What Do Your Mailers Say? The Never-Ending Entertainment Of Direct Mail

April 2008, Auto Dealer Today - WebXclusive

by Thomas B. Hudson, Esq. - Also by this author

My mailbox is a never-ending source of entertainment. Several times a month, dealership “mailer” advertisements appear among the catalogs and bills. I always open them first because I’m interested in the text of the mailer that some ad company has created for the dealership—text I can assure you that the dealer’s lawyer has not seen.

The latest mailer professed to involve a “GMC Owner Loyalty Program.” Even though the GMC and GM logos were prominently displayed in the mailer, the ad appeared to involve only the dealership.

What entertaining things did this mailer contain?

The first sentence that caught my eye said, “Now, as part of General Motors, [dealership’s name] has the distinction of extending this GMC Owner Loyalty Program to customers in the [city] area.” It will come as a surprise to General Motors that this dealership is a “part of General Motors.” Many lawsuits have been filed by ill-informed lawyers around the country who mistakenly believe that dealerships are sales outlets owned by manufacturers. When a dealership holds itself out like this as “a part of” the manufacturer, courts may be reluctant to let the dealer argue that it is a separate corporate entity and should be treated as such.

Next appeared the statement, “Now is your chance to experience Employee Pricing at [name of dealership].” Now, there’s nothing inherently wrong with that sentence as long as it is true. If, however, the customers who buy during this event pay more than the dealership’s employees, the dealership’s mailer becomes Exhibit 1 in an “unfair and deceptive acts and practices” lawsuit by a customer or in an enforcement action by the attorney general.

Further in the ad were bullet points about the details of the dealership’s offer. Two of those bullet points were “no money down” and “no inception fees.” I’ll bet that the dealership will be imposing a documentation fee of some sort. Will a customer claim that the doc fee makes these claims fraudulent? What on earth is an “inception fee,” anyway?

Another bullet point said “0% Financing available for 60 months on selected models.” That statement of the payment period for financing is likely a “triggering term” under the Truth in Lending Act and Regulation Z that requires the dealer to make certain other disclosures. Often dealers satisfy this requirement by using an example, a technique that TILA and Reg. Z permit. Sure enough, an example appeared at the bottom of the mailer, but it was labeled “Lease example,” and didn’t contain the legally-required information.

A third bullet point offered “12–MONTHS FREE VEHICLE MAINTENANCE.” Any lawyer who has reviewed advertisements for longer than 15 minutes will break out in hives when he or she sees the word “free” because what “free” really means is “if you buy a car, we’ll provide something else ’at no additional cost.’” The “something else” isn’t “free” if you must buy a car to get it. The Federal Trade Commission regularly warns against the use of “free” in this way and the practice can run afoul of state law, as well.

It also made me laugh that the “Program” was available for “THREE DAYS ONLY—Thursday, Friday and Saturday”. As to which Thursday, Friday, or Saturday, your guess is as good as mine.

Finally (and my personal favorite line in the mailer), at the very end of the ad, just above the signature of the dealership’s representative, was the statement “Note: Due to the special, invitation-only nature of this event, this letter plus a valid ID is required for admittance.” Call me a cynic, but I’d bet both my dogs and my favorite rod and reel that anyone with a pulse who walks on the dealership’s lot during this “invitation-only event” will be welcomed with open arms. Several enforcement actions by AGs around the country have attacked statements like this that create a false sense of urgency.

My overall reaction was that this litigation time bomb was prepared by ad copywriters with no training in the advertising legal requirements of auto dealerships, and no knowledgeable compliance professional or lawyer had laid an eye on it. If you let your ad company operate in a similarly unsupervised way, maybe I’ll get entertained by your ad next time.

Vol 5, Issue 3

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