2020Directory_FNL_FlippingBook

The FTC has indicated that advertising the fuel economy of vehicles can also trigger liability. The FTC has further taken the position that no item can be advertised as “free”when the primary item being sold (such as an automobile) is subject to a negotiated price. In fact, the FTC has issued an entire regulation on when the word “free” can be used in advertising without being deceptive. Since 2012, the FTC brought more than 30 deceptive practice enforcement actions against dealers. Four involved dealers who advertised that they would pay off a customer’s trade-in balance even if the customer was “under water.” At least five enforcement actions involved dealers advertising prices and discounts that were either not available to all consumers or deceptive in terms of being available only on higher-priced, “loaded”vehicles, terms that were not disclosed. Others are discussed in Topic 7: The FTC: Marketing and Advertising Vehicles, and Credit Terms, including deceptive pricing, concealment of terms, and making the advertised terms available on only a small number of vehicles. The FTC is being very aggressive on scrutinizing dealer advertising especially on the Internet and in social media. Disclaimers or qualifications must be disclosed“clearly and conspicuously”and in close proximity to the advertised language they qualify. The term“advertising” should also be viewed broadly; in 2016 the FTC took action against one dealer for posting fake positive reviews about the dealership on social media. Each of the enforcement actions brought by the FTC involved consent orders that can last up to 20 years and many of the consent orders will be followed by class action lawsuits for state UDAP claims, as FTC consent orders can provide a road map to plaintiffs’lawyers. “Abusive” Practices Similar to Section 5 of the FTC Act, the Dodd-Frank Act prohibits unfair, deceptive acts or practices, however, it differs in that it prohibits abusive acts or practices. Specifically, Section 1031 of the Dodd-Frank Act provides that abusive practices include practices that materially interfere with the consumer’s ability to understand a term or condition of the product or service or take unreasonable advantage of a consumer’s lack of understanding, inability to protect their interests, or their reasonable reliance on the credit provider (dealer) to act in the consumer’s interests. Ex-CFPB Director Richard Cordray had indicated the agency would not publish regulations further clarifying what are abusive practices but would do so by bringing enforcement actions against perceived violators. Said Cordray,“For an institution, if they are in a situation, they should be thinking carefully about whether they are taking unreasonable advantage of their customer … It’s a customer by customer thing.” On June 25, 2019, the CFPB initiated a symposia series on the issue of abusive acts or practices under Section 1031 of the Dodd-Frank Act. A second symposium was held on September 19, 2019 to discuss the methodological foundations of behavioral economics and behavioral law and economics and consumer financial protection. During the latter event, Director Kraninger recognized the CFPB’s discretion to create rules, but implied that some restraint was needed in developing the policy. Specifically, she stated: It cannot be stressed enough that to develop sound policy in these cases we need a demonstration—and not just an assertion—of a market failure. And, we need to offer a remedy carefully tailored to address that failure. Markets often are imperfect. It is often said, wisely, that we should not let the search for the perfect be the enemy of the good. But the Bureau should only address market imperfections if it is clear that intervention would improve the status quo. ***

2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE HOT TOPICS

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