After customer and employee problems – both are a catalyst of lawsuits and regulator issues – the next biggest hurdle you will likely face is assertions that your advertising is deceptive.

The Federal Trade Commission (FTC) is actively pursuing cases, even now. With COVID-19 being in the news cycle constantly, you will not have heard about any enforcement actions. But the FTC is out there and enforcement actions are happening and on-going.

A recent automotive-related case is summarized on the FTC website:

“In March 2020, Michigan-based Federal-Mogul Motorparts LLC (Federal-Mogul) agreed to settle an FTC administrative complaint alleging that it made unsubstantiated claims that its aftermarket Wagner OEX brake pads could stop a vehicle in a shorter distance in an emergency and reduce the risk of collisions, as compared to competitors’ brake pads. The proposed order resolving the FTC’s complaint prohibits Federal-Mogul from making such claims in the future, unless they are true and supported by competent and reliable scientific evidence.”

When you watch the commercial, the brake pad claim seems hard to justify (to me):
https://www.ftc.gov/system/files/documents/cases/172_3102_federal-mogul_motorparts_llc_-_exh_b2_wagner_oex_youtube.mp4

Want to avoid the FTC?

Want to prevent problems and issues with your TV and cable ads? (And don’t forget your print ads, like newsletters, magazines, and newspaper ads.) Consider using a service like ours to review your advertising for proper compliance. We will review the ad, prior to publishing, suggest verbiage changes, and keep you from getting into trouble. We do this work for ad agencies, too. If you are a dealer, we would be happy to work directly with you. Whether you are a car dealer, RV dealer, boat & yacht dealer, or equipment dealer, all of the “trigger terms” can get you into trouble.

The Consumer Financial Protection Bureau (CFPB) has a page that fully details the terms that require additional disclosures. Importantly, the CFPB goes into detail about “clear and conspicuous” advertising. The notion of “clear and conspicuous” is important to keep in mind for all advertising. Otherwise, the ad will be considered misleading.

https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1026/24/#24-i-Interp-3

Consider paying careful attention to the “Triggering terms.”

These include the down payment (if any), the annual percentage rate (APR), the number of payments, the amount of any payment that you show, or the amount of a finance charge.

And please do not forget the processing fee (some dealers still call this a “DOC” fee). If you advertise a payment, it must include the processing fee unless your disclaimer says otherwise. Failure to get this right will result a claim(s) of unfair deceptive acts and practices (uniformly called UDAP). With these claims from Plaintiff lawyers comes “prayers” of punitive damages and cost shifting laws that will have you paying for their attorney’s fees.

If you are having a problem now, we can get you out of trouble.

Or if you want to be proactive, we can keep you out of trouble. You will see what we are saying, once you’ve seen it from a better vantage point.

 

Tom Kline is the Lead Consultant and Founder of Better Vantage Point which is based in Virginia.