Let’s take a quick look at some common VDP advertisement issues, and how you can help automate compliance.
By: Mark Sanborn
Senior Product and Regulatory Counsel
In your quest to drive customers to your dealership, you probably have a whole arsenal of marketing plans, advertisements, banner ads, and maybe even radio and TV ads. Once you’ve got their attention, customers expect to be able to view your inventory on your website. Enter: vehicle display pages (VDPs).
VDPs allow dealers to show vehicles that are ready to roll, on their way, or available for special order. Slap on some photos, pricing info, a few tantalizing rebates, a vehicle description, and maybe even a finance or lease calculator so customers can crunch some numbers before setting foot in your dealership or giving you a ring. Simple, right?
Well, not so fast! Have you considered that your VDPs are another advertisement, subject to all state and federal regulations that apply to your other, more “traditional,” marketing efforts? In a nutshell, if it’s on your site and it’s promoting your products or services, it’s an ad. This means that your VDPs have to play by the same rules as your other ads, including Regulation M for leases, Regulation Z for finance offers, UDAP laws, and the CARS Rule (if/when it becomes effective). Let’s take a quick look at some common VDP advertisement issues, and how you can help automate compliance.
1. Rebates
VDPs often feature a smorgasbord of rebates, but some are only available to certain customers or come with more strings attached than a puppet show. Follow the FTC’s guidance and make sure limited rebates aren’t “stacked” or factored in your advertised price without appropriate disclosures. The conditions and limitations of conditional rebates should be disclosed clearly and conspicuously on the VDP, just like in any other advertisement.
2. Regulation M/Regulation Z disclosures
Highlighting a lease or finance payment or a special APR on your VDP? Better make sure you’re not triggering Reg M or Reg Z. If you are, those required disclosures better be front and center on your VDP (click-throughs and hover-overs probably aren’t gonna cut it, especially once the CARS Rule goes into effect). For more on this topic, see our recent article here.
3. Vehicle availability
Many states have requirements and required disclosures when advertising vehicles that aren’t physically at your dealership. Make sure you’re following the rules wherever you’re advertising and that your VDPs are accurate and compliant when listing those elusive vehicles.Even if your state doesn’t have specific requirements, tread carefully and consider appropriate disclosures when advertising or listing vehicles that haven’t made it to your lot yet. You don’t want to get slapped with claims of misrepresentation, UDAP, or bait and switch.
4. Unsubstantiated fuel-economy claims
VDPs often tout fuel economy, either with general statements like “gets great gas mileage” or specific mileage figures with no source. General statements should disclose the EPA combined fuel economy estimate, while specific numbers should clarify that they’re estimates, cite the EPA as the source, and specify whether they’re for city, highway, or combined mileage. Electric vehicles should disclose the EPA-estimated range. More fuel economy advertising info can be found here.
Keep in mind that EPA fuel economy estimates are for new vehicles. Be cautious when applying these to used vehicles, as their fuel economy can be impacted by vehicle history, mechanical condition, add-ons, and more. EPA estimates might not always be spot-on for every used vehicle.
5. Boilerplate disclosures
Many VDPs have boilerplate disclosures at the bottom of the page, sometimes contradicting other disclosures or other information contained in the VDP (likely due to input from the dealer, website provider, ad agencies, and maybe even the OEM). Use boilerplate disclosures sparingly and make sure they actually apply to your VDPs. Be aware that disclosures at the bottom of a long webpage might not be considered clear and conspicuous under applicable advertising laws. General items to watch out for include disclosures that try to exclude fees that should be included in the price by law, give conflicting info about vehicle availability, suggest that limited rebates or discounts might be factored into a price, or contain other problematic information or requirements like requiring customers to print the VDP and have it signed by a manager for the pricing to be valid.
As you can see, VDP compliance risks are no joke. Plus, maintaining VDPs gets even trickier when various dealership staff (or even third-party vendors) get involved, adding specific notes, disclosures, and maybe even flexing their creative writing muscles in the description to move those vehicles. All of this could inadvertently lead your dealership into deceptive advertising territory.
And let’s not forget the sheer volume of VDPs. An average dealership might have up to 600 vehicles listed at any given time, and each VDP needs to comply with a long list of laws and regulations. Even if an experienced consultant could review and update a VDP in just five minutes, that’s still 50 hours of pure review. And with inventory constantly revolving as vehicles are sold and new ones arrive, 50 hours is a low estimate of the actual time needed. Plus, over an extended period, the quality of human review might dip, and the time it takes could increase, especially since a dealership’s VDPs often follow a similar format and content, making slight deviations or additions harder to catch.
Ease of Access Makes Advertisements Low-Hanging Fruit
Vehicle advertising is a competitive business, with countless digital marketing and ad agencies vying for your dealership’s business, each claiming they can outdo the hundreds of other agencies in the auto industry. This never-ending game of one-upmanship, coupled with the ease of accessing a dealership’s ads, sets the table for a hungry bunch: plaintiffs’ attorneys, class action members, state regulators, and the FTC.
Dealerships that don’t have a tight grip on their ads are heading down a risky path, thanks to how easily this group can access them with just a simple click. While prepping for this article, I spotted glaring issues in the ads of five different dealerships across five brands and five states. The low-hanging fruit in the dealership orchard is practically on the ground, ready to be scooped up. One bad apple (one VDP) is all it takes.
In many law enforcement actions against dealerships, like those launched by the FTC, advertising violations often play a featured role. Even if the main focus of the regulator’s case isn’t advertising-related, they’ll usually toss in some allegations about improper advertising practices for good measure. Why? Because advertising violations are relatively common and relatively easy to prove, while other allegations might be more of an uphill battle. If the regulator can make their case on the advertising front, they can achieve many of the goals that they’re after in the overall case, boosting their bargaining power when it comes to negotiating a settlement, fine, and consent decree with the dealership.
Ad AI: A Guardian Product
A seemingly simple task of manually maintaining VDPs can quickly spiral out of control by becoming extremely complex, expensive, and tedious. This is where an automated review process will shine. This is where ComplyAuto Guardian comes in.
ComplyAuto’s patent pending technology is the industry’s first AI-powered advertising compliance engine that is capable of reviewing all of the dealership’s lease and finance advertisements and its VDPs against over 100 state and federal requirements to help your dealership on the road to compliance.