Motor Vehicle Advertising and Information Disclosure Webinar

Transcription

1 Motor Vehicle Advertising and Information Disclosure Webinar Participant Questions The following questions were posed by participants during the webinar provided by the Consumer Protection Office on the new motor vehicle advertising and information disclosure legislation. This document has been prepared to provide general information to motor vehicle dealers on the new advertising legislation. While the responses have been prepared according to the specific questions, there can be many nuances and differences between vehicle advertisements. Dealers are recommended to review the legislation and how it applies to their advertising practices, methods and content. If a discrepancy is found between this document and the legislation it refers to, the legislation supersedes the information found in this document. The Consumer Protection Amendment and Business Practices Amendment Act (Motor Vehicle Advertising and Information Disclosure and Other Amendments) can be found at: The Motor Vehicle Advertising and Information Disclosure Regulation can be found at: 1. Will there be someone to call to work with us? Dealers can contact the Consumer Protection Office with any questions or inquiries. Consumer Protection Office Portage Avenue Winnipeg, Manitoba R3C 0B6 Phone (Winnipeg and area): Fax: Toll-free within Manitoba: consumers@gov.mb.ca Website: 2. If you are a "broker" do you have to identify yourself as such in classified ads? Only licensed dealers and/or their licensed salespeople can acquire and sell five or more motor vehicles or trailers in a 12 month period in Manitoba. An individual that advertises vehicles for sale that is not a licensed dealer or salesperson will be subject to investigation by Manitoba Public Insurance, possible fines, and/or an audit by the Canada Revenue Agency. Licensed dealers who allow unlicensed salespeople to act on their behalf by acquiring or selling vehicles could face sanctions in the form of a show cause hearing resulting in a possible suspension of their dealer permit. 1

2 If vehicles owned by a dealer are being advertised without the name and permit number of the dealer then they would be subject to the advertising legislation administered by the Consumer Protection Office. For example: a vehicle owned by a dealer that is advertised on Kijiji as a private sale or by an unlicensed party. 3. How do the advertising rules translate to radio, or is this only for print? These rules apply to all forms of advertising. Consideration is given to time and space, but consumers need to be directed to a 24/7 information source for the required information not contained in the advertisement. 4. Do we need to advertise our new vehicles on-line including our fees and tire tax? Yes, the legislation applies to advertising published by any means, such as newspaper, radio, online, billboards even a sign on the vehicle itself. If an advertisement includes the price for a vehicle, that price must include all fees, levies, charges, and taxes. The price can exclude GST and RST, but only if the advertisement indicates they are not included. Example: $28,999 + GST and RST See The Consumer Protection Act s.231(1) and s.231(4) 5. With an advertisement that has several vehicles, can the dealer advertise the specific price on each vehicle and then add a prominent all inclusive statement describing any extra charges. Example: ALL VEHICLES SUBJECT TO ADDITIONAL DOCUMENTATION FEE $399 AND THEFT INSURANCE FEE$99" Is this acceptable rather than adding the fees to each vehicle description and price? No, if a price is included in an advertisement for a vehicle it must include all fees and charges associated with the vehicle, such as documentation fees, administrative fees, and inspection fees. This also includes fees and charges for installed products and services, such as etching, nitrogen, and warranty. Only GST and RST can be excluded from the price and only if the advertisement indicates they are excluded. 6. So from your presentation it appears that joint dealer ads done by Dealer Associations are allowed to state "Customer may be required to pay documentation fees ranging from $199 to $999. Dealers do not have the same fees. I believe this is the practice in Ontario. No, our rule on joint dealer advertising is different than Ontario. To maintain consistency with all-inclusive pricing initiative, the advertised price in a joint dealer advertisement must be an all-inclusive price that is available at a minimum of one dealership. The advertisement should state where that all-inclusive price is available and must also identify the dealership(s) with higher 2

