BBB of WESTERN MICHIGAN
AUTOMOTIVE ADVERTISING STANDARDS
Broadcast. Print. Direct Mail. Signage
Re-issued/clarified April, 2002
NOTE: The primary responsibility for truthful and non-deceptive advertising rests with the advertiser; it is up to the advertiser, not the ad agency or media, to use the proper disclosures.
The following Automotive Advertising Standards were adopted by the Grand Rapids & Holland New Car Dealers Associations. In addition, they have been reviewed by the Michigan Attorney General’s office and are the guidelines for all western Michigan new car auto dealers. These basic principles of truthful and non-deceptive advertising are standards which members of these associations and reputable dealers have subscribed to and agree to follow:
1) Availability of Vehicles
A specific vehicle advertised for sale shall be:
- At the dealership in possession of the advertiser and willingly shown and sold as advertised, illustrated or described, at the advertised price and terms.
- If the specific advertised vehicle is not immediately available, the advertisement must clearly state that the specific vehicle advertised is available by order only with delivery to be made within a reasonable period of time.
- If a vehicle is available only by order, this condition must be clearly and conspicuously disclosed.
2) Inclusion In Price and Add-Ons
When the price of a vehicle is advertised, the vehicle shall be:
- Fully identified as to year, make, and model, including stock number if limited availability exists.
- In addition, the stated price must include all charges which the customer must pay for the vehicle, including, but not limited to, "dealer preparation", "dealer handling", "additional dealer profit", "additional dealer margin", "documentation fee", and all dealer installed options if the vehicle is already so equipped.
- No dealer shall charge purchasers of new motor vehicles for "dealer prep" or other specified pre-delivery services when the manufacturer or distributor of the vehicle in question has agreed to reimburse the dealer for such services.
- Freight may be added to the advertised price only on new or unused vehicles, and only in the amount specified by the manufacturer.
- An advertised purchase price, unlike an advertised payment amount, may not be understated by disclosing required cash or trade-in amounts.
- The advertised price need not include state and local taxes, license plates, registration and title fees, but these should be mentioned in a disclaimer within/near the body of the ad.
3) Minimum Trade-In Allowance
Since the amount of the trade-in will vary depending on the condition, model, and age of a buyer’s vehicle, no specific trade-in amount or range of amount shall be used in advertising.
- Push, pull, drag it in, and guaranteed dollar claims ( e.g. $2,000 trade in for anything brought in), should not be used.
4) Disclosure of Material Facts
When certain types of vehicles and transactions are advertised, regardless of the medium used, this set of standards requires disclosure of certain material facts. Any such disclosure must be made in a clear and conspicuous manner to minimize the possibility of misunderstanding by the consumer public.
- Factors to be taken into consideration include, but are not limited to, ad layout, headlines, illustrations, type size, contrast, crawl speed, and editing.
- Commonly known abbreviations may be used in advertising; those not generally known shall be avoided.
- An asterisk * may be used to give additional or qualifying information about a word or term. However, asterisks or other reference symbols may not be used as a means of contradicting or substantially changing the meaning of any advertised statements. Multiple asterisks must be clearly explained.
- To assure legibility and understanding, type size used in print advertising shall be a minimum of 6 point. e.g.
- Where type is reversed out of black, the minimum type size shall be 8 point. e.g.
- Qualifying statements on television and radio shall be of sufficient content, clarity, and length to be easily understood in order to assure consumer understanding.
SPECIAL NOTES
A) Vehicles in service prior to sale such as "executive", "demonstrators", "driver education", "dealer owned", "factory owned", or "program" cars shall be clearly identified as such. The difference between the price of the vehicle as advertised and the price of a comparable new vehicle may not be described as "savings" or "price reduction."
B) An advertisement for a motor vehicle lease shall not be presented in a manner that a reasonable person could interpret as being an ad for the sale of a motor vehicle. The word "lease" shall appear boldly and conspicuously in close proximity to the payment amount.
C) When credit terms are advertised, they must comply fully with the specific disclosure requirements of the Credit Advertising provisions of the Federal Consumer ‘Truth-in-Lending" Act and Regulation Z which are included as part of these adopted guidelines.
