Any marketer worth his/her salt will tell you that clarity is of the utmost importance in advertising. An unclear ad may fail to convey your intended message and waste precious capital but state and federal prohibitions on deceptive or unfair trade practices provide an even more compelling reason for clarity – hefty fines! Dealership advertising is filled with traps for the unwary. Below are a few things general rules to keep in mind:
Invoice Pricing
a) If a dealership advertisement says a vehicle is being sold above, below or at invoice price then the represented price must be the actual cost the dealer paid to acquire the vehicle from the manufacturer.
1) You can include as part of the represented invoice price:
(1) the actual cost of transporting the vehicle from the manufacturer
(2) any mandatory advertising fees
2) You can’t include as part of the represented invoice price:
(1) dealer holdbacks,
(2) flooring incentives,
(3) manufacturer-to-dealer incentives,
(4) optional advertising fees,
(5) dealer overhead,
(6) document fees or consumer rebates
Prizes and Promotions
a) DON’T imply an offer is “free” if any money must be spent to receive the item in any dealership advertising.
b) Any advertised prize or promotion MUST include the following disclosures:
1) Name and address of sponsor and promoter
2) Retail value of each prize
3) Odds of winning (must be placed in immediate proximity to prize)
4) Whether winner must attend presentation or pay any money to claim prize (disclosure must be in a size equal or greater than prize claim)
5) All material limitations of offer
6) The words “no purchase necessary” and “a purchase will not increase your odds of winning” in a clear and conspicuous manner
7) Any simulated check used as part of a promotion must state “This is Not a Check” diagonally in dominant typeface. (see example below)
8) State on the first page of the offer if a winning ticket must be presented to receive a prize.
Rebates
a) Dealers may only offer authorized manufacturer rebates in conjunction with sale.
1) Any offered rebate must be generally available to the public, available in combination with other rebates offered and expressed as a component part of the advertised price.
(1) Dealers can’t advertise optional equipment rebates because these rebates are not generally available to the public.
2) Dealer must disclose all material limitations in a clear and conspicuous manner and disclose specialty and loyalty rebates separately.
Credit Offers
a) Credit offers that list a down payment, payment amount or the number of payments must include these disclosures:
1) Amount being financed
2) Whether a down payment is required
3) Total amount due at delivery
4) Annual percentage rate
5) Payment amount and frequency of payments
6) Total payment price
7) Model or vehicle to which the offer applies
8) Other material conditions
b) If your dealership advertising lists a finance charge, such as “2.9% financing,” the rate must be stated as an “annual percentage rate,” using that term or the abbreviation “APR.”
Leases
a) Dealership ads for cars available for lease MUST include these disclosures:
1) State the offer is a lease
2) The amount due at delivery
3) Number of payments
4) Amount of payments
5) Lease term
6) Security deposit, if required
7) Buyer’s liability (remaining cost) at end of open-end lease
Documentary Service Fees
a) A 2009 change to Washington state law temporarily increased the documentary service fee from $50 to $150 through June 30, 2014.
b) In order to charge a documentary service fee, the dealer must include a disclosure about the fee in its advertising.
1) A dealer may use in its advertisements the statutory language, “a documentary service fee in an amount up to one hundred and fifty dollars may be added to the sale price or the capitalized cost of a vehicle” or other language that conveys that the documentary is optional and/or negotiable.
(1) Language that infers that the documentary fee is mandatory or required does not satisfy the statute’s requirements.
2) Absent proper disclosure of the fee in print, radio and television advertisements, a dealer cannot charge a consumer a documentary service fee of any amount.
(1) Any advertisements must disclose that the fee may be charged as stated above.
c) If you charge a documentary service fee, you must:
1) Include a written disclosure (in print that is same typeface as standard text and bolded, capitalized, underlined or set out to be conspicuous) stating that the fee is negotiable. This disclosure must be made before completing the purchase and sale agreement.
(1) Refrain from stating or implying that the fee is required by the government.
2) Separately designate the service fee from the selling price and other fees, taxes and charges.
3) You may not charge the consumer any other fee (advertising, business & occupation tax) unless it is required by a state or federal statute.