How to Defend Against the Advertising Compliance War
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How to Defend Against the Advertising Compliance War

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Recently, Federal and State Authorities have declared war on dealer advertising practices — and their favorite target is YOUR WEBSITE. The days of just a “slap on the wrist” and “business as usual”......

Recently, Federal and State Authorities have declared war on dealer advertising practices — and their favorite target is YOUR WEBSITE. The days of just a “slap on the wrist” and “business as usual” are long gone and have been replaced with multi-million dollar penalties, lawsuits, 20-year consent decrees and negative publicity. Inadvertent, trivial and easily overlooked missteps in digital marketing initiatives can result in costly and devastating consequences for the dealerships that haven’t adhered to the existing compliance regulations.

It’s important to understand that advertising violations are easy to find yet difficult to defend against – especially in the digital age. In spite of this, there is good news for dealers. Employing a comprehensive compliance program will not only protect dealerships from liability, but also greatly enhance the dealership’s reputation, increase sales and profitability, and increase customer satisfaction and retention.

In this crucial 1 hour webinar, automotive compliance expert Jim Radogna will teach you how to definitively defend yourself against this onslaught and ensure that your digital marketing compliance is “bulletproof”.

If you are ready to learn how to defend your dealership against the Advertising Compliance War, then don’t miss this very important presentation.

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  • 1. How to Defend Against the Advertising Compliance War June 19, 2014 Copyright 2014 DealerOn, Inc.
  • 2. www.DealerOn.com  Digital Dealer Website Excellence Award Overall Winner – an unprecedented 6 Years in a Row!  2011 thru 2013 DrivingSales Top-Rated Website Provider  Google Adwords Certified Partner  More Dataium Monthly ASI Winners than all others combined  DealerOn’s website customers have a documented lead increase of 200% If you’re not a DealerOn customer and would like to double your leads, send an email to Eliana@DealerOn.com.
  • 3. Jim Radogna Director of Compliance College of Automotive Management jradogna@lagc.com 858-722-2726 www.collegeofautomotive.com www.facebook.com/JimRadogna www.twitter.com/JimRadogna TODAY’S PRESENTER Copyright 2014 DealerOn, Inc.
  • 4. • If you have questions during the presentation, please submit them using the “Questions” feature • Questions will be answered at the end of the webinar •A link to the recorded webinar will be emailed to you within 24 hours and will also be posted on www.DealerOn.com/webinar as an On-Demand Webinar SEND IN YOUR QUESTIONS Copyright 2014 DealerOn, Inc.
  • 5. After the presentation, be the first to answer the giveaway question correctly to win this awesome prize! PRIZE ALERT Copyright 2014 DealerOn, Inc. Professional Website Advertising Compliance Review by the College of Automotive Management Compliance Team $1295 value!
  • 6. Copyright 2014 DealerOn, Inc. AFTER THE SHOW After the webinar, please fill out our survey for a chance to win a Google prize!
  • 7. How to Defend Against the Advertising Compliance War June 19, 2014 Copyright 2014 DealerOn, Inc.
  • 8.  Understanding the risks – how the game has changed…  Learning the rules – Don’t get blindsided!  Determining best practices  Question & Answer Session TODAY’S OBJECTIVES Copyright 2014 DealerOn, Inc.
  • 9. POLL QUESTION Copyright 2014 DealerOn, Inc.
  • 10. What’s Changed? Copyright 2014 DealerOn, Inc. Advertising Compliance Overview • The Feds have traditionally gone after bigger fish and left car dealers to state regulators. • Even though advertising “legal” by state guidelines, FTC has claimed non-compliance. • State AGs can now enforce FTC Act. • FTC partnering with local agencies in their investigations. Regulators compare notes! • Focus on Online Advertising. • Agencies switched to a proactive stance re: dealer advertising – actively seeking out deceptive ads – Easy to do on websites, YouTube, social media, etc. FTC STATEMENT ON ONLINE ADVERTISING “Although the number of companies advertising online and the number of consumers shopping online are soaring, fraud and deception may dampen consumer confidence in the e- marketplace. But cyberspace is not without boundaries, and fraud and deception are unlawful no matter what the medium. The FTC has enforced and will continue enforcing its consumer protection laws online to ensure that products and services are described truthfully in online ads and that consumers get what they pay for. These activities benefit consumers as well as sellers, who expect and deserve a fair marketplace. The same consumer protection laws that apply to commercial activities in other media apply online. The FTC Act’s prohibition on unfair or deceptive acts or practices encompasses Internet advertising, marketing and sales.”
