I write a lot of articles. Sometimes I am asked how I come up with topics to write about. Inspiration comes from all sorts of places — court opinions, attorney general press releases, newspaper articles, things I run across at conferences, experiences that I have with car dealers — all the places you might suspect.

And, sometimes, inspiration comes rolling up the driveway.

So it was a few weeks back. The fellow who maintains our yard (we refer to him tongue-in-cheek as our “estate manager”) had some trouble with his pickup truck. He took it in for service and the dealer very considerately provided him with a loaner.

Not just any loaner, though. This one was a small, brightly-painted sedan, with 2-foot-tall lettering on both sides that read, “$0 DOWN, $299/mo.”

Not a bad idea, huh? The loaner you give to your service customer is a rolling billboard for your dealership. I’ll bet the dealer brought that idea home from a 20 Group meeting.

But wait. What if the words appearing on the car are an “advertisement” as that term is defined in Regulation Z?

Reg z defines the term advertisement as “... a commercial message in any medium that promotes, directly or indirectly, a credit transaction.” Seems to me that the words painted on the car meet that definition.

So, does that mean the dealer can’t employ this nifty idea? Not necessarily.

In regulating advertising, TILA and Reg Z use the concept of “triggering terms.” If certain specified terms appear in your advertisements, they “trigger” further disclosure requirements. The triggering terms are:

  • The amount or percentage of any down payment
  • The number of payments or period of repayment
  • The amount of any payment
  • The amount of any finance charge

That “$299/mo.” is an “amount of any payment,” so it’s a triggering term. Likewise, the “$0 DOWN” is the amount of a down payment and is also a triggering term. Reg Z says that if a “triggering term” is used, your ad must then contain other information, including the amount or percentage of the down payment, the terms of repayment, and the “annual percentage rate,” using either that term or “APR.”

As long as the dealer instructs the sign painter to add a bit more information to the side of the car, the ad could comply with Reg Z. The dealership might have to limit the loaner fleet to big SUVs with a lot of room for lettering, but it could at least continue using the rolling billboard idea.

There’ is a broader point here, though. Dealers hear the word “advertisement” and think TV, radio, direct mail and newspapers. But the list should be a little longer than that.

The federal regulators have provided a handy-dandy list of examples of things that constitute advertisements:

  • Messages in a newspaper, magazine, leaflet, flier or catalog
  • Radio, TV or public address system announcements
  • Internet messages
  • Direct mail
  • Exterior and interior signs
  • Point-of-sale displays (So don’t put monthly payments on the cars on your lot without including the other disclosures.)
  • Telephone solicitations
  • Tattoos on salespeople (Just kidding! The feds didn’t really say that, although it would be correct if they had. I just wanted to make sure you were still awake.)
  • Price tags with credit information
  • Letters to customers as part of an organized solicitation of business

What isn’t an advertisement? The federal regulators say that direct personal contacts, follow-up letters to customers and oral or written communications relating to the negotiation of a specific transaction, and a few other things, don’t meet the definition. Unless you’re certain, treat it as an advertisement until your lawyer says you don’t need to.

Yep, the broader point is that, in a world of tweets, instant messaging, websites, emails, rolling billboards and goodness knows what else, things that a dealer doesn’t think about as advertising can unexpectedly end up being regulated.

About the author
Tom Hudson

Tom Hudson


Thomas B. Hudson Esq. was a founding partner of Hudson Cook LLP and is now of counsel in the firm’s Maryland office. He is the CEO of CounselorLibrary.com LLC and a frequent speaker and writer on a variety of consumer credit topics.

View Bio