It's time regulators deal with digital auto marketing
When the National Association of Motor Vehicle Boards and Commissions meets this week in Alexandria, Va., the group must tackle the thorny issues involving how automobiles are advertised and retailed via the Internet.
Most regulations governing automotive advertising and marketing are determined state by state, which is as it should be. But many, if not most, of those regulations date back to when dealerships did most of their advertising in local newspapers.
Times have changed. Dealerships use a variety of media to attract consumers. Many stores use Internet lead generators that reach across state lines.
Earlier this year a flap erupted over TrueCar Inc.'s business model of providing Internet leads to dealerships for a fee per sale, rather than a subscription fee. That was deemed by some states to be a violation of existing bird-dog statutes, which forbid paying individuals to steer customers to dealerships. As a result, TrueCar officials crisscrossed the country adjusting the company's fee structure to comply with a variety of state regulations.
Other carryover statutes that deal with brokering and advertising restrictions also don't translate easily to the digital world.
For example, a Virginia dealership ran afoul of state regulators when one of its Internet ads that legally and correctly disclosed the full document processing fee was used, or "scraped," by another Web site that removed the doc fee from the ad. That put the dealership in violation of state advertising regulations. The regulators initially held the dealer responsible, which is outrageous.
That would be like someone downloading a story from the Automotive News Web site, editing it in a way that made the story false, then reposting it on a different Web but still attributing it to Automotive News. That might prompt someone to sue Automotive News for libel, expecting to recover for damages inflicted by someone else.
Fortunately, libel laws don't work that way, and neither should state advertising regulations.
Some state regulations seem adaptable to digital commerce; others don't. But it behooves the state regulators meeting this week as a group to make sure their individual states have policies, procedures and rules that do not unreasonably impede marketing cars and trucks on the Internet. Nor should regulations give an unfair advantage to the Internet just because it is a relatively new medium.
The last thing the industry needs is a new federal law regulating how automobiles are marketed on the Internet or a federal agency inspecting each and every dealership ad.
But there must be clarity and consistency, and it is up to state regulators to make that happen.
Dealers and consumers deserve no less.