2020Directory_FNL_FlippingBook

Deceptive Advertising Examples The following are a few examples of deceptive advertising by a dealer:

• Marketing a program where the consumer’s outstanding debt on a trade-in vehicle would be paid off, no matter how much the consumer owed, but in reality, the dealer either financed the “negative equity”or required it to be paid off by the customer in cash. • Failing to disclose that “dealer discounts”and “Internet prices”would require customers to qualify for other discounts that were not generally available (e.g., military member, recent college graduate, etc.) and that even with these other discounts, the consumer would wind up paying a higher price for the vehicle than advertised. • Advertising biweekly payment plans claiming that the plan would save consumers money on their financing by shortening the duration of the financing and thus lowering total interest paid, but the marketing materials fail to disclose that the fees charged for participating in the program outweigh any potential savings. In 2016-2017, the FTC announced a series of settlements with auto dealers regarding advertising of used vehicles subject to unaddressed open recalls. In these cases, the FTC asserted that it was deceptive for dealers to advertise that used vehicles offered for sale were subject to a rigorous inspection when that inspection process did not identify and repair open recalls. The FTC argued that “rigorous inspection” claims constituted an implied representation that the vehicles were not subject to any unaddressed recalls. The FTC further claimed that such implied representations were likely to mislead reasonable consumers if the vehicles offered for sale were, in fact, subject to open recalls. These settlements required the dealers to supplement any inspection claims with a clear and conspicuous disclosure that vehicles offered for sale, even those that the dealer inspected, may be subject to an open recall. This disclosure also needed to explain how consumers could determine whether a particular vehicle offered for sale had any unrepaired recalls. More recently, in 2018, FTC settled a lawsuit, against nine automobile dealers inwhich they agreed to pay over $3.5 million in redress to consumers allegedly harmed by the dealers because that failed to clearly and conspicuously disclose required information in their advertising and otherwise used deceptive and unfair sales and financing practices, deceptive advertising, and deceptive online reviews. Dealer Advertising Practices to Avoid The FTC is aggressively challenging deceptive dealer advertising. Below is a non-exclusive list of “don’ts” that the FTC and others have indicated dealers should avoid: 1. Deceptive pricing. This is where the dealer makes misleading statements or omits material information about the price or terms of an offer. It is deceptive to state a price when that price excludes other significant fees and charges, unless the fees and charges are clearly and conspicuously disclosed. 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

HOT TOPICS

163 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE