (i) a representation, omission, or practice that misleads or is likely to mislead the consumer; (ii) a consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances; and (iii) the misleading representation, omission, or practice is material. A practice can even be deceptive if it is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. In determining whether an act or practice is unfair, the FTC may consider established public policies as evidence to be considered with all other evidence. Deception usually occurs through written or oral promotional messages (often referred to as “representations” or “claims”) but can also occur in other ways. Examples of deceptive practices include, but are not limited to the following: - Misleading price claims, - Sales of systematically defective products

without adequate disclosures, - Bait and switch techniques,

- Failure to perform promised services; - Failure to meet warranty obligations

- If the appearance of the product or 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.

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