3 fees, the amount of the fees and what they are for. A joint advertisement that includes the maximum all-inclusive price amongst the dealerships stating dealers may sell for less is also acceptable. 7. What are the limitations to outdoor ads with pricing? Does there need to be a disclaimer line if you post a price or payment? Can it read "see dealer for details"? If there are practical limitations to the amount of information that can be included in the advertisement, the advertisement must state where the consumer can obtain additional information about the dealer or vehicle. The phrase see dealer for details is not acceptable. Examples of acceptable sources include: a dealer website or phone number. 8. Locally, our dealership pays to run additional advertisements with content developed by manufacturer and for which we are partially reimbursed. So, we are placing ads with their creative. Would this be considered manufacturer advertising? If a dealership is placing the advertisement directly or indirectly through a dealer advertising agency or if the dealership is identified in the advertisement, then the advertisement is subject to the legislation. 9. If a term is different from the amortization, do both have to be in the ad? No, amortization is not required to be disclosed in an advertisement. However, it is required in the initial disclosure statement to the consumer. See Section 34.3(c)(iii) of The Consumer Protection Act. 10. In the example of the Durango for $29999 and the monthly payment which cannot exceed the total price. - where was the amortization time frame for the payment in your example? The image with the Durango was used solely to illustrate the prominence of the total price relative to the payment amount. Further, amortization is not required to be disclosed in advertising. 11. Can rates be advertised as "on approved credit" since not all customers will qualify for a specific rate? Yes, rates may be advertised as on approved credit. 12. If we purchase a company car from the manufacturer, can that be advertised as a company car? Yes, the term demonstrator, executive driven or other similar term may be used in an advertisement, but only if that vehicle was acquired new by the dealer and used for normal business operations. See sub-section 11(3) of the Motor Vehicle Information and Advertising 3

4 Disclosure Regulation. 13. What is deemed "not practical"? We quite often produce a flyer that has 40+ used vehicles on it with price and payments etc. Do we need to list cost of credit for all 40 units on the flyer? Or can we direct people to a source with all of the required information, as long as that is a reasonable size? In such an advertisement, a dealer could use a representative transaction to satisfy the disclosure requirement for the 40 vehicles. To be clear, understandable and prominent, a representative statement must appear on each page of an advertisement. 14. I have a question about TV advertising. In Alberta you must have the vehicle in stock when you start running your TV advertisement, but if it sells a week into the event it is fine because you had the vehicle in stock when you started promoting. Now a days with telecasters and closed captioning it can take up two weeks to get the ad changed so how are we supposed to let them know it is sold. Do you have the same guidelines as Alberta? If an advertised vehicle has been sold or leased while an advertisement is still in effect, then a dealer must post that advertisement in the dealership in a location visible to consumers that the vehicle has been sold or leased. If the vehicle is still located on the premises and visible to consumers, then a sign must also be placed on the vehicle indicating it was been sold or leased. See Motor Vehicle Information and Advertising Disclosure Regulation s.5(5). 15. If there are specific or targeted bonuses i.e.: Loyalty/Conquest or Visa, Costco incentives offered from the manufacturers, can that be deducted from the sale price? No, advertised prices must not be calculated based on the inclusion of any special deduction or circumstance, such as but not limited to: the value of a trade-in; the value of a cash-down payment; the choice to enter into a credit agreement; the value of an after-tax rebate; or other trade incentive. However, the special bonus or circumstance could be deducted from the advertised price afterwards. See Motor Vehicle Information and Advertising Disclosure Regulation s.6(1). 16. You indicated that if it wasn't the exact vehicle you had to specify. Some time we have to use a stock photo the dealer assets doesn't have the exact color. Do we have to specify? Yes. If an advertisement uses a photograph of a vehicle that is not the vehicle for sale or lease, then the advertisement must indicate the vehicle in the photograph is not the vehicle for sale. The vehicle photographed must also be a reasonable representation of the actual vehicle for sale. When assessing whether the vehicle photographed is a reasonable representation of the vehicle actually for sale, the Consumer Protection Office will take several factors into consideration including, but not limited to, the type of advertising media used and the make, model, year, trim level and condition of the vehicles. 4

5 See Motor Vehicle Information and Advertising Disclosure Regulation s.9(1). 17. What about offers of FREE IPAD, trips, TV's, gas cards? Advertisements may use the term free to describe an offering only if the item is available without requiring the purchase or lease of a vehicle. Dealers may consider using included at no extra charge or other similar phrase. See Motor Vehicle Information and Advertising Disclosure Regulation s.11(5). 18. Do we have to say price plus taxes on outdoor mobile signs? Yes. GST and RST can be excluded from the all-in price, but are considered to be excluded if the advertisement states they are excluded. Otherwise, they are considered to be included in the advertised price. 19. Many dealers like to advertise a "finance price", i.e. $1000 less if finance. Can one disclaimer state this if all prices reflect the finance discount? No. The advertised price of a vehicle cannot be calculated based on the consumer s choice to enter into a credit sale agreement. See Motor Vehicle Information and Advertising Disclosure Regulation s.6(1)(c). 20. Can one advertise price alone and no payment? Yes, if it is the all-inclusive cash price which includes all fees, charges taxes and levies. 21. How will negative equity be looked at? ie vehicle is listed for $10,000 customer owes $5,000 more on their trade than it is worth and now we sell the vehicle for $15,000 This legislation addresses the composition of advertised prices. In your example, the new legislation would apply to the vehicle listed for $10,000. With respect to sales documents and the trade of a motor vehicle, negative equity should be reflected accurately. A sales document with an inflated trade in or purchase price could be considered false information. Section 233 of The Consumer Protection Act, states that a dealer must not provide or induce anyone to provide false information or false documentation relating to a trade in a motor vehicle. 22. Regarding advertisements online, is the wording Financing available and warranty offered ok to use? Yes, as long as you are simply advertising in a general manner that financing and extended warranty are available as optional services. If the vehicle is being advertised as a credit sale includes a payment or interest rate, then the 5

