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Advertising seminar offers regulations review, but not ad critiques

November 22, 2010

Dealers and their advertisers gathered at the CATA April 6 to hear Illinois assistant attorneys general comment on the state's motor vehicle advertising regulations.

What they seemed to expect was advice on how to steer clear of action by the AG's office, which enforces the regulations. What they mostly got, it seemed, was frustrated.

The attorney general's office does not provide legal advice to the public. In other words, they won't tell someone where the line is in the sand, but they'll go after anyone who crosses the line.

But the attorneys did offer a list of frequent violations they encounter in today's dealer ads, to help dealers recognize what they're looking for. An advertisement encompasses any oral, written, graphic or pictorial statement, from newspapers to radio to television to handbills, posters and window stickers to the Internet. The seminar was coordinated by the Illinois Automobile Dealers Association.

The complete Illinois motor vehicle advertising regulations appear on the Web sites of the CATA, at www.cata.info, and of the Better Business Bureau, at www.chicago.bbb.org / cataad.html The BBB works with the CATA to review dealer advertising in northern Illinois and serve as a buffer between dealers and the AG's office. The BBB notifies dealers whose ads are not compliant.

If an ad is not subsequently brought into compliance, the matter is forwarded to the AG's office.
Tops on the advertising infractions list are those of the regulation's Section 475.310, covering advertised prices. The section declares that "purchasers shall be able to purchase all vehicles described by the advertisement at the advertised price."

That means that if a specific vehicle-usually identified by a stock number-is advertised for $17,000, it cannot be sold for $19,000. And a vehicle cannot be advertised in a newspaper at one price, say, $17,000, but offered  for$15,000 in a "special Internet price." It must be offered in all media at the same price.

The No. 2 infraction, accordingto the assistant attorneys general, concerns rebates. Any limited rebates- like those offered for recent college graduates-can be disclosed, but they cannot be subtracted from the vehicle's selling price. Don't do the math for readers on limited rebates, the attorneys implored.

The matter of extending gifts-dealer-financed warranties, oil changes and tires for life, roadside assistance-received extended attention. Illinois advertising regulations forbid dealers from offering free prizes, gifts, or other incentives in connection with a vehicle purchase or lease if the transaction price is negotiated, unless the incentive is paid for by the manufacturer or a dealer-line association. No warranty may be advertised as "free" (Section 475.590).

"Zero down payment" written or spoken in automotive advertising does not constitute one of the five "triggering terms" which invoke further disclosure, according to a 2002 opinion by the Illinois attorney general's office and the BBB.

"An advertised down payment that requires actual money down would trigger further disclosure. But 'zero' is not a tangible amount, so that figure does not represent a triggering term," BBB operations director Steve Bernas said in 2002.

The five triggering terms, which demand further disclosure, are:

• amount or percentage of down payment;
• number of payments;
• period of repayment;
• amount of payment (expressed as percentage or dollar amount); and
• amount of any finance charge.

A review of the expression "zero down payment" followed extensive incentive advertising by manufacturers since 2001.

Staff commentary by the attorney general's office states that the trigger term provision "applies only if a down payment is actually required; statements such as 'no down payment' or 'no trade-in required' do not trigger additional disclosures" under the Truth-in-Lending Act.

BBB representatives did not attend the April 6 seminar.

 

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