Operation Steer Clear – Are You FTC Compliant?
The Federal Trade Commission is ramping up its hunt for non-compliant dealerships trying to lure in unsuspecting customers with lies and empty promises. Now is the time to ask yourself: is your automotive direct mail campaign a little too heavy on the hyperbole? Do you offer ‘free’ deals that aren’t literally free? Are your listed pricing offers fixed for the full lease or financing or are they merely promotional and go up after a few months?
There’s a clear and marked difference between clever sales tactics and a shady bait and switch. We all know this to be true. But, in this era of intense competition for business, it’s easy to slip every now and again in an effort to keep up with the ‘Joneses’.
Enter the FTC, which, for the first time in its history, is significantly ramping up its efforts to put a stop to deceptive dealership marketing tactics – a problem they consider “significant”. In fact, they’ve launched a task force named Operation Steer Clear to tamp down the deceptive TV, newspaper, automotive direct mail and online financing and leasing claims.
And, if you think the new Operation Steer Clear task force is yet another government body that blows a lot of hot air without taking much action, beware! Since being formed a year and a half ago, the FTC has sent out a plethora of violations, from “20-year content decrees” (a violation akin to being on time-out) to actual lawsuits. The fines can be stiff too – based on the piece of advertising that’s been sent or broadcast – and can amount to as much as $16,000 per piece.
What does the FTC consider to be a deceptive ad? One that “contains representations or omissions that are likely to mislead a ‘reasonable’ customer,” says the agency.
One of the big red flags for Operation Steer Clear: advertising a discount that is only applicable to a handful of top of the line, fully loaded models you have in stock. Claiming that your dealership will pay the balance of an unpaid loan as part of a trade is also a no-no. Contests-as-bait, meaning they’re merely to lure a customer in to find out of they’re a winner (only no one really wins) is another hot button for the FTC.
Overusing the word “free” in a piece of automotive direct mail could get you into trouble, particularly when the small print that applies to said “freebie” is so small that you’d need a microscope to view it. “Free” appears to be a word where no strings should be attached (ever!) – a tough feat for any automotive dealer.