2020Directory_FNL_FlippingBook

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 low monthly 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 fees), 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. Critically, Regulation Z and Regulation M set forth specific requirements concerning advertising credit. For additional information see below. Credit Advertising TILA and Regulation Z, which apply to closed-end credit transactions, and the Consumer Leasing Act and Regulation M, which apply to consumer leases, all contain advertising requirements relating to credit terms. Under both Regulation M and Regulation Z, all disclosures must be made clearly and conspicuously. Further, Regulation Z permits creditors to state only those terms that actually are or will be arranged or offered by the creditor., if an advertisement states a rate of finance charge, it must state the rate as an “annual percentage rate,” using that term. 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 the following “triggering terms”about closed-end credit requires additional disclosures: - Down payment; - Number of payments or period of repayment; - Payment amount; or - The amount of any finance charge in a credit sale.

2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE HOT TOPICS

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