Dealership ads can avoid regulators' cross hairs if advertisers know the rules, adjust the message and get legal approval, legal experts and F&I trainers say.
The Federal Trade Commission is cracking down on what it considers deceptive dealership advertising, and often zeros in on the language of loan or lease terms, the experts and trainers say.
"As the FTC gets tougher, things that were not violations 10 years ago now are," said Randy Henrick, associate general counsel for Dealertrack Technologies. In general, he said, "dealers are getting better with disclosures and not making misleading statements or conflicting statements in the footnotes."
But, he said, "There are outliers."
For example, 12 dealerships agreed to settlements after being accused of deceptive advertising as part of the FTC's Operation Steer Clear crackdown unveiled in 2014.
Under the settlements, the dealerships will be under scrutiny for 20 years, and any violation could result in a fine of as much as $16,000 for each day a deceptive ad runs.
Dealers could be violating advertising regulations to stay competitive, said Nick Smyth, a financial services regulatory attorney at Reed Smith in Pittsburgh.
Since the financial crisis "the market has steadied," Smyth said. "Maybe dealers are trying to figure out what they can do to get ahead" of rivals.
"There are these 0 percent deals out there," he said. "If they can't offer those deals, they might want to offer something else that's just as good and cut corners in marketing it."
Tony Dupaquier, director of The Academy, an F&I training center in Austin, Texas, believes there are fewer deceptive ads than in the past. Still, some dealerships push the limits, he said.
The stores think "We do it this way because this is the way we've always done it. Right or wrong, good or bad," Dupaquier said. But "the industry is becoming more aware that ignorance isn't an excuse."
To stay on the right side of regulators, dealers need to understand advertising requirements, experts say.
• Fine print. You can't offer a great deal in large type and then effectively pull it away with disclaimers in the fine print.
• Ignoring state rules. A manufacturer-approved or -supplied ad may be federally compliant but violate your state's laws. Check it with a lawyer who knows the local rules.
• Hyping payment amounts. Payments, interest rates and other key terms are so-called trigger terms. If you advertise one, you must include all of the other key terms of the offered deal, too.
"Dealers love to advertise payment amounts," Henrick said. But "payment amount" is one of a number of so-called trigger terms, he said. If a dealership discloses one trigger term in an ad, he said, the store must also disclose the other key terms of the deal to stay compliant. For example, if a dealership advertises down payment, it must also disclose interest rate, payment amount and repayment period.
For leases, if a dealership advertises the amount of upfront payments due, for example, it must also disclose that the transaction is a lease, the total amount due at signing, the number and amount of scheduled payments, whether a security deposit is required and whether the lease is open-ended, meaning that at the end of the vehicle's lease term, the customer can opt to write a new lease for the vehicle instead of turning over the keys. Some states also require dealers to show mileage limitations and the cost per excess miles on their ads.
Disclosing all the terms in fine print won't save dealers, said Paul Metrey, chief regulatory counsel for the National Automobile Dealers Association.
"Dealers can't use fine print to back out of something that is prominently stated in the ad itself," he said.
Hiring a specialized attorney to review dealership advertisements is one way to be sure ads are transparent.
"Dealers cannot assume that advertisements provided by ad agencies are compliant. Dealers need to have ads checked by legal professionals familiar with the regulations," Metrey said.
Dealers should be wary of ads from the manufacturer, too, especially because regulations vary by state, Henrick said.
"A dealer can't just take a manufacturer's ad and slap a name on it and send it out," he said.
"They have to do a review on it to make sure it's compliant. Dealers can't assume that the manufacturer has done a federal or state compliance review."
Some manufacturers give dealers advertising guidelines. Honda, for example, offers a dense marketing packet to steer dealers in the right direction, a company spokesman said.
Honda advises dealers to refrain from quoting retail prices that are below dealer invoice and from using terms or images that convey the impression that the dealer is in a position to deliver the lowest price of any Honda dealer.
Honda also prohibits its dealers from intentionally misleading a customer about a characteristic of a Honda vehicle being offered.
Violations don't necessarily have to harm a customer.
The FTC classifies a deceptive practice as something that could mislead a consumer.
But "who knows what is likely to mislead a consumer?" Henrick said. "It's very subjective with the FTC, and dealers in this environment have to take a conservative approach."
The advertising terms have to be displayed so that it is clear for every device that might access an ad.
"Twitter, for example, would be very hard to put in all the terms you need to disclose in 140 characters," Henrick said.
And Facebook can send part of a dealership's ad to people who "like" the page. Sending only a portion of the ad could cut off disclosures, but the dealer would still be held responsible, Henrick said, adding: "The FTC wants more disclosure rather than less, and they want things to be kept simple."