D) When lease terms are advertised, they must comply fully with specific disclosure requirements of the Lease Advertising provisions of the Federal Consumer "Truth-in-Lending" Act and Regulation M which are included as part of these adopted guidelines. (Fill-in forms or check-offs are attached for your convenience). NEW CAR DEALER ASSOCIATIONS HAVE AGREED TO USE THE BBB LEASE BOX DISCLOSURE FORMAT:
|
Down Payment |
$0,000 |
|
Refundable Security Deposit |
$000 |
|
Amount Due at Start |
$0,000 |
|
Total Payment for Lease |
$0,000 |
|
Lease End Purchase Option |
$00,000 |
|
Cost per Mile Over Allowed |
$.00 |
License, title, tax, document additional
The BBB-WMI also encourages all other West Michigan dealers to use the lease box format proactively. At a minimum, ALL DEALERS MUST FOLLOW FTC GUIDELINES (attached under separate page).
5) Disclosures in Invoice Ads
The unqualified terms "invoice", "factory invoice" or "dealer invoice", shall not be used as reference price (such as $100. over invoice) unless the advertisement containing such terms clearly and conspicuously states that the invoice may not reflect dealer cost.
- The following disclosure is required: "The invoice total may not reflect the factory cost of the vehicle to the dealer."
- In dealership advertisements where "cost" is synonymous with "invoice" the following disclosure is required: "Cost’ means 'Invoice' and the invoice total may not reflect the factory cost of the vehicle to the dealer."
6) Rebate Offers
The terms "rebate", "cash rebate", or similar terms may be used only when payment of money will be made by the retailer or a third party to a purchaser after the sale, or used as down payment at the time of sale. The advertisement must clearly state "dealer participation may affect consumer price."
7) Free Offer
A) The normal price of the merchandise or service to be purchased must not have been increased nor its quality or quantity reduced. (e.g. free oil changes for life to original owner must be free)
B) The advertiser must disclose this condition clearly and conspicuously together with the "free" offer (not by placing an asterisk or other symbol next to "free" in referring to the conditions in a footnote), and
C) The "free" offer must be temporary; otherwise it would become a continuous combination offer, no part of which is free.
D) FREE WARRANTY- the term ‘free warranty’ should not be used to describe the manufacturer’s warranty which is included in the price of the vehicle. If there is "an extended manufacturer’s warranty" which is totally free (e.g. OLDSMOBILE’S special warranty), it must be clearly stated.
8) Unsupported Selling Claims, Or other statements not in the public interest, shall not be used.
- OBJECTIVE claims refer to specific performance standards and can be measured or proven by facts, and documented with third party verification.
- e.g. "# 1 Dealer in Michigan" – would require proof to verify that claim. It is objective and it must be documented.
- & " Largest Inventory in Grand Rapids" - would require proof via a third party to support this claim with a specific survey and specific date.
- SUBJECTIVE claims are expressions of opinion and are considered advertising ‘puffery’. At all times subjective superlatives which mislead consumers should not be used.
- e.g. "Nicest Dealer in Town" is puffery, but not misleading and is considered totally subjective.
- & "Best Chevy Dealer in Town" is not puffery and is objective and must be substantiated as to what "best" means and what town is involved; it must be qualified.
- CREDIT APPROVAL CLAIMS must be factual statements & verifiable as they imply that consumer credit will be extended to anyone regardless of the person’s credit status or financial ability to pay.
- "No Credit Rejected" or "Guaranteed Credit Approval" or "Everyone Approved" shall not be used unless there are absolutely no credit qualifications needed to obtain financing.
- "All Applications Accepted" – this is clearly true, but it is clearly an attempt to mislead consumers and shall not be used. Accepting applications is one thing, but ‘implying’ that financing is available, regardless of the financial ability to repay, is questionable at best.
- When minimum credit approval qualifications exist, they must be stated in the ad. (E.g. "6 Months Employment, One Year as a Resident, Minimum $1,500 per Month Income".)
- SALES DATES
- Beginning and ending dates of a bona fide sale should be stated in the ad.
- Perpetual sales must be avoided and advertisers must prove the sale offering has not become the regular price.
- LIQUIDATION SALES
- The unqualified term ‘liquidation sale’ means that the advertiser’s entire business is in the process of actually being liquidated prior to actual closing.
- E.g. "LIQUIDATING ALL 2001 VEHICLES" is OKAY as it qualifies which specific products are offered.
