In its latest attempt to ensure advertised prices are transparent and truthful, the Federal Trade Commission recently released a set of Frequently Asked Questions (FAQs) to help the automobile industry comply with the Federal Trade Commission Act regarding vehicle advertising activities.
Attorneys Thomas S. Vangel, James F. Radke and Lindsey M. McComber, members of the firm’s Automotive and Vehicle Dealerships Industry Team, wrote about the FAQs in their monthly column for the Massachusetts State Auto Dealers Association magazine.
“The FTC Act requires that an advertisement’s impression is not misleading to a consumer. If an advertisement is considered to be misleading, it can also be found to be unfair and deceptive, which could cause “consumers and competition to suffer,” the three wrote.
They noted that Section 5 of the FTC Act spells out that an act is considered unfair “if it causes or is likely to cause substantial injury to consumers, cannot be reasonably avoided by consumers, and is not outweighed by countervailing benefits to consumers or to competition.”
The attorneys wrote that an act is considered deceptive where:
- a representation, omission, or practice misleads or is likely to mislead the consumer;
- the consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances and
- the misleading representation, omission, or practice is material.
The attorneys say taxes can be excluded from advertised prices, but document fees must be included. Importantly, they point out, Massachusetts law requires the same.
“In all forms of advertising, the actual price of a product must be the most prominently displayed amount that a customer can pay upon the visit to the dealership regardless of payment method,” they wrote.
The three signed off by warning the FTC is targeting pricing in the automobile industry.
“In light of the FTC’s continued focus on the automotive industry, dealers should view these FAQs as a reminder that the FTC Act requires transparency in all advertisements,” they wrote. “As such, dealers should immediately review price financing, promotions, rebates, and discounts to ensure all fees and eligibility conditions are clearly communicated in dealership advertising and that the “all-in price” is the number most prominently displayed.”
Read the full column for more information.
