Pub. 1 2019-20 Issue 2

http://wvcar.com 32 WVADA COUNSELOR’S CORNER: T he importance of having good practices and oversight for advertising cannot be overstressed. In recent years, the Federal Trade Commission targeted multiple dealerships per year to make examples of improper advertising. This led to dealerships being forced to enter into consent decrees with the Fed- eral Trade Commission, which last for 20 years, are non-negotiable, and, if violated in the slightest manner, can result in fines of up to $16,000 per violation. Needless to say, prevention is the best remedy to avoid these types of problems. Please appreciate that the nature of deal- ership advertising makes it easy for any Federal Trade Commission staff attorney sitting in Washington D.C. to simply log on the internet and examine a dealer’s advertising product. Complaints are not required; a staff attorney can easily re- view and determine if your dealership’s advertising is compliant. Social media makes it easier for you to reach your cli- ents, and for legal oversight to occur. It is important to recognize that the dealer is considered the “advertiser” in the eyes of the Federal Trade Commis- sion. Even if you hire a highly reputable company and a mistake is made, you are legally responsible. You may have some remedy if you have indemnity provi- sions with your advertising provider, but I normally find that dealers are more concerned about price, and do not have strong protective agreements with ad- vertisers. The excuses of “that is the way we always do it, or we do it with other dealers”, is not a legal defense. Now that I have your attention, let’s review some basics. Advertising laws apply to any medium in which adver- tising is presented. It would apply to newspapers, magazines, direct mail, television, radio, billboards and the in- ternet. Advertising quality and compli- ance can change from medium to me- dium, and sometimes compliance does not easily carry over from one medium to another. An advertisement clearly stated in a full-page newspaper ad can become rather small, and potentially, not compliant, when simply placed on the internet. In addition to looking for technical com- pliance, the Federal Trade Commission reviews advertisements using broad and subjective concepts such as “deception” and “unfairness.” There are manuals de- scribing each of these concepts, but let me attempt to briefly summarize. Deception is considered the represen- tation or omission of a representation that it is likely to mislead consumers act- ing reasonably under the circumstances. Unfairness is an advertising practice that causes, or is likely to cause, substantial in- jury to consumers and is not reasonably avoidable by the consumer themselves. By Johnnie E. Brown Pullin, Fowler, Flanagan, Brown & Poe, PLLC Advertising: An Overview Part 1