- E.g. "LIQUIDATING ALL USED CARS" is not okay, UNLESS you are going out of the used car business and have the proper local/state license to go out of the used car business.
- EMERGENCY SALES
- SHALL NOT BE USED unless the stated reason is a fact and with specific dates.
- E.g. "LOST OUR LEASE" – all vehicles must be sold before (date) before moving to our new location.
- NO OFFERS REJECTED- this simply must not be used, as it isn’t true as an unqualified statement.
- PRICE BEATING or MEETING COMPETITOR’S PRICING
"WE WILL NOT BE UNDERSOLD"
- Ads that claim a company policy of matching or beating competitor’s pricing "may be used" PROVIDED the terms of the offer are specific, and in good faith, and provided they are verifiable.
- Advertiser’s must be aware that such claims can create "an implicit obligation to adjust prices for specific merchandise upon showing that the advertiser’s price for that merchandise is not as low as, or lower than the competitors."
- THE BBB "SUGGESTS" THAT NO PRICE EQUALING/BEATING CLAIMS BE USED unless factual documentation is provided for every "meet/beat" transaction.
- "Lowest Price Claims"- despite an advertiser’s best efforts to know competitive prices, the speed with which prices fluctuate, and the difficulty of determining the prices of all sellers at all times, make this claim impossible to prove. Because of this lowest price claims should not be used.
- ACQUISITION SALE- these ads include many misleading statements; e.g. "bank ordered sale, our site specially selected, 3 days only, pay only acquisition fee and drive away". All claims must be third party verifiable or should not be used.
- PAY OFF TRADES- a statement like "We will pay off your trade no matter what you owe", should not be used unless it truly means the seller is willing to pay off the outstanding debt WITHOUT including the cost as negative equity as part of the new transaction. If seller passes on cost to the consumer the following disclaimer must be used;
NOTICE TO BUYER this will not relieve you of your debt, any negative equity will be added to the new purchase agreement.
9) Buy-down Interest Rate
- Advertisements must clearly and conspicuously disclose that dealer participation may affect consumer price.
The foregoing standards were adopted April, 1993 and revised/clarified in April 2002 by the Better Business Bureau of Western Michigan and the Grand Rapids New Car Dealers Association in response to advertising issues identified by the Attorney Generals Office of the State of Michigan, GRNCDA, and the BBB. The majority of these standards have been approved by the Michigan Attorney Generals Office and are enforceable for all new car dealers in Michigan under state law.
FTC & BBB-WMI LEASE Disclosures
It is a violation of the Federal Truth In Lending Act as well as a violation of NEW CAR DEALER Automotive Advertising Standards for an advertisement, in any media, to promote a "consumer lease" containing any of the following "triggering" terms without making certain specific disclosures.
The "triggering" terms are:
- The amount or percentage of the down payment.
- The specific terms of repayment.
- The annual percentage rate; and if the annual rate may be increased after the start of the credit transaction.
When any of the above "triggering" terms are used in any ad, the following disclosures are required within that same ad:
In order to be in COMPLIANCE WITH FTC AUTO ADVERTISING you ‘must have’ the following:
- A statement that the transaction advertised is a lease.
- The total amount due at the start. When nothing is due, that too must be stated.
- Whether or not a Security Deposit is due and if so at what amount. If no security deposit is due, that too, must be stated.
- The number of, and amounts of, all scheduled payments.
*TV & RADIO ADS- the required disclosures apply to all lease ads. IF your TV or Radio ads refer clearly and conspicuously to a TOLL FREE NUMBER, you can limit the information in the TV or Radio ad.
BUT You must still state: a) transaction is a lease, b) total amount due on delivery c) number, amounts and due dates of payments. * Toll free number only for TV & Radio ads.
# MILEAGE- though not required by FTC, the BBB-WMI "suggests" that your ad state the number of miles included in the lease term and what the cost per extra miles surcharge will be.
Other Items to Avoid:
- Merely stating "refundable security deposit" or "capitalized cost reduction". These amounts must be listed in the ad.
- Stating that the customer has an option to purchase the vehicle without indicating at what time and what price.
- Using too many or unknown abbreviations in a lease disclosure. E.g.: "Opt. at end for deter. price" or "ttl pymt. X 36".
