A recent U.S. Federal Trade Commission (FTC) regulations crackdown has RV dealerships across America re-examining sales and advertising practices. The FTC recently sent warning letters to 97 dealership groups expressing “concern” that the dealers are violating vehicle advertising laws.
In response, compliance software and education supplier KPA released a comprehensive checklist the company said will help RV dealers remain compliant.
KPA Chief Legal and Strategy Officer Adam Crowell said the FTC is reinforcing a clear message to dealers: advertisements that tend to confuse or mislead consumers will not be tolerated.
“It is really about advertising the price and making sure that all discounts being reflected are really something that someone would actually get,” Crowell said, “…making sure that all the fees are basically baked into the advertised price.”
Crowell said the FTC is attempting to hold as many people accountable as possible.
“When the FTC is taking action, they are not just suing the dealership or the dealership group. They are also suing people individually,” Crowell said. “That really has been their modus operandi — to continue to put pressure, not just on business, but also on the individuals that they think were involved.”
A current pending case involves a group of dealership managers who settled with the FTC.
“Those managers basically have a $4.8 million settlement that is hanging over their head,” Corwell said. “I think what they are trying to do is get people that they think are bad actors, out of the business.”
KPA’s checklist identified six issues the FTC found problematic:
- Advertising prices that do not reflect all non-government required fees (like taxes)
- Advertising prices that factor in rebates or discounts that not everyone will qualify for
- Advertising prices that do not include the down payment
- Advertising prices conditioned upon using dealer financing
- Requiring the purchase of other items at an additional cost to get the advertised price
- Advertising unavailable or non-existent vehicles
The FTC said the list is non-exhaustive, and many more compliance obligations other than the ones listed in the letter are required.
“The picture that the FTC is trying to paint here is we do not want to see bait-and-switch advertising for vehicles, essentially,” Corwell said. “It is really about making sure your disclosures are accurate and making sure you are disclosing everything, every part that is built into the advertised price.”
Crowell said full compliance requires full education for all employees.
“Even having a conversation, whether it be by email or social media, or in person [with a customer] about a vehicle, that is considered to be an advertisement,” Crowell said. “So there really needs to be an education push across all the dealerships about what this means…what is permissible and what is not permissible.”
Crowell said education ensures dealership compliance and protects employees.
“It is also critically important that employees understand that they could be personally on the hook for these types of issues,” Corwell said. “That is one of the reasons why, when we go through a training and certification process with employees, we talk about things like personal liability. It is so they understand the gravity of the situation.”
Dealers can access the checklist online. KPA will release a frequently asked questions (FAQ) document in the coming days.
Crowell is a licensed practicing attorney with over 20 years of legal experience. Before joining KPA, Crowell was president and general counsel at ComplyNet.