6 advertisement must include: APR, term, cash price, and cost of credit. See Section 34.2 of The Consumer Protection Act. If however, extended warranty is included with the vehicle being advertised for purchase or lease, and the advertisement indicates that the extended warranty is included, then the advertisement must also indicate the term of the warranty and the maximum individual claim limits, if any, for the warranty. See Motor Vehicle Information and Advertising Disclosure Regulation s What about out of town delivery fee? Can we add a delivery fee to a vehicle we deliver? Yes, as long as the advertisement did not indicate that delivery of the vehicle from the dealership to the consumer was already included in the price. With respect to the delivery of a vehicle from a manufacturer to a dealer, any related fees or charges must be included in an advertised price. 24. How do the all-in pricing rules work if a dealer uses a third-party to provide financing for a fee? If the vehicle is advertised as a credit sale then the price must include all related financing charges, including those from a third-party lender. In the event that a consumer responds to an advertisement for a vehicle at an all-inclusive price, but subsequently inquires about financing, then additional financing fees would be permitted as the consumer did not respond to an advertisement for a credit sale. 25. Can we assume PPSA charges, which can vary, would not need to be included in online advertised prices? The new advertising rules apply to all forms of advertising. It is recognized that PPSA charges can vary according to term length. However, an advertisement for a credit sale that includes a payment amount or interest rate is required to include the term. Thus, the corresponding PPSA fee to that term must be included in the advertised price. 26. Can we advertise just payments with the cost of credit? Or does the price of the car need to be included in all ads? If a payment amount or interest rate is advertised then the cash price, term of the loan, APR, and cost of credit must also be included. See s.34.2 of The Consumer Protection Act. Further, the payment must not be featured more prominently than the total price of the vehicle. See Motor Vehicle Information and Advertising Disclosure Regulation s.6(2). 6

7 27. Do we have to show pricing? Can we say 0% financing up to xx months, up to $5,000 cash back, CALL US FOR PRICING? Prices do not need to be included in advertisements. However, if the advertisement is for specific vehicles, then including the zero percent interest rate would bring into effect the disclosure in advertising provisions in s.34.2 of The Consumer Protection Act. 28. An advertisement for a specific vehicle provides consumers with different options for acquiring the vehicle: 1. $4,000 rebate; % financing; 3. Lease; and % financing with $3,000 off. What information must be included in the advertisement? The advertisement must include an all-inclusive cash price for the vehicle. The rebate may be advertised, but not applied to the cash price. See sub-section 6(1) of The Motor Vehicle Advertising and Information Disclosure Regulation. See the definition of cash price in The Consumer Protection Act. If the financing scenarios include an interest rate, they must also include the associated cost of credit information, including term, APR of the credit, and cost of credit. See s.34.2 of The Consumer Protection Act. If any specific information is included about the lease option, then the advertisement must also include the term, amount and timing of payments, the amount and timing of period payments, the amount and timing of any other payments, the APR of the lease, and the km allowance for the lease and overages charges. See s.38 of The Consumer Protection Act and s.17 of The Consumer Protection Regulation. 29. Why are the manufacturers exempt? The Consumer Protection Office hears, mediates and investigates complaints involving business to consumer transactions. Accordingly, the legislation is designed to address advertising targeting the sale of motor vehicles to consumers by dealers. The Consumer Protection Office has the ability through regulation to extend the application of the legislation to manufacturers and this matter remains under consideration. There would be consultation in the development of any such regulation amendment. 30. How are these changes going to be policed? Is it a complaint driven process? The legislation will be enforced by the Consumer Protection Office. The office will investigate complaints it receives from the public as well as proactively addressing advertising practices it observes in the marketplace. The Consumer Protection Office has a variety of measures to use to achieve compliance, such as inspections, mediation, compliance orders, administrative penalties and prosecution. The 7

8 Consumer Protection Office also has the authority to publicise administrative penalties and or compliance orders that have been issued and release of information to the public, when it is in the public interest to do so. 8