CARdinal rules for online advertisers

If there are strings attached to a particular deal, those material terms and conditions have to be clearly and conspicuously disclosed up front. That well-settled legal principle applies to online ads. It applies to car ads.  And so (QED) it applies to online car ads. That should come as no surprise to savvy marketers. But two FTC settlements underscore it, highlight it, and festoon it with multi-colored pennants for members of the auto industry — and other advertisers, too.

The FTC’s lawsuit against Cleveland-based Ganley Ford West addresses claims the company made on its website and in local newspapers touting sizable discounts off the manufacturer’s suggested retail price — for example:

NEW 2013 FORD F-150
$12,000
OFF MSRP!

But according to the FTC, you could drive a truck through the gap between what the dealership advertised and the actual terms of the offer.  The FTC says that when people tried to get the advertised discount, they learned the “$12,000 OFF MSRP!” deal was available only for a particular version of the vehicle, usually a pricey, tricked-out model.  As the complaint explains, the only 2013 Ford F-150 available for $12,000 off the MSRP was the Ford F-150 Lariat, with an MSRP of $47,000.  The deal wasn’t available for the less expensive ones — for example, the base model F-150 with an MSRP of $23,670.

The FTC’s complaint against Timonium Chrysler in Cockeysville, Maryland, also challenges allegedly deceptive online advertising.  The dealership’s website featured specific “Dealer Discounts” or “Internet Prices.”  For example, a 2013 Chrysler 200 Limited Sedan was advertised like this:

            MSRP                          $27,320
            Dealer Discount           -$7,499
            Internet Price               $19,821

But according to the FTC, the discount and price touted on the site depended on a sedanful of qualifications or restrictions not adequately disclosed in the ad — like being a member of the military, being a recent college grad, having an account at a particular bank, and owning a vehicle with a lien on it.  And even if a prospective customer somehow cobbled together all the smaller rebates, the FTC says the cost of the car was still more than the advertised price.

Both companies have agreed to change how they do business and have signed proposed orders to make those promises legally binding.  The orders prohibit them from claiming that a discount, rebate, bonus, incentive or price is available unless they clearly and conspicuously disclose all material qualifications or restrictions.  That includes strings on who can get the deal and the cars or trucks it applies to.

The orders also bans misrepresentations about the existence or amount of any discount, rebate, bonus, incentive or price; the existence, price, value, coverage, or features of any product or service; how many vehicles are available at particular prices; or any other material fact about the price, sale, financing, or leasing of vehicles. The deadline for commenting about the proposed settlements is October 3, 2013.

Even if cars aren't your lot, here are some across-the-board tips for advertisers:

Disclose the details of the deal.  If the disclosure of information is necessary to prevent an ad claim from being deceptive, it has to be clear and conspicuous.  “But we don’t know how to make information clear and conspicuous,” some advertisers say.  Our response:  With all due respect, baloney.  Advertisers invented huge headlines, eye-catching graphics, and 30-foot inflatable pink gorillas outside their places of business.  “Clear and conspicuous” is what advertisers are all about.  When in doubt, use the same methods you employ to grab the attention of prospective customers.  (OK, maybe not the 30-foot gorilla.)

Best-case-scenario advertising can lead to a worst-case-scenario outcome for your business.  As a general rule, when consumers see an advertised offer, it’s reasonable for them to conclude that’s what they’ll pay.  If there are strings attached — either about who qualifies for the deal, how much they’ll pay, or what exactly is for sale —  the advertiser has the obligation to explain that information in a way consumers will notice and understand.  Failing to be upfront can earn you the ire of prospective customers and the unwanted attention of law enforcers.

There’s a reason it’s called an asterisk.  Making an ad claim and then attempting to modify it by sending consumers elsewhere for the full story is risky business.  Also iffy:  fineprint footnotes, dense blocks of text, and vague hyperlinks.  The wiser practice is to put the explanatory info as close as possible to the triggering claim.  Looking for more guidance?  Read .com Disclosures: How to Make Effective Disclosures in Digital Advertising.

 

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Thanks for the information. I know that it is important to check all the hidden fees or other things that go a long with buying things. Great information.

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