Ads must be clear; laws must, too
James B. Treece is a news editor at Automotive News.
The Federal Trade Commission's crackdown on what it calls deceptive dealership advertising should have much to applaud. If a cleanup of dubious ads improves the unfavorable image of auto dealers, that's a plus for the entire industry.
But the FTC's Operation Steer Clear appears to target ads from A to Z, and too much in between.
A: One dealership got flagged for an ad produced by its local TV station that referred to the "percentage rate" on available financing, rather than the required "annual percentage rate." OK, so that's the law.
Z: Another advertised "zero money down" on a lease. "But guess what?" said Jessica Rich, director of the FTC's Bureau of Consumer Protection. "There were fees, down payments and taxes, in one case totaling more than $5,000, all buried in the fine print.
"Dealers think that if they put the real price of something in really fine print, that's not deceptive," she said. "That is deceptive and it violates the law."
Fine print violates the law? What about all those pharmaceutical ads in magazines that come with two pages of tiny print, explaining that the real price of using this asthma drug is a possible heart attack?
Or consider this example. The FTC says a dealership sent out 30,000 mailers to consumers, saying they had won prizes in a sweepstakes. But "not a single consumer, not one," won any prize, Rich said.
The FTC didn't name the dealership, but it cited only one for offering prizes: Fowlerville Ford of Fowlerville, Mich. The dealership says the mailing told consumers they could win a prize if they had the winning number, and the odds of winning were stated in the program.
Having a jackpot with no winners sounds fishy, but weeks go by with no Powerball lottery winners, either. The dealership felt it complied with all relevant regulations.
"The FTC concluded that the disclosure was not specific enough in its opinion, even though no regulations had been published defining what kind of disclosure was needed," Fowlerville Ford said in a statement.
And there's the rub.
The FTC's actions seem to imply the agency wants auto retailers to comply with the spirit of the law, not just the letter of the law.
That's more than a subtle distinction. It opens the door to a world in which the law and compliance with the law become whatever the regulators then in office say they are. That is profoundly unfair.
The Federal Trade Commission should steer clear of that approach to policing advertising.
You can reach James B. Treece at email@example.com.