By Thomas B. Hudson
Someone at your dealership is in charge of advertising. Is that someone committing advertising malpractice?
I frequently see (and receiving the mail) ads from car dealers with content that might as well say, “C’mon, Federal Trade Commission, sue us!” The ads contain problems that the FTC has been targeting for the last few years, but these dealers apparently haven’t gotten the memo.
The FTC has mounted two major efforts to clean up dealer advertising. Operation Steer clear and Operation Ruse Control are the noisiest and most-publicized efforts, but they are just the tip of the FTC’s iceberg of advertising enforcement actions against dealers. The FTC has announced several dozen other advertising enforcement efforts over the last few years. Although it is admittedly a rough measurement, as search of Spot Delivery articles using the search term “Federal Trade Commission AND advertising” yields a staggering 426 articles.
The FTC actions have focused on a number of practices that the FTC believes violate the law. Some examples include “we’ll pay off your trade, no matter what you owe,” “nothing down” big print followed by the revelation the “you will need to stroke us a check when you pick up the car,” use of prices that reflect various discounts that a buyer cannot (or is very unlikely to be able to) use, discount claims, non-compliant email advertising, false green marketing claims, non-compliant Internet advertising, satisfaction guarantees, offers of “free” items with a purchase, and use of trigger terms without using the required disclosures triggered by those terms.
And it’s not like there isn’t a lot of help available for avoiding common advertising violations. The National Automobile Dealers Association has a publication that assists new car dealers in complying with federal advertising requirements on the sale, financing, and leasing of automotive products and services. A Dealer Guide to Federal Advertising Requirements provides examples of “bad” ads and “good” ads and chapters on 41 different federal advertising topics. The publication is available to both NADA members and non-members.
Many state auto dealer associations and independent auto dealer associations offer similar guidance. The FTC’s own website is a treasure trove advertising compliance help.
The FTC claims cited above, as well as a number of other advertising “gotchas,” have received so much publicity and attention that any dealership running those types of ads is committing advertising malpractice. If I were a dealer principal and the FTC nailed my dealership for these or similar violations, I’d be looking for someone to fire because there’s really no fighting these FTC enforcement actions. The advertisements say that they say, so there’s not a lot of argument about facts.
And I wouldn’t take as an excuse a response like, “We bought this ad program from a vendor and assumed the vendor knew what it was doing.” The FTC will say, correctly, that the advertisements, and the problems, are all yours. There isn’t even any assurance that the FTC will include the ad company in its enforcement action.
I also wouldn’t take as an excuse a response like, ” I didn’t know about these developments.” Not when you consider those 426 articles, all the noise, and all the resources on government and dealership association websites. You’d have to be intentionally looking the other way not to know about dealership advertising practices.
So, unless you plan to fire the compliance officer, hand this article to him or her with instructions to get to work.