Examples of Legal Lease Disclaimers
- No Right To Purchase At End Of Lease:
Closed end lease for qualified customer, lease payment of $263. for 48 months, 60,000 mile limitation, $.06 per mile for excess mileage over 72,000 miles, lessee has no right to purchase vehicle at lease end. Lessee responsible for excessive wear and tear. Total lease payment of $14,352. Due at inception is first month’s payment, no down payment, and the refundable security deposit of $300. plus current tax, license and title fees.
- No Obligation To Purchase But Option To Purchase for Specific Price:
Closed end lease for qualified customer, lease payment of $299. for 36 months, 45,000 mile limitation, $.15 per mile for excess mileage over 45,000 miles, lessee has no obligation to purchase vehicle at lease end, lessee has option to purchase at lease end for $7,500. Lessee responsible for excessive wear and tear. Total lease payment of $6,838.20. Due at lease inception is first month’s payment, no down payment, and the refundable security deposit of $250. plus current tax, license and title fees.
- Down Payment/Manufacturer’s Incentives Assigned To Dealer Option Purchase Price:
Closed end lease for qualified customer, lease payment of $206. for 48 months, 60,000 mile limitation, $.l0 per mile for excess mileage over 60,000 miles, lessee has no obligation to purchase vehicle at lease end, but does have the option to purchase at lease end for $10,000, lessee responsible for excessive wear and tear. Total lease payment of $10,888. Due at lease inception is first month’s payment, down payment of $1,000 and the refundable security deposit of $225. plus current tax, license and title fees. All manufacturer’s incentives assigned to dealer.
Lease Disclaimer Worksheet
- VEHICLE STOCK NUMBER: ____________________________________________________
- Monthly Payment: ______________________
- Lease term of __________ months
- Mileage Limitations of __________ miles
- Cost per mile over mileage limitation ______________________
- Total Payment for Lease ______________________
(Monthly payments plus down payments)
- Security Deposit ______________________
- Down Payment (Capital Reduction Cost) ______________________
- Option to Purchase YES NO
- Option Price if Applicable ______________________
Disclaimer Format
Closed end lease for qualified customer, lease payment of $(Amount per month) for (Number of months) with a lease limit of (total number of non-penalty miles permitted under lease) and (cost per mile over limitation) per mile above that figure.
(SELECT A OR B, WHICHEVER IS APPLICABLE)
A. Lessee has no right to purchase vehicle at lease end.
B. Lessee has the option but no obligation to purchase at lease end.
Lessee is responsible for excessive wear and tear. Total payment under lease is $(Total dollar cost to consumer under lease). Due at lease inception is first month’s payment, (Either down payment or no down payment) and refundable security deposit of $(Amount of security deposit) plus current tax, license, and title fees. (If applicable, Insert that "All manufacturer’s incentives assigned to dealer.")
BBB of WESTERN MICHIGAN "LEASE BOX DISCLAIMER"
Suggested for ALL WEST MICHIGAN DEALERS; required of GRNCDA & Holland Associations
FTC & BBB-WMI "CLOSED END CREDIT" REQUIREMENTS
For PURCHASE OF ANY VEHICLE: NEW OR USED
It is a violation of the Federal TRUTH IN LENDING ACT (TILA) and the BBB-WMI Auto Dealer Automotive Advertising Standards, for an ad (in any media) to promote a "vehicle purchase" containing "ANY of the following TRIGGERING TERMS", without including the required disclosures.
CLOSED END CREDIT (PURCHASE) triggering terms are:
- Amount of Down Payment – (either dollar amount or percentage)
- E.g. "10% down", OR "$1,000 down", OR "$49.00 down".
- Amount of Any Monthly Payment
- E.g. "$279 per Month", OR "$299/mos.".
- Number of, or Period of, Repayment
- E.g. "48 Months to pay", OR "Four Year Terms".
- Amount of Any Finance Charges
- E.g. "$1,500 finance charges".
If any of the above TRIGGERING TERMS are used the following DISCLOSURES "Must be stated in the advertisement".
- The amount or percentage of the down payment.
- E.g. $2,500 down", OR "10% down required".
- Terms of Repayment
* The number of, and amount of, all scheduled payments*
- E.g. " $269.00per month for 36 months", OR "48 months at $299 per month".
- The ANNUAL PERCENTAGE RATE (APR) FOR THE TERM OF THE LOAN
Should you have any questions feel free to contact the BBB-WMI at bbbads@iserv.net.