  • 11. The Downside Copyright 2014 DealerOn, Inc. Advertising Compliance Overview • Fines up to $16,000 per violation per day • 20 year consent decrees – Do you want the FTC or others looking over your shoulder? • Local authorities can take action against dealer’s license • Devastating reputation damage
  • 12. 10 Advertising Guidelines Every Dealer Should Know Copyright 2014 DealerOn, Inc. Advertising Compliance Overview 1. Be aware that advertising laws apply to all forms of advertising, including radio, television, print, electronic, direct mail, flyers, billboards, showroom and other dealership displays, and the Internet (including social media). 2. It’s all about the big picture. An advertisement as a whole may be misleading although every sentence separately considered is literally true. The key is to make sure your message is clear, truthful, easy to understand, and not subject to multiple interpretations. 3. Even though the meaning of statements in an ad seems obvious to you, it may still be considered deceptive. Statements susceptible to both a misleading and a truthful interpretation are typically considered to be misleading by regulators. 4. Disclaimers in themselves won’t always protect against advertising violations. A disclaimer must not contradict, confuse, unreasonably limit, materially modify a principle message, or substantially change the meaning of any advertised statements. Your disclosures should be made in a clear and conspicuous manner to minimize the possibility of misunderstanding by the consumer public. Be sure that all disclaimers are clearly and conspicuously displayed and not buried away in difficult-to-read fine print or a difficult-to-find links on websites.
  • 13. 10 Advertising Guidelines Every Dealer Should Know Copyright 2014 DealerOn, Inc. Advertising Compliance Overview 5. Despite your best intentions, you may be held accountable for advertising errors. If an ad is deemed deceptive, an advertiser has liability regardless of whether there was intent to deceive. 6. There’s no safety net in the “but everybody does it this way” mindset. The fact that others were, are, or will be engaged in like practices will not be considered a defense in a legal action. 7. If the first contact with a consumer is secured by deception, a violation may occur even though the true facts are made known to the buyer before he enters into the contract of purchase or lease. For instance, in the FTC action with the “we’ll pay off your trade no matter how much you owe” ads, the dealers were found to be in violation even though they disclose that negative equity is added to the amount financed at the time of sale. “See Dealer For Details” is not enough in many cases! 8. Regulators frequently cite dealers for advertising violations even though there are no customer complaints. Since statements and representations in advertisements are evaluated based on their tendency to deceive, no actual harm to consumers need occur for there to be a violation.
  • 14. 10 Advertising Guidelines Every Dealer Should Know Copyright 2014 DealerOn, Inc. Advertising Compliance Overview 9. Bait & Switch advertising is a hot button with lawmakers and must be avoided. It is unlawful to advertise for sale any vehicle that the dealer does not intend to sell because the true intention is to switch the customer to another vehicle. No customer should be encouraged to not purchase the advertised vehicle, nor should there be any acts attempted by the sales staff to prevent the sale. Ensure that vehicles are promptly removed from the website and third party sites after they have been sold. 10. Don’t assume that your vendors are utilizing language that is acceptable in your particular state or including all of the required disclosures. Check to determine if all necessary disclosures are present and clearly and conspicuously displayed on the site. The primary responsibility for compliance lies with the dealership, not the vendor. According to the law, a dealer has the duty to investigate the accuracy of any statements made in advertising. BOTTOM LINE: Advertising violations are easy to find and difficult to defend against. Often, all the proof a regulator or attorney needs is the ad itself.
  • 15. Something to Think About… Copyright 2014 DealerOn, Inc.  Getting “caught” is no longer a just a fine and slap on the wrist. Regulators have begun using the media to penalize those dealers caught in order to intimidate others. Regulators want press, and the tougher the press is on the offending dealers the better it is for the regulators in charge.  The severity of the offenses is often exaggerated.  •The social media age brings more long-term consequences and public humiliation than businesses have ever seen before.  Do you want your customers seeing YOUR dealership on the 6 o’clock news?
  • 16. Real World Website Examples Copyright 2014 DealerOn, Inc. Is YOUR Website Bulletproof???
  • 17. POLL QUESTION Copyright 2014 DealerOn, Inc.
