The FTC’s recently announced settlement with local car dealers in suburban Washington, D.C. and Cleveland, Ohio illustrate two important points.
First, who are the people in your neighborhood? Do they include FTC employees, because they are consumers too. (And if your kids have all just left for college and you’re feeling nostalgic, click here.) Now it may just be a coincidence but the challenged dealers were located near cities where the FTC has its headquarters and a regional office. We’ve seen many an investigation launched because of an ad an FTC employee saw or heard, or a product they purchased.
Second, the FTC was serious when it noted in its revised .Com Disclosure Guides that disclosures needed to be clear, prominent and in close proximity to the claim and perhaps sometimes should even appear in the body of the claim.
Both cases featured the now very familiar claims of auto rebates or savings off of MSRP but failed to adequately disclose that either the models eligible for the advertised savings were limited or that few, if any, people would be eligible for the total amount of potential rebates. In one case, the car dealer touted “New 2013 Ford F-150 $12,000 off MSRP.” However, according to the FTC’s complaint the savings was only available on the highest priced, $47,000, model and not, for example, the base model priced at $23,670. The advertisement did note in fine print that “Percentage off is from top suggested retail price,” and one could query whether the claim conveyed that it was applicable to all Ford F-150s or that a consumer could reasonably expect to save over 50% on the suggested retail price of a $23,000 truck. But as a result, a car dealer in Cleveland has now had his 15 seconds of consumer protection fame and a consent order that will not sunset for decades.
In the second case, the dealer advertised an Internet price that included dealer discounts that were subject to various qualifying conditions, including such things as being in the military, being a recent graduate, having a car with a lien, etc. so that few, if any, individuals would qualify for the full amount of the savings. In this case as well there was a disclosure stating “not all customers will qualify for all incentives. Interestingly enough this was also not an instance where a consumer drove down to the dealer only to find the advertised car or deal wasn’t available. The ad in this instance states that the actual price must be verified by the “Internet Department” by phone, chat, email or website form.
Bottom line is that advertisers should expect the adequacy of their disclosures to continue to get a hard look by the FTC.