Arkansas Administrative Code › Agency 063 - Motor Vehicle Commission › Rule 063.00.08-001 - Rule 3 - Advertising

Current through Register Vol. 49, No. 6, June, 2024
RULE 3
ADVERTISING
OBJECTIVE:
Rule 3 implements the Legislative intent of the law governing
			 advertising as stated in the Arkansas Motor Vehicle Commission Act. False and
			 misleading advertising will be defined and prohibited in a unified effort to
			 insure truthful and accurate product advertising that will benefit the
			 consumers and businesses of this State affected by legislation. Certain key
			 examples of prohibited advertising will be exhibited, but shall not be
			 construed as an all-inclusive exhibit of prohibited practices. The Commission
			 has been granted the authority to review all advertising pertaining to new and
			 used motor vehicles. The Commission will review each advertisement for
			 misleading and deceptive practices and will govern them accordingly.
(a) Rule 3 establishes standards of practices
		  which set forth certain basic principles in advertising the sale and lease of
		  new and used motor vehicles. These standards apply to advertisements both in
		  the print and electronic media.
(b)
		  The primary responsibility for truthful and non-deceptive advertising rests
		  with the advertising dealer. Advertising dealers must be prepared to
		  substantiate any or all offers made before publication or broadcast, and upon
		  request, present such substantiation.
(c) Rule 3 does not apply to any radio or
		  television broadcasting station, or any publisher, printer, distributor or
		  owner, of any newspaper or magazine, billboard or other advertising medium, or
		  any owner, operator, agent or employee of any advertising agency or other
		  business engaged in preparing or disseminating advertising for public
		  consumption on behalf, of any other person when the advertising is in good
		  faith and he is without knowledge of its untrue, deceptive or misleading
		  character.
(d) It shall be the
		  DEALER'S RESPONSIBILITY to provide a copy of Rule 3 to any advertising agent or
		  agency or other business engaged in preparing or disseminating advertisements
		  for the dealer, including outside web page designers or web page design firms;
		  and each employee assigned to preparing or disseminating advertisements for the
		  dealer.
(e) Violation of any
		  Advertising Rule(s) by any licensee shall be considered a
prima
		  facie
violation of A.C.A. §
							23-112-402(3)
		  or A.C.A. §
							23-112-403(a)(2)(D).
(f) The Commission will monitor and evaluate
		  each dealer's advertisement regarding its compliance with laws and rules. The
		  advertising sections activities include, but are not limited to:
1. Review of advertisements in any
		  medium.
2. Review all complaints as
		  received.
3. Answer advertisement
		  inquiries.
4. Address advertising
		  violations.
1.
DEFINITIONS
:
A. Advertisement and or
		  advertising" means any oral, written, telecommunicated, graphic, pictorial or
		  other statement made in the course of soliciting business, including without
		  limitation a statement or representation made in a newspaper, magazine,
		  Internet, or other publication or contained or appearing in or on a notice,
		  sign, poster, display, circular, pamphlet, letter, flyer, price tag, window
		  sticker, banner, billboard, handbill, radio, television, web page, or any other
		  medium.
B. "Bait and switch" means
		  an alluring but insincere offer to switch consumers from buying the advertised
		  motor vehicle, in order to sell or lease a different motor vehicle on terms
		  more advantageous to the advertiser.
C. "Clear and conspicuous" means that the
		  statement, representation, or term being used is of such size, color, contrast,
		  audibility and is presented so as to be readily noticed, understood and
		  non-deceptive. All language and terms, including abbreviations, shall be used
		  in accordance with their common or ordinary usage and meaning by the general
		  public.
D. "Dealer discount" means
		  an amount of reduction or contribution by the dealer to reduce the selling
		  price of the vehicle from "MSRP".
E. "Dealership addendum" an equipment list
		  displayed on a window of a motor vehicle when the dealership installs special
		  features, equipment, parts or accessories, or charges for service not already
		  compensated by the manufacturer or distributor for work required to prepare a
		  vehicle for delivery to a buyer.
F.
		  "Disclaimer" means those words or phrases used to provide a clear understanding
		  of an advertised statement, but not used to contradict or change the meaning of
		  the statement.
G. "Disclosure"
		  means required information that is clear, conspicuous, and accurate shall be in
		  the immediate proximity of the year, make and model offered in the
		  advertisement or stated at a clear and concise level in broadcast
		  mediums.
