GNYADA March 2017 Newsletter

AlliedMember Memo

8 Advertising Compliance & Review Four Ad Violations for Dealers to Watch Out For

Ad compliance has never been more important; because, in today’s digital era, an ad is forever. Unlike years past, when print ads often wound up in the trash with yesterday’s newspa- per, today’s ads “live on” for decades, and they can be accessed and reviewed by regulators at any time. Regulators on every level of govern- ment have begun enforcing automo- tive advertising compliance: Federal: The Federal Trade Commission (FTC) and the Truth in Lending Act (Regulations Z and M.) State: New York's Unfair and Deceptive Trade Practices Act and enforcement under the State Attorney General's Advertising Guidelines. Local: New York City’s Department of Consumer Affairs and individual counties’ Offices of Consumer Affairs. Recent history reveals a pattern of enforcement actions involving certain ad violations: GNYADA has learned about the fol- lowing identity-theft scam: Last summer, an individual used what appeared to be a legitimate North Carolina driver’s license to complete a no-money-down vehicle purchase at a New Jersey dealership. The deal was approved and financed by a lender, who soon after began pursuing the individual for nonpay- ment. After the lender contacted the dealership regarding the customer's payment delinquency, it became 9

is exclusive to his/her dealership, as it is a rebate available on that particular vehicle statewide. Further, unless rebates are available to all consumers, advertising prices with the rebate amount subtracted/factored in, is deemed deceptive. “Free Giveaways”: Federal regula- tions, the FTC and state and local agencies have determined “free give- away” language to be deceptive, if the advertised item is only free contingent on a separate purchase. To avoid the consequences of an enforcement action, the best practice is to have all dealership ads, including online ads, routinely reviewed by legal counsel for compliance. Karl Chip Seman, Esq. of Grunwald & Seman, P.C., a GNYADA Allied Member, offers comprehensive monthly reviews and compliance audits of dealership advertis- ing, and liaises with many dealerships’ ad agencies. The Association thanks Mr. Seman for his contributions to this article.

Conflicting Representations: The text of an ad is, in fact, a representa- tion. When it prominently makes one statement (e.g., “up to $3,000 off vehicle trade-ins”) and the disclaimer states otherwise, this is a violation. If a headlines screams, “We finance everyone!” but much smaller font next to it states, "with excellent cred- it”, this is a violation. Too-Small Disclaimers/Footnotes: Use of any font smaller than 10-point is deceptive. Using too-small “fine print” can automatically mean the main text is also deceptive, since the fine print often alters its meaning. Dealer Rebates: Per FTC guidance, ads featuring rebate amounts must accurately disclose information, such as the terms and conditions to receive it. The FTC has deemed it deceptive for a dealership to advertise that the dealership provides rebates. This is important to keep in mind with regard to New York State’s ZEV Rebate Program; a dealer ad should not make it seem as though a ZEV rebate offer apparent that a stolen identity had been used to purchase the vehicle. The dealership filed a police report and an insurance claim. The vehicle was eventually located at a southern U.S. port in early 2017, where it was impounded before it could be shipped overseas. After a subsequent investi- gation, it appears that this culprit has also defrauded other dealerships in New Jersey and Pennsylvania. The frightening aspect of this type of

Watch Out For This Sophisticated Fraud Scam

scam is how hard it was to detect; in this case, the identification and the supporting documents all appeared legitimate, even by the lender. Given this, extreme vigilance and communi- cation among dealerships is recom- mended. Dealers are advised to review any bulletins or reports about vehicle thefts where a stolen identity was used. Be sure to note the names and other identification points used in those fraudulent transactions in case someone tries to use the same stolen identity at your dealership.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • March 2017 7