DAR File No. 32234

Tax Commission, Motor Vehicle Enforcement

R877-23V-7

Misleading Advertising Pursuant to Utah Code Ann. Section 41-3-210

NOTICE OF PROPOSED RULE

DAR File No.: 32234
Filed: 12/18/2008, 10:27
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The proposed amendment updates the standards of practice for the advertising and selling of motor vehicles.

Summary of the rule or change:

The proposed amendment updates dealer advertising prohibitions by repealing language that is no longer applicable and adding prohibitions to match the current vehicle market and current advertising techniques.

State statutory or constitutional authorization for this rule:

Section 41-3-210

Anticipated cost or savings to:

the state budget:

None--The proposed amendment provides guidance on how a car dealer may advertise the sale of motor vehicles.

local governments:

None--There are no local revenues involved in this process.

small businesses and persons other than businesses:

None--The proposed amendment provides guidance on how a car dealer may advertise the sale of motor vehicles.

Compliance costs for affected persons:

None--The proposed amendment provides guidance on how a car dealer may advertise the sale of motor vehicles.

Comments by the department head on the fiscal impact the rule may have on businesses:

There are no anticipated fiscal impacts. D'Arcy Dixon, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Tax Commission
Motor Vehicle Enforcement
210 N 1950 W
SALT LAKE CITY UT 84134

Direct questions regarding this rule to:

Cheryl Lee at the above address, by phone at 801-297-3900, by FAX at 801-297-3919, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

02/17/2009

This rule may become effective on:

02/24/2009

Authorized by:

D'Arcy Dixon, Commissioner

R877. Tax Commission, Motor Vehicle Enforcement.

R877-23V. Motor Vehicle Enforcement.

R877-23V-7. Misleading Advertising Pursuant to Utah Code Ann. Section 41-3-210.

(1)(a) "Advertisement" means any oral, written, graphic, or pictorial statement made that concerns the offering of a motor vehicle for sale or lease.

(b) "Advertisement" includes any statement or representation:

(i) made in a newspaper, magazine, electronic medium, or other publication;

(ii) made on radio or television;

(iii) appearing in any notice, handbill, sign, billboard, banner, poster, display, circular, pamphlet, letter, or other printed material;

(iv) contained in any window sticker or price tag; and

(v) in any oral statement.

(c) "Advertisement" includes the terms "advertise" and "advertising".

(d) "Advertisement" does not include:

(i) a statement made solely for the purpose of obtaining vehicle financing or a vehicle title; or

(ii) hand written negotiation sheets between a dealer and a customer of the dealer.

(2) Violation of any of the following standards of practice for the advertising and selling of motor vehicles is a violation of Section 41-3-210.

[(1)](a) Accuracy. Any advertised statements and offers about a vehicle as to year, make, model, type, condition, equipment, price, trade-in-allowance, terms, and so forth, shall be clearly set forth and based upon facts.

[(2)](b) Bait. Bait advertising and selling practices may not be used. A vehicle advertised at a specific price shall be in the possession of the advertiser at the address given. It shall be willingly shown, demonstrated and sold[, or, in the case of a new vehicle floor model, orders shall be taken for future delivery of the identical model at the advertised price and terms]. If sold, the advertiser shall, upon request of any prospective purchaser, peace officer, or employee of the division, show sales records of the advertised vehicle.

[(3)(a)(i)](c)(i)(A) Price. When the price or payment of a vehicle is quoted, the vehicle shall be clearly identified as to make, year, model and if new or used. Except as provided in Subsection [(3)(a)(ii)](c)(i)(B), the advertised price must include [all ]charges that the customer must pay for the vehicle, including freight or destination charges, dealer preparation, and dealer handling[, and additional dealer profit].

[(ii)](B) The following fees are not required to be included in the advertised price that the customer must pay for the vehicle:

[(A)](I) dealer document [service ]fees;

[(B)](II) if optional, undercoating or rustproofing fees; and

[(C)](III) taxes or fees[sales tax, or titling and registration fees] required by the state or a county, including sales tax, titling and registration fees, safety and emission fees, and waste tire recycling fees.

