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Another FTC Crackdown on Automotive Ads

Robert Ebin /

As if we needed any more proof that the FTC is continuing its enforcement actions in full force during the COVID-19 pandemic, the FTC recently announced that it is taking legal action against a marketing firm for car dealers. According to the FTC, mailers that were sent out by this firm led consumers to believe they would be able to obtain CARES Act stimulus relief in person at a designated site. The mailers also claimed that an “Economic Automotive Stimulus Program Relief Program” was approved by the U.S. government. These mailers even went so far as to include “checks” that say “COVID-19 Auto Stimulus” with a space to endorse the check on the back. However, as you likely already predicted, the checks were fake (i.e., simulated checks), there was no automotive stimulus program affiliated with or endorsed by the U.S. government, and the designated site ended up being the location of a used car sale in Florida.

It goes without saying that during these times, you should never have any advertising campaign making any false representations regarding COVID-19 stimulus information. The FTC has been cracking down on numerous other COVID-19-related schemes outside the automotive space as well, and so anything regarding COVID-19 is definitely on the FTC’s radar. Here are a few quick reminders that we can all take away from this recent FTC action:

  • If you are using an advertising or marketing firm, always remember to review their advertisements for compliance before publishing. In my experience, some of these firms are not based in California and may not know about some (or many) of California’s stringent automotive advertising regulations. Even if your dealership does not use a firm, you must still review all advertisements for compliance beforehand.
  • All advertising must be true and not misleading in any way. The fact that you may be ignorant or unaware of the untruthfulness or misleading qualities of the advertisement is no excuse. Also, reliance by a consumer and/or actual damages resulting from the false advertisement is unnecessary to prove an advertising violation. Furthermore, and in connection with the previous point above, a dealer’s reliance on an advertising agency also does not absolve a dealer from liability for a misleading advertisement. [15 U.S.C. § 45; Business and Professions Code § 17500; Vehicle Code § 11713(a); 13 CCR § 260.00].
  • The use of any deceptive envelope or offer formats that lead a consumer to believe the offer comes from a government agency or bill collecting agency is prohibited. [Business and Professions Code § 17537.1(g)(1)].
  • Simulated checks should not be used in California for any purpose. California law is crystal clear about this prohibition because it is mentioned in multiple code sections. Vehicle Code section 11713.1(w) states that it is unlawful for a dealer to “use a simulated check . . . in an advertisement for the sale or lease of a vehicle.” Similarly, Business and Professions Code section 22433(b) states that “[n]o person shall produce, advertise, offer for sale, sell, distribute, or otherwise transfer for use in this state any simulated check.” In other words, do not even think about having a simulated check in an advertisement.

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