  • 18. Online Credit Applications Copyright 2014 DealerOn, Inc. Website Advertising Compliance • Dealers are required to provide consumers with a Privacy Notice if they plan on disclosing financial information about the Consumer to a nonaffiliated third party. • Since it’s possible that the consumer information collected on these applications is available to the nonaffiliated third party that created the online application for the website (and possibly other parties), it is recommended that the dealership’s Privacy Notice be delivered to the consumer before submission of the application. This will give the consumer the opportunity to “opt-out” by not submitting.
  • 19. Website Privacy Policy Copyright 2014 DealerOn, Inc. Website Advertising Compliance Common Website Privacy Policy Issues: • No Privacy Policy • OEM’s Privacy Policy, not dealer’s • Website provider’s PP, bot dealer’s • Wrong Privacy Policy (GLBA privacy notice is NOT the same as website policy) • Using boilerplate policy that doesn’t reflect dealer’s actual practices Federal and state regulators can take action against companies that fail to comply with their own privacy policies or otherwise misrepresent their information management practices. And of course, there is the real possibility of substantial private lawsuits.
  • 20. Price Disclosures Copyright 2014 DealerOn, Inc. Website Advertising Compliance • Disclosures and what must be included in the advertised purchase price are specific to each state • Boilerplate disclosures can create problems • Disclosures must be clear & conspicuous • Failure to follow guidelines pertaining to price disclosure can be an Unfair & Deceptive Practice “The price for this vehicle as equipped does not include charges such as: License, Title, Registration Fees, State or Local Taxes, Finance Charges, Credit Investigation, Optional Credit Insurance, Physical Damage or Liability Insurance, Delivery Fees, or a negotiable Documentary Fee” “Price does not include applicable tax, title, license, processing, documentation and/or electronic filing fees, and destination charges.”
  • 21. Vehicle History Disclosures Copyright 2014 DealerOn, Inc. Website Advertising Compliance • Some states require that prior rentals, etc. be disclosed in vehicle advertising • Disclosures should be made on third party sites as well (Cars.com, AutoTrader.com, etc.) • Particularly important when vehicle is listed as “one-owner” • Be careful with descriptions on “one-owner” prior rentals: “This 2010 Elantra is for Hyundai fans that are searching for that babied, one-owner creampuff.” “From the looks of it, I'd say this car has been garage kept and babied regularly. If only my wife treated me as nice!!!”
  • 22. Advertising Vehicles Not in Specific Dealer’s Inventory Copyright 2014 DealerOn, Inc. Website Advertising Compliance • In most states it is illegal for a dealer to advertise any vehicle not actually for sale at the premises of the dealer or available to the dealer directly from the manufacturer at the time of the advertisement. • If advertised vehicles are located on different lots, a best practice is to place a clear and conspicuous disclosure on the top of each Search Results Page stating that the vehicles listed are located at different dealerships throughout the area and that the actual location of the vehicles are listed on each Vehicle Detail Page. Then, on each Vehicle Detail Page, state the actual location with the dealership name and address.
  • 23. Free Gifts With Purchase Copyright 2014 DealerOn, Inc. Website Advertising Compliance Many states, as well as the FTC, prohibit dealers from advertising free goods or services conditioned on the purchase or lease of a vehicle.* However, free merchandise or services can generally be offered for taking a test drive or visiting the dealership. * Free gifts offered by the OEM to the customer tied to a purchase or lease are generally exempt from this prohibition.
  • 24. Clear and Conspicuous Disclosures Copyright 2014 DealerOn, Inc. Website Advertising Compliance • Type size is too small to read. • Often happens when newspaper ads are shrunk to fit webpage or TV commercials are put on YouTube. • The type size should be big enough to read easily. • The FTC has developed what it refers to as “THE FOUR Ps” to describe what the clear and conspicuous standard requires: Prominence – Size matters Presentation – Easy to understand Placement – Placed where it will be read Proximity – Close to the main message
  • 25. Inventory Claims and Links Copyright 2014 DealerOn, Inc. Website Advertising Compliance • A banner ad on the website states that Kia Certified Pre-Owned vehicles are available. However, when the used inventory is filtered by “certified”, the results show “0 vehicles currently match your selection” • Next, when you click the “Click Here For details” link on banner, 225 vehicles show up, many of which are not Kias and therefore could not be certified. This could give the misleading impression that all of these vehicles are “certified”. • Links from banner ads should always be relevant. E.g., if a specific vehicle price or payment is advertised, the link should go to the VDP, NOT the SRP.