[(b)](ii) In addition to other advertisements, this pertains to price statements such as "$..... Buys".

[(c)](iii) When "list", "sticker", or words of similar import are used in an advertisement, they may refer only to the manufacturer's suggested retail price. If a supplementary price sticker is used, the advertised price must include all items listed on the supplementary sticker.

[(d)](iv) If the customer requests and receives a temporary permit, the temporary permit fee need not be included in the advertised price.[ Documentation fees are not required by the state or counties.]

[(4)](d) Savings and Discount Claims. Because the intrinsic value of a used vehicle is difficult to establish, specific claims of savings may not be used in an advertisement. This includes statements such as, "Was priced at $....., now priced at $......

[(a)](i) The word "wholesale" may not be used in retail automobile advertising.

[(b)](ii) When an automotive advertisement contains an offer of a discount on a new vehicle, the amount of the discount must be stated by reference to the manufacturer's suggested retail price of the vehicle.

[(5)](e) Down Payments. The amount of the down payment may not be stated in a manner that suggests that it is the selling price of the vehicle. If an advertisement states "You can buy with no money down", or terms of similar import, the customer must be able to leave the dealership with the vehicle without making any outlay of money.

[(6)](f) Trade-in Allowance. Statements representing that no other dealer grants greater allowances for trade-ins may not be used. A specific trade-in amount or range of trade-in amounts may not be used in advertising.

[(7)](g)(i)(A) Finance. The phrases, "no finance charge", "no carrying charge", or similar expressions may not be used when there is a charge for placing the transaction on a time payment basis. Statements representing or implying that no prospective credit purchaser will be rejected because of inability to qualify for credit, such as "we accept all credit applications", may not be used.

(B) If the amount of the advertised payment changes during the term of the loan, both the payments and the terms of the loan must be disclosed together.

(ii) The phrase "we will pay off your trade no matter what you owe" may not be used.

[(8)](h) Unpaid Balance and Repossessions. The term "repossessed" may be used only to describe vehicles that have actually been repossessed from a purchaser. Advertisers offering repossessed vehicles for sale may be required to offer proof of those repossessions. The unpaid balance shall be the full selling price unless otherwise stated.

[(9)](i) Current Used. When a used motor vehicle, as defined by Section 41-3-102, of a current series is advertised, the first line of the advertisement must contain the word "used", "pre-owned", "certified used", "certified pre-owned", or other similar term used to designate a used vehicle, or the text must clearly indicate that the vehicle offered is used.

[(10)](j) Demonstrators, Executives' and Officials' Cars.

[(a)](i) "Demonstrator" means a vehicle that has never been sold or leased to a member of the public.

[(b)](ii) Demonstrator vehicles include vehicles used by new vehicle dealers or their personnel for demonstrating performance ability but not vehicles purchased or leased by dealers or their personnel and used as their personal vehicles.

[(c)](iii) A demonstrator vehicle may be advertised for sale only by a dealer franchised for the sale of that make of new vehicle.

[(d)](iv) An executive's or official's vehicle shall have been used exclusively by an executive of the dealer's franchising manufacturer or distributor, or by an executive of the franchised dealership. These vehicles may not have been sold or leased to a member of the public prior to the appearance of the advertisement.

[(e)](v) Demonstrator's, executive's and official's vehicles shall be clearly and prominently advertised as such. Advertisements shall include the year, make, and model of the vehicle offered for sale.

[(11)](k) Taxi-cabs, Police, Sheriff, and Highway Patrol Vehicles. Taxi-cabs, police, sheriff, and highway patrol vehicles shall be so identified. These vehicles may not be described by an ambiguous term such as "commercial".

[(12)](l) Mileage Statements. When an advertisement quotes the number of miles or a range of miles a vehicle has been driven, the [licensee]dealer must have written evidence that the vehicle has not been operated in excess of the advertised mileage.

[(a)](i) The evidence required by this section shall be the properly completed odometer statement required by Section 41-1a-902.