H. "Dealer Service and
		  Handling Fees" means a fee that a dealer may charge in connection with the sale
		  or lease of a new or used motor vehicle for handling, processing, and storage
		  of documents and other administrative and clerical services.
I. "Incentive" means anything of value
		  offered as an inducement directly or indirectly towards the purchase of a
		  vehicle, including but not limited to, discounts, savings claims, and other
		  dealer programs, but not including factory rebates.
J. "Limited rebate" means rebates not
		  available to all consumers and is defined as any payment of money to a
		  consumer, or any payment to a dealer or third party on behalf of a consumer,
		  and that is confined, or restricted, to a certain class of consumers,
		  including, but not limited to, on the basis of the consumer's status,
		  sponsorship, affiliation, or association
K. "Line make" means a group or series of
		  motor vehicles that have the same brand identification or brand name, based
		  upon the manufacturer's trademark, trade name or logo.
L. "List" or "Sticker" price when used in a
		  new motor vehicle advertisement refers only to the Manufacturer's Suggested
		  Retail Price (Monroney Sticker or "MSRP")
M. "Manufacturer label" means the label
		  required by the Federal Automobile Information Disclosure Act, 15 U.S.C.
		  Sections 1231-1233 (normally referred to as Monroney Label), to be affixed by
		  the manufacturer to the windshield or side window of each new automobile
		  delivered to a dealer.
N. "MSRP,"
		  or "Manufacturer Suggested Retail Price," means the "list price" shown on the
		  window sticker or "Monroney Label" and is the manufacturer's baseline price for
		  that vehicle. "Dealership addendums" or "temporary factory value packages" are
		  not a part of "MSRP".
O. "Rebate"
		  means the payment of money from the manufacturer to a consumer, or payment to a
		  dealer or third party on behalf of a consumer on the condition that the
		  consumer purchases or leases a new motor vehicle.
2.
ADVERTISING GUIDELINES FOR SALE OR
		  LEASE OF NEW AND USED MOTOR VEHICLES:
A.
General Advertising
		  Guidelines
(1) The advertised price of
		  a motor vehicle must be the full cash price for which the dealer will sell or
		  lease the vehicle to any consumer and shall exclude only the following charges:
(a) State, county, local and other applicable
		  taxes,
(b) License fees,
		  and
(c) Title fees.
Charges including but not limited to dealer service and handling
			 fees, freight and transportation fees, and preparation fees must be included in
			 the advertised price.
(2) The price of a new motor vehicle, when
		  advertised by a dealer, must be the price that is available to every consumer.
		  Rebates or incentives that are available to all consumers without qualification
		  can be deducted from the price. Limited Rebates or incentives that are only
		  available to select or qualifying consumers shall not be deducted from the
		  advertised price.
(3) Additionally,
		  a qualification may not be used when advertising the sales price of a vehicle
		  such as "with trade", "with acceptable trade", or "with down
		  payment".
(4) Dealers must clearly
		  and prominently identify themselves by their dealership name or their DBA name
		  listed on file with the Commission.
(5) Specific motor vehicles, new or used, or
		  line-make of vehicles advertised for sale or lease shall be in the possession
		  of the dealer as advertised at the address given at the time the advertisement
		  is placed. However, if the time between the placement and the broadcast of the
		  advertisement to the public is excessive, the dealer must have a similar
		  line-make new motor vehicle or an equivalent used motor vehicle to the specific
		  motor vehicle advertised. The vehicles shall be in condition to be
		  demonstrated, and shall be willingly shown and sold or leased at the advertised
		  prices and upon the terms advertised.
(6) Specific claims or discount offers shall
		  only be used in connection with new or demonstrator vehicles.
(7) Specific claims or discount offers must
		  only be used to show the difference between the dealer's current selling price
		  and the Manufacturer's Suggested Retail Price. The dealer shall include dealer
		  add-ons identified in the dealership addendum when advertising the current
		  selling price.
(8) If an
		  advertisement discloses a rebate, cash back, discount savings claim or other
		  incentive, the full price of the vehicle (MSRP) must be conspicuously disclosed
		  or stated in the ad as well as the price of the vehicle after deducting the
		  incentive(s). Rebates cannot be combined as one.