  • 26. Improper Advertising of “New” Vehicles Copyright 2014 DealerOn, Inc. Website Advertising Compliance • A number of vehicles that are advertised on this site as “New” are actually not considered to be “New” based on state and federal laws. • In addition to state regulations, the federal Used Car Rule states: “Previously titled or not, any vehicle driven for purposes other than moving or test driving, is considered a used vehicle” • These vehicles should be listed on Used Vehicle inventory pages.
  • 27. “Too Good To Be True” Ad? Copyright 2014 DealerOn, Inc. Website Advertising Compliance What a Deal! • Payment misstated • Amount due at signing misstated • Disclosure hard to read • Disclosure contradicts the main message and does NOT protect the dealer.
  • 28. “Too Good To Be True” Part 2 Copyright 2014 DealerOn, Inc. Website Advertising Compliance $13K discount? Where do I sign??? • Actually a pre-paid lease • Price misstated • Savings misstated • Disclosure hard to read • Disclosure contradicts the main message and does NOT protect the dealer.
  • 29. Truth in Lending Disclosures Copyright 2014 DealerOn, Inc. Website Advertising Compliance Hot Button Issue With Regulators Required disclosures when a payment is advertised: • The amount or percentage of the down payment • The terms of repayment • The “annual percentage rate” using that term or the abbreviation “APR”, and if the rate may be increased after consummation, that fact.
  • 30. Use of the Word “Wholesale” Copyright 2014 DealerOn, Inc. Website Advertising Compliance It is improper to use the word “wholesale” when advertising retail transactions to the public. Be careful when using advertising created by outside vendors! The dealer is responsible.
  • 31. “Internet Pricing” Copyright 2014 DealerOn, Inc. Website Advertising Compliance The statement “Complete the form below to lock in internet pricing” may be a misleading call to action as the law in many states requires all advertised pricing to be honored with or without actual knowledge. Thus, the consumer may be mislead to believe they have to provide their contact information in order to get the advertised prices on the web. In many states, there is no such thing as “Internet Pricing”!
  • 32. “Disclosure Issues” Copyright 2014 DealerOn, Inc. Website Advertising Compliance These Banner Ads contain disclosures that are only partially readable due to directional arrows obscuring parts of the disclosures.
  • 33. Unsubstantiated Claims Copyright 2014 DealerOn, Inc. Website Advertising Compliance Are these claims true? Can they be proven?
  • 34. POLL QUESTION Copyright 2014 DealerOn, Inc.
  • 35. TAKE AWAYS Copyright 2014 DealerOn, Inc.  Advertising compliance isn’t rocket science. The rules for good advertising are mostly common sense. It’s all about being truthful and easy to understand. A good practice is to have a friend or family member not involved in the car business look at your ads. If they don’t get it, your customers probably won’t either!  Depending on the dealership, advertising may be handled by any number of people such as sales managers, internet staff, or a marketing department. Any employee or vendor involved in advertising should be properly trained on federal and state advertising regulations.  If you’re not sure about an advertisement, don’t guess! It’s a good idea to have your advertising reviewed by a qualified professional – it may end up costing quite a bit less than a legal action!  Work with your website provider to help ensure compliance. The DealerOn team is always available to help you keep your website bulletproof!
  • 36. www.DealerOn.com
  • 37. Be the first to answer the giveaway question correctly to win this awesome prize! PRIZE ALERT Copyright 2014 DealerOn, Inc. Professional Website Advertising Compliance Review by the College of Automotive Management Compliance Team $1295 value!
  • 38. A link to the recorded webinar will be emailed to you within 24 hours and will also be posted on www.DealerOn.com/webinar CONTACT INFORMATION Copyright 2014 DealerOn, Inc. Jim Radogna Director of Compliance College of Automotive Management jradogna@lagc.com 858-722-2726 www.collegeofautomotive.com www.facebook.com/JimRadogna www.twitter.com/JimRadogna
  • 39. Copyright 2014 DealerOn, Inc. AFTER THE SHOW After the webinar, please fill out our survey for a chance to win a Google prize!
  • 40. Jeremy Anspach CEO Pure Cars How to Take Consumers from Search to Showroom June 26, 2014 Check out our next webinar Copyright 2014 DealerOn, Inc.