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  • Writer's pictureJulie A. Cardosi


Dealers should pay close attention to their advertising claims to ensure legal compliance. Advertising compliance problems can adversely affect the dealership’s profit potential, with compliance costs and other expenses, including fines and penalties.

Over the past year, the Federal Trade Commission has conducted nationwide enforcement, focusing on the sale, financing and leasing of advertised motor vehicles. In these actions, the dealers allegedly made misrepresentations in print, internet, and broadcast advertisements that violated the FTC Act, falsely leading consumers to believe they could purchase vehicles for low prices, finance vehicles with low monthly payments, and/or make no upfront payments.

Purchasing or leasing a vehicle is often one of the single largest consumer transactions a person makes. Ads are an important source of information for discerning customers. If dealers’ ads do not comply with applicable laws, federal and state agencies charged with enforcing those laws will take action. This has occurred not only at the federal level, but also at the state level.

The Illinois Attorney General’s Office is charged with enforcing the State’s consumer protection laws including the Illinois Motor Vehicle Advertising Regulations (MVAR). Some areas where there may be a higher incidence of compliance problems in dealer advertising include the following, however, this list is not exhaustive:

Limited Availability Rebates. The MVAR (14 Ill. Admin. Code 475.530 & 475.310) prohibit advertising a price or payment from which limited availability rebates have been deducted. Noncompliant ads fail to disclose that rebates are limited and/or deduct limited rebates from a vehicle’s advertised price. Purchasers must be able to purchase all vehicles described by an advertisement at the advertised price. It is a violation of the law to sell a car for more than the advertised price.

Free Gift and Prize Offers. It is also a violation of the MVAR (14 Ill. Admin. Code 475.590) to advertise or offer free prizes, gifts or other incentives in connection with the purchase or lease of a vehicle where the vehicle is sold or leased at a price arrived at through bargaining or negotiation. An incentive offered through a manufacturer’s program, or authorized dealer advertising association, without any participation by the dealer, is permissible if the program or association is clearly and conspicuously disclosed, along with all material terms and conditions relating to the offer, at the outset of the offer.

Coupons. The Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2J.1) provides, in pertinent part, “No coupon shall be offered in connection with any retail sale of a motor vehicle.”

Loan Advertising to Persons Adjudged Bankrupts. Credit advertising claims made to persons adjudged bankrupt violate the Illinois Loan Advertising to Bankrupts Act (720 ILCS 330/1 et seq.). The Act prohibits advertisements stating or implying that financing or extension of credit will be made to a person who has been adjudged bankrupt.

Sale Claims. It is a violation of the MVAR (14 Ill. Admin. Code 475.370) to advertise sale terminology (e.g., "sale", "discount", "savings", "price cut", "reduced", "clearance", "tent sale", and other similar terms), which states or implies a price savings, unless the current selling price of the vehicle is reduced by a reasonable amount from the vehicle's former (regular) price as also defined in the MVAR.

Guaranteed Trade-In Amounts. Advertising or offering a specific trade allowance or a range of amounts for trade-ins, including without limitation, that the trade-in will be valued at a guaranteed minimum amount violates the MVAR (14 Ill. Admin. Code 475.540).

Compliance analysis of an ad might begin with the following threshold questions:

  • Is the substance of the advertisement prohibited (for example, dealer rebates, guaranteed trade-in amount)?

  • Does the substance of the advertisement require a particular format or treatment?

  • Does the nature of the advertisement require disclosures (for example, credit advertising Truth-in-Lending; limitation as to quantity of advertised vehicles; limitation as to the effective period of the advertised offer)?

  • If prices for vehicles are listed, are they the total advertised prices?

  • Does the advertising format clearly distinguish between lease and sale offers if both are present?

  • If a credit sale is advertised, are there “triggering” terms, and, if so, are all necessary and required disclosures included; or if the advertisement refers to a consumer lease, are there “triggering” terms, and, if so, are all necessary and required disclosures included?

  • If disclosures are necessary, are they published “clearly and conspicuously”?

  • Are the disclosures understandable and appropriate in light of the content of the advertisement?

  • Has the dealership designated a responsible agent to review the advertising “proof” to screen for possible errors?

Dealers should ensure their advertising and business practices fully comply with applicable federal and state laws and regulations and, as necessary, consult with private counsel for compliance assistance.

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