Not since 2004 has there been any real activity by Florida’s regulatory agencies regarding how dealers advertise on websites, in print and in various media. However, the Federal Trade Commission (FTC)has been active nationally and in Florida. As we have reported earlier the FTC is watching your print ads and website promotions online in their DC offices.
In the past 5-6 years the pressures of competition have caused a slow and gradual move away from the principles communicated back in 2004 when the Attorney General’s office weighed in and before the FTC got involved.
We understand the crowd mentality of all dealers when they begin to lose business because some dealers are outwardly violating the laws of fair practice. The norm is now the antithesis of what the AG and the FTC have communicated.
New issues that will definitely become issues for dealers are the inclusion of rebates and programs that lower prices for select groups of people, but are carte blanche used to promote lower vehicle prices in ads for all consumers (i.e., trade assists, finance assists,other rebates applicable to only certain customers) notwithstanding their inapplicability to most consumers.
The Attorney General’s office has given guidance over the years:
March 1, 2004
Dear Mr. Smith:
Recently, certain dealerships which have been subject to enforcement actions by this office have expressed a desire that our position as to specific acts and practices relating to advertisements for the sale of motor vehicles be clarified. One particular area of concern pertains to the method of disclosure of dealers fees.
Florida Statute 501 Part VI describes particular acts and practices which are considered unfair and deceptive, and thus actionable, under Florida’s Deceptive and Unfair Trade Practices Act. Section 501.976 (16) states, in part, that:
…The advertised price must include all fees or charges that the customer must pay,including: freight or destination charge, dealer preparation charge, and charges for undercoating or rust-proofing. State and local taxes, tags, registration fees, and title fees, unless otherwise required by local law or standard, need not be disclosed in the advertisement….(emphasis added)
In terms of traditional forms of advertising, including but not limited to print advertising, “advertised price” is the price most prominently displayed as to a particular vehicle. That price should include any and all fees or charges that the customer must pay, including dealer preparation fees, but excluding tax, tag, registration and title fees. From an enforcement standpoint, however, we look at the totality of the circumstances and evaluate each case independently. When deciding whether to initiate an action based on the advertisements of a particular dealership (where the issue concerns the disclosure of dealer fees), we consider numerous factors including, but not limited to:
- if the dealer fee is not included in the most prominent advertised price, is that additional fee clearly, proximately and prominently displayed in a manner that will draw the attention of the consumer;
- are there other facets of the advertisement (or series of advertisements) that would be considered unfair or deceptive;
- have there been prior complaints regarding the acts and practices of the dealership and
- do the current advertisements violate prior agreements between the dealership and this office.
It should be understood that the objective of Florida Statute 501 Part VI and 501 Part II is not solely the protection of the consumer. A dealership that, on a consistent and ongoing basis, engages in unfair and deceptive advertising does so to the detriment of its fellow dealerships. If and when such a pattern and practice of deceptive conduct on the part of a dealership is presented, this office has an obligation, not only to the consumer, but to “level the playing field” for the benefit of the dealerships’ competitors.
FTC Recent Print & Internet Advertisement Enforcements:The FTC’s crackdown on deceptive advertising; ad tactics the agency is targeting:
- Deceptive pricing: Advertising prices that reflect huge down payments or “stacking” of multiple discounts for which most buyers wouldn’t qualify
- Any manufacturer rebates that are advertised should be generally available to consumers
- Any material qualifications . . . that a consumer must satisfy to receive a rebate, or limitations that apply, should be clearly and conspicuously disclosed.
- Price advertising that includes multiple manufacturer rebates (i.e. rebate stacking) that have qualifications that are inconsistent or unlikely to be satisfied by a consumer should be avoided.
- Deceptive teaser payments:Low payments in effect for only a few months of a finance term, without proper disclosure that the payments balloon to a larger amount.
- Hidden rates: Charging cash and credit buyers different amounts for the same vehicle, without disclosing the extra finance charge
- False no-money-upfront lease claims
- Undisclosed lease terms
- Bogus prize promotions and sweepstakes
- Improper disclosure of credit or lease terms
- General rule of thumb for dealer ads is “Don’t lie, and don’t be tricky.”
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