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AG acting against dealers who violate 'zero tolerance' categories of ad regs

November 21, 2014
As reported in September, a series of changes to the BBB/CATA advertising review program was approved this year by the Chicago Automobile Trade Association’s board of directors, to combat concerns that some dealerships have been playing the system to commit repeated program infractions without penalty.
The changes reduce the time dealerships have to correct violations in their ads, and tighten the standards under which a violating dealer is referred to the Illinois attorney general’s office for discipline.
One result of the changes: The attorney general is acting against offending dealerships, including one case that almost certainly will result in a fine for violating one of five "zero tolerance" categories of the Illinois Motor Vehicle Advertising Regulations.
Previously, when BBB reviewers spotted a dealer ad that was not compliant with the Illinois Motor Vehicle Advertising Regulations, they would send notice to the offending dealer, who was given five days to respond. If the dealer did not respond, the process was repeated, meaning a noncompliant ad could be circulated up to 10 days before the attorney general’s office was notified.
Those timelines have been reduced to four days following the first notice and three days after the follow-up notice, or seven days total until the matter is referred to the AG.
In addition, dealers had been able to violate the same rule twice in a 12-month period without the attorney general’s knowledge. Only upon the third such violation was the AG notified. A dealer theoretically could violate every rule twice a year without the AG becoming involved, giving dealers substantial opportunities to fail to correct themselves, and leading to unfair competition with respect to dealers who abide by the regulations.
Now, a dealer with any two rule violations, not just the same rule, within a 12-month period will be referred to the attorney general. Also, a third violation of any rule in a 24-month period may result in a referral.
Further, multiple franchises under one rooftop will be treated as the same dealer pursuant to the new program policies; the violations will be counted against the entire operation, not separate brands.
Important, while the BBB refers appropriate matters to the Attorney General, that office has complete and independent authority to handle all matters as it sees fit in light of enforcement priorities and resources.
Reviewers from the Better Business Bureau noted that several advertising rules have been violated repeatedly recently. Violations that occur in the following areas will be given zero tolerance, and the matters will be referred immediately to the attorney general:
Rule 475.310. This rule is being widely violated in two ways. First, disclosures, particularly on websites, contain amounts deducted from advertised prices over what the rule allows which is tax, title, license and a doc fee only. No other amounts, such as freight, destination, environmental, "dealer fees," and such are allowed in Illinois. Second, advertised prices are not available to all consumers primarily due to the inclusion of limited rebates.
Rule 475.530. This rule allows dealers to advertise prices wherein rebates available to all consumers have been deducted, resulting in a price lower than MSRP. General dealer discounts available to all consumers can lower the price even more.
The rule specifically prohibits dealers from advertising prices where limited rebates have been deducted. Limited rebates must be advertised separate from price. The terms of the limitation must be clearly and conspicuously disclosed so that consumers can readily understand what rebates apply to them.
Reviewers are seeing many advertisements where limited rebates are pulled out of prices. We also are seeing advertised prices that are not actually available to any consumer at all because the rebates are bundled. However, only one is available to the customer. Such a price is completely fictitious. This is an egregious practice and unfair to any dealer competing fairly.
Rule 475.540. Dealers continue to advertise that they will pay an amount equal to or over a book value for consumers’ trade-ins. Some dealers purport to desire to merely purchase consumers’ vehicles without selling them vehicles in an effort to skirt the rule. This claim has been rejected as a way to avoid a violation.
Rule 475.590. Free gifts, prizes and other incentives are being used extensively in connection with the sale of motor vehicles. Often items of significant value are being combined with offers of minor value. Dealers are assigning a money value to customer loyalty programs such as car washes. Whatever the value, dealers are prohibited from offering anything to consumers in connection with selling vehicles where the price is negotiated.
Consumer Fraud Act, section 2 (j) (1). This provision prohibits dealers from using coupons in the sale of a motor vehicle. BBB reviewers have seen coupons, or vouchers, used extensively in connection with specific trade-in amounts and offers of trade-in assistance.