Both state and federal law heavily regulate automobile advertising. A number of regulations strive to create clarity and standardization among advertisements for new and used automobiles and also for automobile repair. The main regulations that affect automobile advertising are the Unfair Trade Practices and Consumer Protection Law (UTPCPL) and the Automotive Industry Trade Practices Regulations. If automobile dealers have any questions regarding these regulations, it is strongly recommended that they contact an attorney to discuss their concerns.
Unfair Trade Practices and Consumer Protection Law (73 P.S. § 201-2)
A great number of factors in any automobile advertisement may trigger the UTPCPL in addition to other applicable regulations. The UTPCPL makes it a crime to misrepresent an automobile or a specific factor (such as price) in the purchase of automobiles. Advertisers are strongly encouraged to review the UTPCPL if there is any question as to whether a dealer is making a false claim or representation in an advertisement.
Specific examples of common violations of the UTPCPL:
- Guaranteed Credit/financing
- No one refused credit
- Guaranteed $_____ trade-in allowance
- We will beat every other dealer’s prices
Whenever claims such as these are made, they must be 100% true. Otherwise, they are violations of the UTPCPL. For example, if an automobile dealer advertises that no one is denied credit, but someone who has no income cannot receive an auto loan, the advertisement is in violation of the UTPCPL. It does not matter if the company who denies the buyer credit is a third party financial institution. If the dealer advertises that everyone receives credit, everyone must receive credit. Additionally, when using statements in disclaimers such as “down payment may vary,” the down payment must be within auto industry standards. An unreasonable down payment (such as half-down) that is required in order to receive financing may be considered a violation of the UTPCPL.
The Automotive Industry Trade Practices Regulations (37 Pa. Code 301.1 et. seq.)
The Automotive Industry Trade Practices Regulations do not just apply to established automobile dealerships. Under these regulations, the term “dealer” not only includes sales people and other employees of automotive dealerships, but also includes anybody who sells or negotiates the sale of five or more motor vehicles in a calendar year or sells or negotiates the sale of a vehicle which is not owned by the person or which is acquired for resale purposes. 37 Pa. Code § 301.1
It is unlawful to engage in unfair methods of competition and unfair or deceptive acts or practices. Examples of behavior considered to be unfair or deceptive include:
- Failing to disclose the business name and address of the advertiser or the word “dealer.”
- Using different type, size, or style in an advertisement to misrepresent material facts.
- Misrepresenting the size, inventory or nature of business of the advertiser or seller; or the expertise, ability or capability of the advertiser or seller.
- Using advertising as part of a plan not to sell the vehicles that are advertised or not to sell the vehicles at the advertised price.
- Failing or refusing to sell vehicles according to the terms and conditions of the advertisement.
- Misrepresenting the style, model, standard, quality or grade of the vehicle(s) in the advertisement.
- Making statements or representations for which the advertiser does not have adequate information upon which to make such representations.
- Stating specific prices or dollar amounts that do not include extra charges that are necessary and usual prior to delivery.
- Using phrases such as “at wholesale” or other similar terms.
- Advertising sales promotions without stating any expiration dates or other sale conditions such as a limited supply.
- Advertising specific motor vehicles when no such vehicle is in stock unless phrases such as “Not in Stock” or “Order Yours Now” are included.
Note: Pennsylvania ’s Board of Vehicles Act (63 P.S. § 818.5) requires persons engaged in the business of salesperson, broker, dealer, manufacturer, factory branch, distributor, etc. to obtain licenses.