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BBB reviewers see trade-in issues in dealer advertising

March 14, 2014
Officials from the Better Business Bureau, which reviews dealer advertising for compliance with the Illinois Motor Vehicle Advertising Regulations, said they recently have seen "widespread" instances of ads that violate rules about trade-in allowances.
Section 475.540 of the regulations prohibits dealerships from offering specific trade-in allowances or ranges of trade-in allowances under any circumstances. Tying such amounts to a book value does not prevent a violation of the rule. There also is no provision in the rule to authorize dealers to advertise that certain trade-in vehicles have values connected to book values.
"The practice of suggesting to consumers that their trade-ins can be worth an amount set by a recognized price guide has become widespread," said Patricia Kelly, the Chicago BBB’s general counsel. "The BBB sends letters weekly on the practice. We receive many referrals on this issue, as it continues in the marketplace because many dealers understand that it is a problem under Section 475.540.  
"We have seen it in published advertisements and most often in direct mail pieces targeted to consumers with specific vehicles known to the dealers sending the mail pieces. The direct mail piece often identifies the vehicle currently owned by the consumer receiving the mail piece, and states that the consumer can expect to obtain the book value, or even a percent over that, for his or her trade-in."
The BBB/CATA ad review program exists to provide a forum for self-regulation and to ensure that all dealers are operating on a level playing field.  
The current practice of tying a book value to a potential trade-in may have arisen because Section 475.360(d) does allow dealers to compare the used cars they sell to a recognized book value. In fact, the rule mandates that a recognized book value is the only price standard available to dealers for the used cars they sell.  
In addition, there is a required disclosure, in at least 10-point boldfaced type which states: "The value of used vehicles varies with mileage, usage and condition. Book values should be considered estimates only."
However, there is no authorization in any section of the advertising regulations which allows dealers to compare the used cars they buy, as trade-ins, to a book value. Section 475.540 is the entry dealers must consider when they make claims concerning trade-in values.
Kelly said the BBB will continue to monitor dealer ads and issue letters as needed.