Any successful car dealership knows that advertising is key to getting attention and driving new customer acquisition. Dealers have to be aggressive in creating promotions and marketing vehicles, prices, and services to remain competitive in today’s automotive retail market.
What many dealers overlook is that while advertising must be persuasive, it must also meet a large set of important government regulations. Marketing and advertising strategies for car dealers must find a way to balance the need for attracting customers with great offers, while also understanding the laws and regulations surrounding car dealer advertising.
● Truth in Lending Act Compliance. For any advertising related to financing offers, which of course are common in auto ads, the dealer must disclose important information such as the amount or percentage of down payment, number of payments or period of repayment, the amount of any payment, and the amount of finance charge.
● Federal Advertising Rules. Any disclosures related to advertising claims must be made “clear and conspicuous” wherever the advertising occurs. This means that the disclosure must be placed near the relevant messaging, must be visible across devices and platforms, must use plain language that consumers can understand, and more. In general, you must make a real effort to have consumers read and understand disclosures. It is not enough to bury them in a “terms and conditions” page or similar.
● The Consumer Leasing Act Compliance Checklist. In any advertising which offers a lease to the consumer, the ad must state if the dealership usually leases cars under the advertised terms - a dealership cannot advertise leasing rates that would only be presented to millionaires with perfect credit, for example! The terms must be clear and conspicuous, and the lease rate cannot be more prominent than the remainder of the text. Dealers are also not allowed to use “annual percentage” or “annual lease rate”.
● Bait and Switch is Prohibited. Dealers cannot advertise a certain vehicle, price, or promotion unless that offer is really available to the average customer. It is not acceptable to advertise a price that, for example, is only available for one specific car on one specific day - unless those limitations are clearly disclosed in the advertising.
Hopefully this quick overview will help you to understand the many relations that apply to automotive advertising, and will help put your auto dealership on the right path to compliant advertising. To learn more about advertising compliance for car dealers, please contact Total Dealer Compliance today.