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make sure you disclose any material connections between you and an endorser of your product, including if the endorser is receiving monetary or other compensation. 6. Adopt a social media policy in accordance with the guidelines described above and in consultation with your attorney or compliance professional. Make sure that your social media policy protects against improper disclosure of company or consumer information but does not inhibit the employee. 7. The FTC’s website, www.ftc.gov, and State Attorney General websites provide a great deal of information on auto dealer advertising guidelines. Checking those websites to see recent enforcement proceedings involving auto dealer advertising can also be helpful. 8. Understand the state law concerning a dealer’s ability to disclaimwarranties. Make sure it is clear in the service contracts you sell whether you have “entered into” the service contract, in which event you cannot disclaim implied warranties under the Magnuson-Moss Warranty Act (MMWA) discussed in Topic 7: The FTC: Marketing and Advertising Vehicles, and Credit Terms. Service contracts and insurance contracts to cover the obligations can be structured in a number of different ways, each of which has different tax and liability issues. Two examples are“retro”policies and“reinsurance”policies. In“retro”policies, a portion of the customer premiums is sent by the dealer to an insurer who deposits it into an account to pay claims. When contracts expire or at predetermined times, the dealer receives a portion of the earned premiums. In reinsurance policy programs, the dealer sends a fixed amount to an insurance company who in turn cedes the amount to a reinsurance company that may be affiliated with the dealer. The insurer offsets claims payments against sums paid to the reinsurance company. When National Warranty went bankrupt, reinsurance companies were deemed to own the reserves, which remained available for customer claims. Retro accounts were considered part of National Warranty’s bankruptcy estate and not available to satisfy consumer claims. State insurance laws also contain requirements for insurance and reinsurance for service contracts. Review how your service contracts are structured and insured with your lawyer and accountant. Additional Resources FTC Guidance on Advertising Consumer Leases https://www.ftc.gov/tips-advice/business-center/guidance/advertising-consumer-leases A consumer compliance handbook published by the Federal Reserve Board to promote compliance with Section 5 of the FTC Act which prohibits unfair and deceptive acts and practices: www.federalreserve.gov/boarddocs/supmanual/cch/200806/ftca.pdf FTC Guidelines for Small Business Advertising: www.business.ftc.gov/documents/bus35-advertising-faqs-guide-small-business FTC Guidelines for Advertising and Marketing on the Internet: http://business.ftc.gov/documents/bus28-advertising-and-marketing-internet-rules-road A Dealer’s Guide to the Used Car Rule: http://business.ftc.gov/documents/bus13-dealers-guide-used-car-rule

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175 2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE

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