Are You Advertising The Truth?

Advertising is incredibly important to automotive dealers and contributes majorly to sales and consumer satisfaction, but beware, disregarding advertising guidelines will cost you.

A few years ago a Victorian dealership paid a hefty price after the Australian Competition and Consumer Commission (ACCC) found it guilty of making a misleading representation in advertisements placed in two prominent newspapers.

The dealership’s headline offer conflicted with the limitations set out in the fine print and it was ultimately made to pay over $13,000 in infringements – the maximum penalty at the time. According to the ACCC, the dealership had contravened the Competition and Consumer Act 2010 for providing ‘false or misleading representations about the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.’

Along with paying the substantial fine, the dealership was made to publish corrective notices in the papers as well as offer to upgrade customers who had made a purchase to a premium warranty product, free of charge as compensation.

As strict a penalty as this was for the Dealer, this example is not an isolated case.

As in so many other industries, retail new car dealers rely on advertising to attract new customers to their business, boost sales, move ageing stock and (hopefully) create long-standing relationships with customers. Whether Dealers are placing ads in print, digitally or through the media – the marketing and advertising component of the dealership business is often ‘make or break’ and is so crucial to success.

Yet so many dealerships are getting it wrong and are paying the price for advertising which is false, misleading or just plain unlawful.

Price is often a major factor in a consumer’s decision to purchase a new or pre-owned car, and is usually the first place where Dealers stumble in their ads. Australian Consumer Law (ACL) is firm in its rules around ‘price advertising’, requiring all who participate to correctly represent the product for sale in a way that enables consumers to make an informed decision. There is no excuse for misleading a consumer.

While some advertising practices should be avoided, others must be used with caution – and no matter whether you’re advertising directly or using a third party, it’s important to have an understanding of the rules. Though it would be impossible to detail the ACL guidelines here, these are some of the basic rules you should be aware of.

False and Misleading Claims

This is an area where Dealers need to be particularly careful and refer to any advertising which is likely to deceive or mislead consumers. Whether the content in your ad actually misleads a consumer or is likely to, is irrelevant. This also goes for whether you intended to be deceptive or you were unaware of your actions.

When you advertise a new or pre-owned car, the overall impression created by your ad needs to be accurate – this extends to the wording, images, offers, models, features as well as any representations you make to the consumer in person when they are considering the purchase.

To avoid landing in hot water, ensure that the information in your ads is truthful, not creating a false impression, includes important information and does not make false, inaccurate or unrealistic claims.

Fine Print and Disclaimers

Fine print is common in advertising and perfectly legal as long as the message in the fine print does not contradict the overall message of the advertisement. This is where disclaimers come in, which are usually represented in fine print.

If an advertisement states that a product is ‘free’, but the fine print indicates that some payments must be made, the advertisement is likely to be misleading.

In relation to ‘price representation’, a common misconception is that disclaimers are used to correct misleading impressions in the overall advertisement, when in fact they should simply explain the representation further.

Blanket disclaimers like ‘terms and conditions apply’ should be used without concealing important information and with caution. In reference to the placement of disclaimers – font size and type must be easy to read and near the relevant offer in print and online, while on media such as TV/radio it must visible or audible enough for simple interpretation.

Dealer Advertising – Price

Though it’s been mandated for several years, Dealers should never forget that the sum of all components that make up a car’s price must be advertised.  This usually includes the vehicle purchase price, stamp duty, compulsory third party insurance, registration and delivery fees. If you are advertising the single price for a new vehicle and it includes less than 12 months registration, this should be clearly communicated.

Comparative Advertising

If your advertisements are comparing products or services to others on the market, it’s crucial that the comparisons are based on price, quality, range and/or volume. If you’re not comparing ‘apples for apples’, or for example, models against competitors in the same price/specification range, you risk misleading consumers.

Bait Advertising

This refers to using a particular price point to draw customers into your dealership, but then not having the stock or the means to deliver the vehicle at the advertised price. If you are aware or should have been reasonably aware that you cannot deliver a type of vehicle at a certain price, or for a reasonable time period, you could be in breach of the ACL.

You can help yourself avoid trouble by clearly stipulating how many vehicles of a certain type are available, anticipating demand and advertising cars that are in stock.

Social Media

Social media has given many dealerships an exciting new platform to connect with customers and advertise their offers – however, some Dealers forget that advertising rules still apply.

As such, you should not make statements on your Facebook, Twitter, LinkedIn, Instagram or any other pages that are in breach of ACCC guidelines.

Though there are no specific consumer laws or rules in place for social media, businesses are still being fined for misleading customers. Aside from ensuring your posts are compliant, it’s also important that you monitor the comments of your followers and remove any posts that are misleading or false.

And if you think that you’d never be fined for activity on social media, think again.

According to the ACCC website, in 2011 a court case concluded that a company accepted responsibility for misleading fan posts and testimonials on its social media pages when it knew about them and decided not to remove them.

Don’t Advertise In Doubt

The guidelines outlined here just scratch the surface of what you must consider before advertising online, in print and beyond. Though you shouldn’t use this article to guide your advertising decisions, it’s a good starting point for further research and making sure you advertise the right way.

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