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BBB sees pricing faults in dealer ads

November 16, 2010
Agents from the Better Business Bureau who monitor Chicago area dealer advertising report two recurring infractions about advertised prices.
 
The first involves advertising a price or payment amount and then claiming "all rebates applied", "includes all rebates" or similar language.  Rule 475.310 of the Illinois Motor Vehicle Advertising Regulations states that "all purchasers 
shall be able to purchase all vehicles described by the advertisement at the 
advertised price."  
 
In addition, Rule 475.530(c) states that "It is an unfair or deceptive act to advertise a price or amount of an installment payment in which limited rebates have been deducted or to advertise a total amount of rebate if a portion of the total consists of a limited rebate."
 
These rules make it clear that only a rebate available from the manufacturer to any consumer purchasing a vehicle can be deducted from a price or payment in an advertisement. Of course, the availability of limited rebates can be advertised "if the terms of the limitation are clearly and conspicuously disclosed," according to Rule 475.530 (c).
 
In short, limited rebates can only be advertised separate from price or payment amounts and cannot be bundled together into large discounts because not everyone may qualify for the bundled amount. 
 
The BBB sent many letters to dealers recently asking what is included in the "all rebates applied" claim and determined that some of the advertised prices included limited rebates, in breach of the regulations.   
 
A second issue involves language in an ad that states "prices are subject to change without notice." Rule 475.310 also covers this issue. All consumers must be able to purchase the advertised vehicles at the advertised prices. But if prices are advertised and then change without notice, all consumers cannot 
purchase the advertised vehicles at the advertised prices.
 
In the case where a sale or price reduction event is held, Rule 475.370 applies an additional legal standard, requiring that the duration of a sale event be stated in the ad promoting the sale. 
 
"If prices can change without notice, then there is no duration to the sale event. Even if one is expressed in the ad, the prices are not truly fixed for the length of the sale," said BBB-Chicago President Steve Bernas.
 
Bernas said dealers should continue to state the duration of the sale event in the advertisement but refrain from including any statement indicating that prices are subject to change without notice during that sale event in a general disclosure section at the bottom of the advertisement.
 
He acknowledged that there are some manufacturer price incentives for consumers that may be withdrawn by the manufacturer without prior knowledge of the dealer and during the duration of the sale event.  
 
Therefore, Bernas said the BBB recommends that any disclosure necessary to explain that fact be placed in close proximity to the manufacturer program described in the advertisement.
 
For more information on the BBB/CATA ad review program, see www.chicago.bbb.org/cata or send an e-mail to cata@chicago.bbb.org
 

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