Three Things We Learned About Compliance in 2015...and Why it Matters in 2016

Last year was a busy year in the world of advertising compliance actions – in particular the year-long drumbeat of activity that came from the Washington, D.C hallways of the Federal Trade Commission (FTC) and the Consumer Fraud Protection Bureau (CFPB). The year saw the CFPB place considerable pressure on automotive dealers through their oversight of indirect finance activities, while the FTC conducted 11 new enforcement actions around unfair or deceptive advertising. Practices most often cited were not disclosing “triggered” terms required by the Truth in Lending and Consumer Leasing Act, rebate stacking, $0 down leasing claims, and more.

This year promises to be much the same.

The CFPB and the FTC will continue to dedicate resources to identify non-compliant dealers. Just like last year, savvy dealers will be prepared by building compliance into their advertising and marketing processes – along with it a healthy dose of attention to detail. To that end, here are the three signs we saw in 2015 – and what they mean for 2016.

 1. The FTC will continue to scrutinize how ads handle payment amounts for credit sale or lease
Dealers should know that advertising any payment amount for a credit sale or lease triggers a requirement to disclose other terms…and that this is the first thing the FTC looks for. Customers should be able to determine if they qualify for the advertised offers so including minimum credit scores is an advisable practice.   

2. CFPB began looking at the sale of aftermarket products, and will continue to investigateThis is especially true for aftermarket products sold by credit card companies. The agency has entered into $200 million consent decrees with a number of card companies and an $800 million consent decree with a large national bank; indications are that in analyzing lenders’ automotive finance portfolios, the CFPB is looking at the sale of aftermarket products for possible new causes of action.

3. The FTC expanded enforcement of unfair and deceptive dealer practices – and plan to continue their approach
Last year, there were 11 new enforcement actions around unfair or deceptive advertising, involving sale of aftermarket products. The difference? A deceptive ad is a representation, omission, or practice that is likely to mislead a consumer acting reasonably under the circumstances. It must be “material,” i.e., affecting the consumer’s decision on purchasing or financing, and may be deceptive if the advertiser does not have a reasonable basis to support the claim. Unfair is a broader standard and can include essentially any advertising that is likely to cause substantial injury to consumers which is not reasonably avoidable.  This includes things like advertising deals that most consumers will not qualify for based on their credit standing or other requirements when those limitations are not clearly and conspicuously stated in the ad.