B.
False or misleading
		  advertising.
(1) Licensee shall not use
		  false or misleading advertising.
(2) All advertising shall be in plain
		  language, with disclosures of material facts that are clear and conspicuous and
		  non-deceptive. By way of example and not limitation, the following are in
		  violation of this rule:
(a) Direct statements
		  or reasonable inferences that have the tendency to mislead consumer;
(b) Advertising whose overall impression has
		  the tendency to mislead consumers;
(c) Disclaimers or disclosures that
		  contradict, confuse, or unreasonably limit or significantly alter a principal
		  message of an advertisement;
(d)
		  The failure to make clear and conspicuous disclosures of limitations,
		  disclaimers, qualifications, conditions, exclusions or restrictions;
(e) Statements susceptible to both a
		  misleading and a truthful interpretation; and
(f) Deceptive statements, even though the
		  true facts are subsequently made known to the consumer.
(g) Using in any advertisement, footnotes,
		  asterisks, or various superscripted symbols which, confuse, contradict,
		  materially modify or unreasonably limit the material terms of an
		  advertisement.
(3) No
		  advertisement containing an offer to sell or lease a motor vehicle shall be
		  published when the offer is not a bona fide attempt to sell or lease that
		  specific advertised motor vehicle. Certain acts or practices that will be
		  considered in determining if an advertisement is not a bona fide offer to sell
		  or lease the advertised motor vehicle include:
(a) The refusal to show, demonstrate, sell or
		  lease the motor vehicle offered in accordance with the terms of the
		  offer.
(b) The failure to have
		  available at all outlets listed or stated in the advertisement, the number of
		  motor vehicles advertised to meet reasonably anticipated demands, unless the
		  advertisement clearly and adequately discloses that a supply is limited the
		  merchandise is available only at designated outlets and any other applicable
		  restrictions, to which the advertised vehicle may be subject.
(4) It is false and misleading to
		  use, in any advertising, inaccurate photographs or illustrations when
		  describing specific automobiles. If a vehicle description or photograph is
		  inaccurate, the dealer must prove to the Commission, that a more acceptable
		  photograph or description was unavailable.
(5) It shall be false and misleading to
		  advertise or represent the dealer service and handling fee charge as a required
		  governmental fee.
C.
Bait and Switch Advertising.
(1)
		  Licensees shall not use bait and switch advertising.
(2) No act or practice shall be engaged in by
		  an advertiser to discourage the purchase of the advertised motor vehicle if
		  such act or practice is part of a bait and switch scheme to sell or lease other
		  motor vehicles.
(3) Sales or leases
		  resulting from an advertisement for a motor vehicle do not by themselves rule
		  out the existence of a bait and switch scheme.
(4) To prevent Bait and Switch Advertising
		  from occurring, the vehicle(s) advertised must be:
(a) At the advertised location as defined in
		  Section 2, paragraph A(5);
(b) In
		  condition to be shown;
(c)
		  Willingly shown to the consumer;
(d) Willingly shown under the same terms as
		  advertised, and
(e) Sold at the
		  same terms as advertised, unless the consumer was unharmed in the
		  transaction.
D.
Minimum Advertising
		  Requirements.
The following are minimum requirements needed to meet the clear
			 and conspicuous standard as described in Section 2(B)(2):
(1) In all printed media, written, typed
		  and/or graphic advertisements:
(a) Not less
		  than 8-point type print;
(b) Shall
		  be displayed and phrased in a manner which is clear and conspicuous.
(2) In broadcast commercials:
(a) Terms, conditions or disclosures shall be
		  clearly and conspicuously displayed or announced during the
		  advertisement;
(b) Shall be at a
		  speed equal to or slower than any other statement, representation or term
		  contained in the advertisement.
(c)
		  "See dealer for details," shall only be used in radio broadcast commercials
		  provided the advertisements meet the federal truth in lending guidelines as
		  defined in Section 5(A).
(3) For broadcast graphics or
		  advertisement(s) in any other audio-visual medium the minimum height of fonts
		  and display time should:
(a) Appear on the
		  screen for duration sufficient to allow a viewer to have a reasonable
		  opportunity to read and understand the statement, representation or term;
		  and
(b) The broadcast graphics
		  shall remain on the screen for a minimum display time of;
(i) Three seconds for the first line of text;
		  and
(ii) One second for each
		  additional line.
