F&I False Advertising – Easier and Worse Than You Think

By October 23, 2015 Uncategorized No Comments

measure-false-advertisingHave you ever used “As low as…” or “For the low payment of…” and then used an asterisk and lots of very tiny print to try and lure customers?

Okay, maybe you haven’t – but you know someone who has (wink, wink)!

Well, it is time start being very, very careful.  It is illegal.  The Feds are watching.  This practice will catch up with you!

The following story pertains to car dealerships, but it is only a matter of time, and not much time before the FTC starts trickling enforcement down the recreational vehicle line.


United States: Las Vegas Auto Dealers Settle FTC Deceptive Advertising Claims

Last Updated: July 6 2015

Article by Justin M. Brandt, Chad R. Fuller and Alan D. Wingfield

The allegations against Planet Hyundai and Planet Nissan involved similar misleading advertisements in which big, bold claims such as “$0 DOWN AVAILABLE” or “PURCHASE! NOT A LEASE!” were paired with asterisks and small fine print that was contradictory, disingenuous, and/or only applicable to a small segment of the population.  Additionally, the dealerships were targeted for allegedly misleading by omission, such as failing to disclose whether a security deposit was required.

No penalties were imposed on either company, and there were no public admissions of wrongdoing, but both dealerships signed consent orders placing the dealerships under heightened scrutiny for twenty years and imposing hefty fines for future violations.  The FTC unanimously approved the consent orders with a 5-0 vote, and there will be a thirty-day public comment period on the proposed settlements before they are finalized.

At a press briefing last year, FTC Bureau of Consumer Protection Director Jessica Rich stated, “Dealers think that if they put the real price of something in really fine print, that’s not deceptive.  That is deceptive, and it violates the law.”  From January through March 2014, the FTC announced settlements with ten dealerships throughout the country as part of “Operation Steer Clear,” which involved similar allegations.  Although the two Las Vegas settlements were not part of that operation, they demonstrate a continued focus by the FTC on auto dealership advertising practices.


So, what happened here?  Look very carefully at the wording of the violations.

The “fine print” was “contradictory, disingenuous, and/or only applicable to a small segment of the population” and the dealers were also charged with “misleading by omission, such as failing to disclose whether a security deposit was required”.

When you put your signs on the wall or hang them off your vehicles, and you offer “the low payment of…” and then put fine print that says, “Based on qualifying credit” you do put yourself at risk.

Take a look at the credit profiles of the customers buying from you.  Is your average customer’s credit score a 700?  Is the rate and payment based on needing a 750, or qualifying for an “auto-approval” that 80% of your customer’s credit profiles would not achieve?  You are now making an offer that is”applicable to a small segment of the population.”  If the rate and payment requires 10% or 20% down and you don’t disclose that, you are “misleading by omission.”

Your signage needs to reflect what is possible for your average buyer.  If you have competitors that are pushing the envelope and you aren’t, just remember, “karma is a bitch.”  The law, and social media reputation will catch up with the cheaters.

Be honest and forthright!  Do the right thing by your customers, no matter how painful it may seem at the moment.  Not only will it keep you out of the FTC spotlight, it is the right thing to do…and it will pay off!

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