IADA and CATA dealers and staff recently met with staff from the Illinois Attorney General's Office and the Better Business Bureau to discuss common violations of the Attorney General's motor vehicle advertising rules. Attorney General's Office staff advised that the most common violations include the following:
- Advertised Price. The Attorney General's Office reported that it has seen some dealers advertise vehicles at very low prices, but when a customer attempts to purchase one of the advertised vehicles, it turns out that the vehicle was sold several months before the advertisement was published. Advertising a vehicle price after the vehicle has been sold violates Section 475.310 of the advertising rules, which requires that purchasers should be able to obtain vehicles at the advertised price.
- Limited Rebates. Often combined with the advertised price violation discussed above, is a violation of Section 475.590 of the advertising rules, which prohibits deducting a rebate from the final price of a vehicle if the rebate is not available to all customers. Instead, a limited rebate must be separately stated. For example, a rebate that is available only to first time buyers, members of the military, or customers who finance a vehicle purchase through the manufacturer's captive finance company, that offer must be treated as a limited rebate. A limited rebate must be shown as additional savings below the advertised price and the conditions of the offer must be disclosed in the advertisement. A limited rebate cannot be deducted from the vehicle's advertised price. Although not technically a limited rebate, deducting the amount of a federal electric vehicle tax credit from the selling price of a vehicle would be considered generally deceptive under Section 2 of the Consumer Fraud and Deceptive Business Practices Act. The federal tax credit does not directly reduce the vehicle price, but is not realized until an electric vehicle purchaser files his or her federal income tax return.
- Free Gifts and Coupons. Section 475.590 prohibits dealership offers of a free gift in connection with the sale or lease of a motor vehicle. This ban includes, but is not limited to, offering free tires or lifetime oil changes to purchasers, or offering a free third-party warranty to a vehicle customer. A free gift is permissible only if it is offered as part of a manufacturer program or a manufacturer-approved advertising association program. Section 2J.1 of the Consumer Fraud and Deceptive Business Practices Act prohibits the use of coupons in connection with the purchase of a vehicle. The Attorney General's Office advised that a new twist in free gift and coupon violations is that some dealers are using social media accounts and dealership websites to offer coupons for down payment assistance or guaranteed trade offers. Dealership advertising on social media must comply with the same rules as print, radio, and television advertising.
When reviewing your social media advertising, it might be worthwhile to put in place a dealership policy prohibiting employees from using their personal social media accounts offers related to your dealership. The Attorney General's Office reported that it has seen dealership employees post motor vehicle pricing information, which is often inaccurate, on their personal social media accounts without the dealership's knowledge. Even if you can convince the Attorney General's Office that you were unaware of the content your rogue employee posted on his or her social media account, it can create ill-will with your customers as well as unwanted attention from the Attorney General's Office.
- Trade-ins. Section 475.540 prohibits a dealer from offering a guaranteed trade-in allowance. This prohibition extends to an offer to pay a guaranteed percentage of the book value of a customer's trade-in.
- Prize Promotions. One advertising matter that has received a great deal of attention from the Attorney General's Office is the use of prize promotion mailers with illusory prizes. In some cases, the prize promotions initially make it appear as though the recipient has won one of the 2 or 3 top prizes being offered, but when the recipient tries to collect the prize, he or she finds out that he or she was merely entered into a drawing for a chance to win one of those prizes. If you advertise that a customer has won a prize, but he or she really won a chance to win a prize, it is a violation of the Prizes and Gifts Act. Similarly, if a dealership promotion guarantees that somebody will win a vehicle, the dealership must actually give away the vehicle without placing an undue burden on the winner (such as requiring him or her to drive to Oregon to collect the prize). If your promotion advertises scratch and win gift cards between $1 and $500, there must be at least one $500 gift card given away.
It is important to closely monitor your dealership website to review content that may be placed onto the website by the manufacturer. Many times, manufacturers will download content onto dealership websites that violates the Illinois advertising rules and, once that content appears on a dealership website, the Attorney General's Office will hold the dealer responsible for any violations. Similarly, if you use a new advertising or promotional company, especially one from out of state, be sure that it is familiar with the Illinois Motor Vehicle Advertising Rules and review its work before it goes out the door. If your dealership uses material created by a third-party marketing company, your dealership is liable for content that violates the motor vehicle advertising rules. Once the Attorney General's Office starts looking at advertising violations, its investigation may expand to an inquiry into transactional violations such as odometer discrepancies or the sale of vehicles without possession of the title.
Please take a few moments to review the Illinois Motor Vehicle Advertising Rules and Related Statutes to make sure that your advertisements are compliant. A copy of the Illinois Motor Vehicle Advertising Rules and Related Statutes can be found here.
If you have any questions about this article or any other advertising matters, please contact IADA at (217) 753-0220 or email@example.com.