E.
Required Disclosures.
(1) Disclosures should only be used in
		  limited circumstances and must meet the following qualifications:
(a) Must be adjacent to the advertised
		  vehicle depicted or stated in a clear and conspicuous level in any broadcast
		  medium.
(b) Asterisks (*) may only
		  be used to give additional information about a word or phrase.
(2) In any advertisement, the
		  motor vehicle shall be clearly identified as to year, make, model, and commonly
		  accepted trade, brand, or style name and the advertisement must clearly define
		  the vehicle as a new, used, demonstrator, leased, rental, factory off-lease,
		  loaner, executive/official or factory program vehicle.
(3) When advertising a new motor vehicle, the
		  use of stock numbers will not preempt the requirements of full
		  disclosure.
(4) Advertising
		  conditions involving a change in the monthly payments or graduated payments
		  must be of the same size in print advertisements and given the same prominence
		  in all other mediums and shall not be referenced by an asterisk.
3.
MANUFACTURER
		  ADVERTISING FOR NEW, USED AND/OR LEASED VEHICLES:
A. Manufacturers must comply with Commission
		  Rule 3 on Advertising.
B. The
		  suggested retail price of a new motor vehicle when advertised by a manufacturer
		  or distributor shall include the following:
(1) All charges, except destination charges,
		  dealer service and handling fees and/or state or local sales taxes.
(2) Such advertising shall state that dealer
		  service and handling fees, and/or state or local sales taxes are
		  excluded.
C. It shall be
		  unlawful for any manufacturer or distributor to advertise, a rebate, refund,
		  discount or other financial incentive paid by, financed by, or contributed by
		  the dealer selling the motor vehicle, unless such advertising discloses clearly
		  and discernibly the following:
"The dealer's contribution may affect the final negotiated
			 price of the motor vehicle."
4.
PROHIBITED STATEMENTS AND
		  ADVERTISING TECHNIQUES:
The following statements or advertising techniques are
			 presumptively false and misleading, and the burden of proving otherwise shall
			 be on the Advertiser/Licensee.
A.
		  Statements using abbreviations or shortened terms for words or initials for
		  groups of words not commonly understood, including but not limited to "FTB,"
		  "A/R", "TOP," and "POF," must not be used. Commonly understood abbreviations,
		  including but not limited to "2 DR," "AM/FM," "APR," "WAC," "DEMO," and "EXEC,"
		  may be used.
B. Statements such as
		  "write your own deal," "name your own price," pick your monthly payments,"
		  "appraise your own motor vehicle," or statements with similar meaning are
		  obviously untrue and shall not be used.
C. No statement or advertisement shall be
		  worded to imply that because of large sales volume, a dealer is able to
		  purchase motor vehicles for less than another dealer selling the same line-make
		  of vehicles.
D. No motor vehicle
		  advertisement shall contain the following statements or terms "cost," "percent
		  or dollars over or under cost, invoice, or profit," "profit" or "invoice" "take
		  over payments", "fleet pricing", "wholesale," "x pricing," "employee pricing",
		  or terms with similar meaning. However, a dealer may utilize the phrase
		  "employee pricing or terms with similar meaning" only when the event is a
		  manufacturer sponsored campaign that is available to all dealers of that
		  line-make.
E. A used vehicle shall
		  not be advertised in a manner that creates the impression it is new. Product
		  nameplates and/or logos of any franchise line-make shall not be used in an
		  advertisement that is a "used only" vehicle advertisement.
F. The following statements or terms "sale",
		  "discount", "savings", "price cut", "reduced", "clearance", "tent sale", and
		  other similar terms, without clearly and conspicuously disclosing that such
		  "clearance" or other such terms are limited to certain vehicles and/or specific
		  dates of the sale if it is a limited time offer.
G. Using any advertising statements or terms
		  such as "Closing Out Sale", "Lost Our Lease Sale", "Forced to Vacate Sale" or
		  similar terms used to imply a court-ordered closure or to induce a belief that
		  upon disposal of the stock of goods on hand, the business will cease and be
		  discontinued at the premises where the sale is conducted, unless such is the
		  case.
H. Statements such as "sales
		  tax paid," or terms with similar meaning shall not be used, unless it is truly
		  paid by the dealer and not financed or added to the price of the
		  vehicle.
