Advertising statutes differ state by state. Know the differences between states rules so you don't accidentally advertise incorrectly.
As a dealer in New Hampshire who advertises vehicles for sale in the media, you surely are aware of the Federal Trade Commission Act regarding truthful and non-deceptive advertising. You also surely are aware of New Hampshire’s Consumer Protection Act, which also requires truthful and non-deceptive advertising. What you may not realize is that you also should be aware of other states’ advertising laws if you are located near the state border and your advertising flows into another state, especially Vermont.
Although the goal of both Vermont and New Hampshire is to prohibit untruthful and deceptive advertising, the two states go about it differently. New Hampshire’s law is the Consumer Protection Act (“CPA”), RSA 358-A. The CPA lists 14 “unlawful acts” that apply to the advertising and sale of all property and services to New Hampshire citizens. Each of the 14 unlawful acts is described in general terms, such as “Causing likelihood of confusion or of misunderstanding as to affiliation, connection or association with, or certification by, another.” This unlawful act could be interpreted to include a dealer’s ad that reads, “FACTORY AUTHORIZED SALE” as well as many other forms of advertising.
Vermont’s advertising rules are not as open-ended as New Hampshire’s. The Vermont Attorney General has issued detailed regulations that deal specifically with advertising cars and trucks. The regulations prohibit the use of many common terms that dealers have used for years. For example, the regulations prohibit the use of any terms that imply a vehicle is for sale at a price below, at, or slightly above cost, such as Dealer Cost, Dealer Invoice, Factory Invoice, or Wholesale. These terms are prohibited if the advertised price includes holdbacks or other payments from the manufacturer to the dealer, or if dealer’s profit will be made up by decreasing trade-in allowance and/or increased finance charges. Some other prohibited terms are:
Factory Outlet, Factory Authorized Sale
Any term that implies the dealer has a special connection with the factory is prohibited unless there really is a special arrangement with the factory that is greater than that which other dealers have.
Any term that implies that the dealer sells vehicles at a lower price than other dealers due to sales volume or dealership size is prohibited unless that fact is true.
Liquidation Sale, Public Sale
Prohibited unless the sale is required by court order, operation of law, or due to the impending cessation of the dealer’s business.
Lower Prices, Lowest Prices of The Year
Prohibited if the claim cannot be substantiated by the dealer.
Free, No Charge, Bonus
Prohibited if used in connection with the sale of a vehicle whose price is arrived at through bargaining, or if the offer is contingent on the customer purchasing an item whose price is marked up to cover the cost of the free merchandise.
Unless the rebate is provided through a manufacturer’s rebate program, use of the term “rebate” is prohibited. If the price of the vehicle is increased to offset the rebate, the ad must disclose this fact.
This term is prohibited if the vehicle is not new.
This term is prohibited unless the vehicle has been used exclusively by factory, manufacturer, or distributor personnel.
The term cannot be used if the vehicle is a driver education vehicle, unless the vehicle is disclosed as such.
Advertising about trade-in values also can be a violation if the Vermont rules are not strictly followed. If the ad states a minimum or guaranteed trade-in value and the price of the advertised vehicle has been or might be greater than it normally would be but for the minimum trade-in value, it is a violation if that fact is not disclosed. If you advertise a specific price that will be paid for a trade-in vehicle, the advertised price must be paid for all trade-ins or the ad must disclose any and all conditions that must be met in order to be paid that price for the trade. If the ad uses a term such as “up to $xxx” to state the dollar range that will be paid for a trade-in vehicle, the ad must disclose any factors (age, mileage) that will be used to determine the actual amount paid for the trade.
The above discussion is not a complete review of the Vermont advertising regulations. Any dealer whose advertising goes into Vermont must be completely aware of all of that state’s regulations. The Vermont Consumer Fraud Rules can be found on the Vermont Attorney General’s website.
Contact Greg Holmes, a bronze-level association partner, at 603-224-8004, or email Greg here.