Take Preventive Measures to Protect
Car Advertisement Review Services (CARS)
The Car Advertisement Review Services (CARS) is a fee-based service that offers franchise and independent automobile dealers an opportunity to take preventive measures to comply with FTC advertising regulations. CARS will review your ads for clarity, accuracy, and compliance with advertising federal, state and local regulations. After reviewing ads, CARS will provide the store with recommendation letter highlighting red flags that might violate regulatory requirements as well as areas that need improvements.
Deceptive Advertising - Take Preventive Measures To Protect Your Store
Deceptive advertising remains a hot topic for government regulators. The FTC’s Bureau of Consumer Protection, as well as the many state Attorneys General, watch advertising practices of both franchise and independent dealers. They have been quite active in starting enforcement actions at the first sight of deceptive advertisements. Consumer complaints or actual instances of harm resulting from advertisements are not needed to pursue an investigation; the mere existence of a deceptive advertisement is enough incentive to initiate government action. Auto dealers should therefore proceed extremely carefully when advertising an aspect of their business to the consuming public.
What Are The Financial Implications For Your Store
The FTC assesses $11,000 per violation. The nature of the term “violation” can vary for the FTC; if a dealership mails 20,000 deceptive flyers, it may be charged for 1 violation or 20,000. Beyond the scope of the FTC, auto dealerships can also run the risk of injunction or even criminal referral. They can also be subject to state enforcement that also carries civil penalties and fines. Combined with the large attorney fees you will face when dealing with an issue of this kind, publishing truthful advertising is simply a way to avoid extraordinary financial costs and possibly worse. It goes without saying that auto dealers should make sure that their advertisements are clear and not deceptive.
Deceptive Sales and Advertising Practices
The New York Attorney General settled with a former Nissan dealer charges assessing illegal fees to consumers and/or subjecting consumers to a variety of deceptive sales and advertising practices. The investigation revealed that consumers were charged as much as $5,000 for warranties and service contracts without their authorization and induced to purchase and finance vehicles on terms they could not afford with false promises that the dealership would refinance their loans on more favorable terms after several months. The dealer agreed to pay $101,986 in restitution to 119 consumers who were charged.
Southwest Kia and the Federal Trade Commission
Three Dallas Southwest Kia dealers, have agreed to pay an $85,000 civil penalty to settle FTC charges of deceptively advertising the cost of buying or leasing a car. In a TV ad, the dealers offered two cars for “under $200 per month,” but in fine print that appeared for two seconds, disclosed that the offer applied only to leases, not sales, and required a $1,999 payment at lease signing. One dealer mailed ads claiming a new car could be purchased for $179 per month, but in small print, disclosed that $1,999 would be due up front, along with tax, title and license fees, and that $8,271 would be due at the end of a 38-month financing term.
NJ Dealership and the NJ Attornney General Case
NJ dealership has been ordered to pay $690,000 by a state Superior Court Judge. The case, which was filed by The New Jersey Attorney General, alleged violated the Consumer Fraud Act, the Motor Vehicle Advertising Regulations, the Automotive Sales Regulations, the Used Car Lemon Law by, advertising used motor vehicles for sale without disclosing to consumers the vehicle’s prior damage or prior use; plus more violations.
They were required to pay $640,000 in civil penalties, $31,200.91 in reimbursement to the State and $22,445 in restitution to seven consumers.
For detail information on these cases and more, read the 3Q 2016 Auto Retail Regulatory Report
How To Submit Sale Ads For Review By CARS
Auto dealers can submit store sales related ads for review by ARN's Car Advertisement Review Services (CARS) via its online application form. In addition, dealers can use CARS to upload ads as well as view and print CARS responses, review and recommendation letters. Dealers can submit their files in a variety of formats including: PDF, mp4, wmv, and word.
ARN Chief Regulatory Counsel
Tashia Zeigler, Esq. has been practicing consumer law, with a particular focus on automobile advertising and sales practices, for over a decade. Ms. Zeigler is currently the managing attorney of The Zeigler Firm in Atlanta, Georgia.
Prior to opening her firm, she served as a staff attorney and then director of Lemon Law for the Georgia Governor’s Office of Consumer Protection. While she was with that agency, she led the team that redrafted Georgia’s Auto Advertising and Sales Practices Enforcement Policies, started the regularly circulated newsletter The Auto Informer, and taught auto advertising seminars to Georgia’s franchise and independent dealerships.
She also led numerous enforcement actions against auto dealerships that engaged in deceptive advertising and sales practices, including an emphasis on sweepstakes and promotions.
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