This is a topic that never gets old and needs to be reviewed again and again. Over the years, I have counseled clients, conducted seminars, and written numerous articles on advertising compliance. And the topic is still relevant. As you know, the FTC has become actively involved in reviewing dealerships’ advertising practices. The FTC entered into numerous consent agreements with dealerships indicating the stores could not advertise prices or discounts unless qualifications are clearly disclosed. Further, the ads cannot misrepresent the existence of any discounts, rebates, bonus incentives or prices, or the existence of any price advantage/value unless it is disclosed. Further disclosing the number of vehicles at a specific price is another material fact and the required disclosures for financing or leasing of the vehicle.
The typical question I get when discussing advertising with dealers is, “Well others do it, why can’t I?” My canned response is, “Because it is illegal and eventually you will be the one who gets caught.”
Ohio, like every other state, has extensive rules and regulations regarding automotive advertising. I always suggest that you obtain a copy from your local dealer association or state Attorney General’s Office, who will be more than happy to provide one. Generally, ads are not blatant lies; rather, the ads are just slightly misleading. This is what causes most stores to get into trouble. Other primary issues for dealer compliance is the use of third party vendors and advertising agencies that create the ads. Although the vast majority of them are very well intentioned, they do not know the specifics of the state advertising laws and you, as the dealer putting your name on the ad, need to review the ads and amend them to make sure the ads conform to state law. Obviously, as Tier II and Tier III advertisers, it is your responsibility to create excitement. However, you must still comply with federal and state laws. You know the old adage, if ads are too good to be true then they are and will get you into trouble.
I have had numerous discussions with ad agencies regarding disclaimers and formats in ads and the general response is, “Well, we put it in the disclosure, isn’t that sufficient?” No. If there is an issue of stacking, rebates, or other offers than this is a problem. Further disclaimers have to be of a certain size depending on the size of print in the ad, must be close to the offer being made and the ad must be understandable to the general public. There is always a pushback by the ad agency stating, “Well this will not look good in print or the disclaimer is too long for radio or television.” However, the law is the law and you need to do the best you can to make the ad work. Further, you always get the argument from the third party vendors, “Well they used it in other states, why can’t we use it here?” The simple answer is because state law prohibits it.
My law firm has been involved in several class action lawsuits dealing specifically with dealer advertising. Obviously there are different fact patterns for each lawsuit but, in general, the class action lawsuits state that the ad is misleading to the consumer and contains statements in the ad that are not true or, and this is the big one, the dealership did not sell the vehicle at the advertised price. Make sure if you run an ad at a specific price on a specific vehicle that your sales managers and your sales people know that the vehicle has been advertised at a specific price, and sell the vehicle at the advertised price!
While this YAK just scratches the surface on the advertising issues dealers face, always review your ads whether placed by yourself or placed by third party vendors, don’t lie, don’t mislead and don’t try to be cute and tricky. Most importantly, SELL THE VEHICLE AT THE ADVERTISED PRICE!