I. Statements or terms
		  inferring a vehicle has been "repossessed" from an immediate former owner.
		  Neither shall a dealer advertise that a purchaser will be receiving benefits on
		  an existing loan on a vehicle when no such benefit exists.
J. Statements such as "big volume buying
		  power," "manufacturer's outlet," "factory authorized outlet," "factory sale",
		  "factory approved", and "factory wholesale outlet", or terms with similar
		  meaning shall not be used. Any term or statement that gives the consumer the
		  impression the dealer has a special arrangement with the manufacturer or
		  distributor as compared to similarly situated dealers, is misleading and shall
		  not be used
K. "Double Rebates,"
		  "Triple Rebates" or any other amount of rebates that are not truly offered by
		  the manufacturer are prohibited.
L.
		  The statement "no reasonable offer refused," shall not be used because, what
		  may be reasonable to the dealership may not be reasonable to the consumer. As a
		  result, the statement is almost impossible to prove.
M. Terms or phrases that may be unfamiliar to
		  a consumer must be fully defined in the advertisement.
N. Statements offering a specific trade-in
		  allowance (i.e., $2500 minimum trade-in"), or a range of amounts for trade-ins
		  (e.g., "up to $1,000" or "as much as $1,000") including, without limitation,
		  that the trade-in will be valued at a specific amount or guaranteed minimum
		  amount.
5.
REQUIRED DISCLOSURES FOR CREDIT TERM AND LEASE ADVERTISEMENTS:
A.
Closed ended credit term
		  advertising.
(1) The Federal Reserve
		  System and the Federal Trade Commission are two agencies involved with the
		  enforcement of Federal Regulation Z. If an advertisement, promoting closed-end
		  credit sale on a motor vehicle purchase contains any of the following terms:
(a) The amount of the down payment expressed
		  either as a percentage or dollar amount;
(b) The amount of any payment expressed as a
		  percentage or dollar amount;
(c)
		  The number of payments;
(d) The
		  period of repayment; or
(e) The
		  amount of any finance charge.
(2) Then the following terms must be
		  disclosed:
(a) Amount or percentage of down
		  payment;
(b) Terms of repayment;
		  and
(c) Annual percentage rate,
		  using the term or the abbreviation "APR".
B.
Lease advertising.
(1) The word "Lease" or "Smart Buy" must
		  appear in a prominent position in the advertisement.
(2) Advertising that involves consumer leases
		  falls under Federal Regulation M. If an advertisement, promoting consumer lease
		  on motor vehicle contains any of the following terms:
(a) The amount of any payment; or
(b) A statement of any capitalized cost
		  reduction or other payment required prior to or at consummation or
		  delivery.
(3) Then the
		  following terms must be disclosed:
(a) That
		  the advertised transaction is a lease;
(b) The total amount due prior to or at
		  consummation or delivery;
(c) The
		  number, amounts and due dates or periods of scheduled payments;
(d) A statement of whether or not a security
		  deposit is required; and
(e) A
		  statement that an extra charge may be imposed at the end of the lease term
		  where the lessee's liability, if any, is based on the difference between the
		  residual value of the leased property and its realized value at the end of the
		  lease term.
C.
Open ended credit terms.
Examples of open-end credit are bank and gas company credit cards
			 and stores' revolving charge accounts. In open-end credit, the creditor
			 reasonably expects the customer to make repeated transactions.
The triggering terms for open-ended credit are:
(1) Statement of when the finance charge
		  begins to accrue, including any "free ride" period, if any.
(2) Statement of either the periodic rate
		  used to compute the finance charge or the annual percentage rate.
(3) The method of determining the balance on
		  which a finance charge may be imposed.
(4) The method of determining the finance
		  charge, including a description of how any finance charge other than the
		  periodic rate will be determined.
(5) The amount of any charge (other than the
		  finance charge) that may be imposed as part of the plan.
(6) The fact that the creditor will acquire a
		  security interest.
The required disclosures are:
(1) Any minimum, fixed, transaction,
		  activity, or similar charges that could be imposed.
(2) Any periodic rate that may be applied,
		  expressed as an "annual percentage rate". If the plan provides for a variable
		  periodic rate, that fact must be stated.
(3) Any membership or participation
		  fee.