|After writing an article about the Oregon Attorney General’s (AG) actions against car dealer advertisements, I went snooping on the AG’s Web site and found another example of such enforcement actions. Again, the AG moved against car dealers and marketers for allegedly bad ads. An October 2004 press release announced that the AG had filed agreements in two Oregon courts with two car dealerships and a direct marketing company for allegedly luring consumers onto dealership lots with direct mail flyers containing false offers of credit.|
The AG’s document, called an “Assurance of Voluntary Compliance” (AVC) and filed in one county court, named Hillsboro Automotive Group, Inc. (d/b/a Hillsboro Chrysler Jeep), Larry Miller Chrysler Jeep, Larry Miller Hillsboro Chrysler Jeep and Larry H. Miller Corporation-Oregon (d/b/a Honda of St. Johns) and Larry Miller Honda of St. Johns. An AVC filed in another county named Direct Marketing Associates, Corp. (d/b/a onlinebkmanager.com), Evergreen Automotive Acceptance and Evergreen President John Rainey. Neither AVC admitted a law violation on the part of the dealers or ad companies.
“Both the dealers and marketing company were blatantly violating state and federal laws with so-called, pre-approved offers of credit that consumers never received,” Myers said.
“Unfortunately, these are the first of many sanctions to come concerning these types of misleading offers. The continuing pattern of dealers and marketers ignoring the law and using these illusory credit offers must be stopped.”
What had these dealers and marketers done to get the AG so riled up, you ask?
The Department of Justice legal staff claimed that both the Hillsboro and St. Johns dealers sent out “Vehicle Buyback Notice” direct mail flyers offering to “buy back consumers’ current vehicles at 20 percent of $4,000 over NADA book value.” That ad, said the AG, violated an Oregon rule that makes it illegal to guarantee a minimum amount that will be paid for a trade-in vehicle.
The Hillsboro dealership flyers also stated that the recipients had “been pre-approved” for loans “of up to $42,988” at a 4.9 percent interest rate “with no money down.” The AG claimed that this offer did not comply with the federal Truth in Lending Act.
You can’t always tell from these self-serving AG press releases what actually went on – the AGs tend to report on the things that show how diligent they are at protecting consumers, and don’t deal with extraneous stuff. But, I’ll bet I can make a couple of educated guesses about the facts not reported.
I wonder how many of my guesses are right.
We’ve reported on several enforcement actions dealing with advertisements recently, and if you haven’t identified this as a hot compliance topic for your dealership, it’s high time you did. Many AGs around the country have their sights set on dealer advertising, and as this enforcement action shows, there is plenty of low-hanging fruit for the AGs to pick.
We’ve said it before, but here we go again – Your dealership’s ads are the responsibility of your dealership. The ad company won’t pay your fines or legal fees when the AG comes-a-calling. It will be your dealership that gets its name smeared all over the media for violating advertising rules.
So, don’t engage in an ad campaign unless you’ve gotten a legal review of what your ads will say and how they will say it. If you’ve got ad campaigns running that haven’t been reviewed, pull them and get them blessed. And don’t sign any ad company contracts without doing a due diligence review on the ad company and without having your lawyer review the contract.
Vol 4, Issue 1
Chinese carmaker Zotye Automobile has formed a U.S. sales and distribution company and has begun a search for dealers of a yet-to-be-named SUV.