Dealer Advertising Comes Under More Scrutiny

Advertisements by automobile dealerships are coming under increasing scrutiny by the attorneys general of several states. With regard to advertising new and used autos, dealers need to be careful. While many dealers run honest and forthright advertising, those who engage in a practice of misleading and/or potentially illegal advertising activities do the industry a disservice.

Areas of particular concern include:

• Some dealers advertise that free equipment or accessories are included, while in actuality the vehicle could be purchased at a lesser price without these items, making them not really “free” after all.
  
• Similarly, some consumers learn that purchase of additional equipment is required as a condition of the sale, meaning the advertised price is good only if customer buys additional equipment.
  
• Dealers must know when credit terms advertised need to be disclosed in compliance with the Truth in Lending Act and Regulation Z.
  
• They also must know when lease terms advertised need to be disclosed in compliance with the Truth in Lending Act and Regulation M.
  
• No buy-down interest rates should be advertised if any costs of securing the loan are passed along to the customer, unless the dealer discloses that condition. The dealer still must comply with the Truth in Lending Act and Regulation Z.
  
• Disclosures carried on television or radio must be clearly and conspicuously displayed, and terms and other required information must be shown in a way that can be seen and/or heard and understood.