My friends know that I collect dealer advertising like some people collect coins or stamps. And why not? The ads are a source of constant entertainment. I get some real doozies, but a recent one from a South Carolina dealer really piqued my interest.

Let me share some of the ad content with you. As I do, I’ll tell you why this ad is the front-runner for my 2008 Boneheaded Ad of the Year Award. First, the ad described the dealer as an “Outlet Store.” I’d be interested in whether the dealer’s attorney general would claim that characterizing a car dealership as an “outlet store” is an unfair or deceptive act or practice. After all, most people think that outlet stores are places where manufacturers sell their merchandise at especially low prices. If that isn’t happening at this dealership, the term might be a dangerous one to use. I Googled this dealership, and, sure enough, it is located near some outlet stores. If I were the AG, that wouldn’t fly as an excuse to characterize the dealership as an “outlet store.”

Next, the ad trumpeted “Payments start as low as $199 per month.” Stating the amount of a payment in an advertisement is a “triggering term” under the federal Truth in Lending Act and Regulation Z. When an ad uses a triggering term, the ad must also disclose the amount or percentage of any down payment, the terms of repayment and the annual percentage rate, using that term or APR. Whoever wrote this ad had not been introduced to the federal law and regulation.

Then came that perennial favorite: “Top Dollar On All Trade-Ins.” That’s bad enough, but elsewhere in the ad was “You will never receive more money for your trade! Special appraisers will be on hand!” What do you think the chances are that this dealer, if challenged, could back those statements up? I also wonder if this dealer is planning on making up any money it loses on offering generous trade allowances by jacking up the cash price of the cars it sells (a little “fuzzy math” trick that sharp AGs and plaintiff’s lawyers are onto).

Another statement that we see all the time in ads caught my eye: “All credit applications will be accepted.” That’s an attempt to fool customers into hearing “Everyone’s application for credit will be approved.” On the reverse side of the page, I ran across “Bank approval required on all credit applications.” Shame, shame on the ad writer and the dealer for trying to fool the ad readers.

The ad claimed “[Name of city], South Carolina has been selected as the exclusive site for this $37 Acquisition Sale.” That makes it sound like some third party has “selected” this dealership to offer this great sale, when all that has occurred is that the dealer bought a lousy ad campaign from an ad company. But the icing on the cake was “A $37 Acquisition Fee, Then Take Over the Payments.” I almost don’t know where to start with that one.

First, there’s the implication that these cars have somehow already been financed for someone else, and that the new buyer is simply paying a small sum to “take over the payments.” Call me cynical, but I’ll bet that these transactions will be straightforward credit deals between the dealer and the customer that are assigned to banks or sales finance companies. If that’s the case, the attempt to describe them as something they are not is likely to be challenged as an unfair or deceptive act or practice.

I’d also like to get a look at how that $37 gets disclosed in the retail installment contracts that this dealer has its customers sign. The $37 is almost certainly a finance charge, and probably a prepaid finance charge, at that. Any finance charge has to go into the disclosed finance charge and is used to calculate the APR. If it is a prepaid finance (and assuming that state law permits a prepaid finance charge), it needs to be disclosed in a particular way.

It should really steam this dealer that an ad company charged him money for an ad that has the potential to land the dealer in a great deal of hot water. It should also concern this dealer that his or her managers signed off on an ad with as many problems as this one has.

To paraphrase a Midwest attorney general who laid a very large dollar fine on a dealer for a deceptive ad campaign, “Dealers cannot simply say whatever they want to say to get people into a dealership.”

Or, stated another way, dealers’ ads need to be truthful. What a concept!

Thomas B. Hudson, Esq. ([email protected]) is the author of several books, available at He is also the publisher of Spot Delivery, a monthly legal newsletter for auto dealers, and CARLAW, a monthly report of legal developments in all states for the auto finance and leasing industry. He is also a partner in the Maryland office of Hudson Cook LLP.

Copyright 2008, all rights reserved. Based on an article from Spot Delivery. Single-print publication rights only, to Special Finance Magazine. HC# 4848-9635-4563 (11/08).