Pub. 15 2016-2017 Issue 2

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 3 , 2 0 1 6 18 new jersey auto retailer any advertisement of a vehiclemust be posted “on or near” the vehicle. Nowadays, most dealerships advertise their entire inventory on the Internet, but the applicationof the regulation is unclear in this context; what is a “copy” of an Internet ad (as opposed to a print ad), and how can it be posted? Should it be assumed that the regulation requires that some kindof reproductionof an Internet adbe posted? Is it, asNJCAR believes appropriate, sufficient to maintain a computer kiosk in the showroom, where customers can access the dealership’s Internet ads? The intent, according to theDCA, is that a customer in the showroom should be able to see, and should only pay, the advertised price, even if they were unaware of the ad when they came to the dealership. To complicate this, an appellate court has recently held that New Jersey’s retail pricing law, which requires posting prices for all items displayed for sale at retail, applies to all used vehicles. Combined with the fact that the entire inventory is “advertised”, compliance has becomemuch more burdensome, with dealerships required to make sure every ve- hicle is correctly labelled and that posted ads are constantly updated. This raises the question of “special Internet pricing.” Strictly inter- preted, the advertising rules do not allow special Internet pricing, because the special Internet price ad should be posted on or near the vehicle so that any potential buyer can see it. There may be a way to work around this problem, however. Some dealerships have designed their Internet ads in a way that they display a “price” for each vehicle, and then require a specific request by a potential customer to receive their individual “quote,” a lower price, which is only provided upon request. Because it is only provided on request, it is reasonable to take the position these are not “advertised prices,” but rather an initial step in bargaining to achieve the final price, and therefore do not have to be posted. NJ CAR cannot guarantee that the DCA is in complete agreement with this analysis, however, so any dealership considering adopting this strategy shouldconsultwith legal counsel beforedoing so. Another issue involves ads that are literally “true” but are nevertheless considered “misleading” by regulators. In a recent “sweep” conducted by theFederal TradeCommission (FTC), several cases involved adver- tisements thatmake a prominent statementwhich is literally true, such as “$10,000 off MSRP on 2013 models” or “$5,000 above Blue Book for your trade.” However, the FTC considered these ads to be decep- tive because they contained a number of conditions and limitations, andwere dependent on the buyer qualifying for variousmanufacturer programs anddiscounts. It is clear fromtheFTC’s filings in these cases that the FTC will consider such advertisements deceptive if there are conditions which make the advertised discount unavailable to most people, even if these conditions are disclosed in a footnote or fine print. The FTC found the ads in these cases to be deceptive because they did not prominently set forth all relevant conditions and disclaimers. Finally, the issue of dealership “doc fees” has been raised by theDCA. The issue arises from the price disclosure statement mandated by N.J.A.C. 13:45A-26A.5(2). As currently written, that provision re- quires every advertisement that states a price to contain the following disclosure,word forwordas set forth in the regulation: “Price(s) include(s) all costs to be paid by consumer, except for licensing costs, registration fees, and taxes.” This required disclosure of excluded fees does not make any mention of documentary fees. TheDCA, therefore, takes the position that a dealer’s “doc fee” should be included in all “advertised prices.” Contrary to the DCA’s take, the industry has always understood that doc fees charged by a dealership are not part of the price of the vehicle, but rather represent an independent fee for services by the dealership, independently negotiable between the dealership and the customer. This reasonable interpretation is supported by the DCA’s separate treatment of doc fees in the regulations which define these fees as a fee for services. Despite a dealership’s best efforts, it is unclear what is allowed and what is not. There is no harm in erring on the side of caution, and disclosing a doc fee in all ads, even in a footnote, but ultimately this is a judgment call which can only be made in consultation with the dealership’s legal counsel. Patrick Cox is NJ CAR’s Director of Legal & Regulatory Affairs and can be reached at 609.883.5056, x350 or pcox@njcar.org . It is clear from the FTC’s filings in these cases that the FTC will consider such advertisements deceptive if there are conditions which make the advertised discount unavailable to most people, even if these conditions are disclosed in a footnote or fine print. COMPLIANCE DEVELOPMENTS  continued from page 17