[(b)](ii) If a [licensee]dealer chooses to advertise specific mileage or a range of miles a vehicle has been driven, the [licensee]dealer shall upon request of any prospective purchaser, peace officer, or employee of the division produce all documents in its possession pertaining to that vehicle so that the mileage can be readily verified.

[(13)](m) Underselling Claims. Unsupported underselling claims may not be used. Underselling claims include the following: "our prices are guaranteed lower than elsewhere", "money refunded if you can duplicate our values", "we guarantee to sell for less", "we sell for less", "we purchase vehicles for less so we can sell them for less", "highest trade-in allowance", "we give $300 more in trade than any other dealers". Evidence of supported underselling claims must be contained in the advertisement and shall be produced upon request of a prospective purchaser, peace officer, or employee of the division.

[(14) Would You Take $...... Use of cards, circulars, or other advertising containing such offers as "would you take $....., if I could get you $..... for your car", may not be used.

(15)](n) Free. "Free" may be used in advertising only when the advertiser is offering [an unconditional gift. If receipt of the merchandise or service is conditional on a purchase the following conditions must be satisfied:

(a) The normal price of the merchandise or service to be purchased may not have been increased nor its quantity reduced;

(b) The advertiser must disclose this condition clearly and conspicuously together with the offer and not by placing an asterisk or symbol next to the word "free" and then referring to the condition in a footnote; and

(c) The offer must be temporary. For purposes of this subsection, "temporary" means that the offer is made for no more than 30 days during any 12-month period]a gift that is not conditional on the purchase of any property or service.

[(16)](o) Driving Trial. A free driving trial means that the purchaser may drive the vehicle during the trial period and return it to the dealer within the specified period and obtain a refund of all moneys, signed agreements, or other considerations deposited and a return of any vehicle traded in. The exact terms and conditions of the free driving trial shall be set forth in writing and a copy given to the purchaser at the time of the sale.

[(17)](p) Guaranteed. When words such as "guarantee", "warranty", or other terms implying protection are used in advertising, an explanation of the time and coverage of the guarantee or warranty shall be given in clear and concise language. The purchaser shall be provided with a written document stating the specific terms and coverage.

[(18)](q) Name Your Own Deal. Statements such as "write your own deal", "name your own price", "name your own monthly payments", "appraise your own vehicle", and phrases of similar import may not be used.

[(19)](r) Disclosure of Material Facts. Disclosures of material facts that are contained in advertisements and that involve types of vehicles and transactions shall be made in a clear and conspicuous manner.

[(a) Factors to be taken into consideration include advertisement layout, headlines, illustrations, type size, contrast, crawl speed and editing.

(b)](i) Fine print, and mouse print are not acceptable methods of disclosing material facts.

[(c)](ii) The disclosure must be made in a typeface and point size comparable to the smallest typeface and point size of the text used throughout the body of the advertisement.

[(d)](iii) An asterisk may be used to give additional information about a word or term, however, asterisks or other reference symbols may not be used as a means of contradicting or substantially changing the meaning of any advertising statements.

[(20)](s) Lease. When an advertisement relates to a lease, the advertisement must make it readily apparent that the transaction advertised is a lease.

[(a)](i) The word "lease" must appear in a prominent position in the advertisement in a typeface and point size comparable to the largest text used to directly advertise the vehicle.

[(b)](ii) Statements that do not use the term "lease" do not constitute adequate disclosure of a lease.

[(c)](iii) Lease advertisements may not contain the phrase "no down payment" or words of similar import if an outlay of money is required to lease the vehicle.

[(d)](iv) Lease terms that are not available to the general public may not be included in advertisements directed at the general public.

[(e)](v) Limitations and qualifications applicable to the lease terms advertised shall be clearly and conspicuously disclosed.

[(21)](t) [Television]Electronic Medium Disclosures. A disclosure appearing in any [television advertisements]electronic advertising medium must clearly and conspicuously feature all necessary information in a manner that can be read and understood if type is used, or that can be heard and understood if audio is used.[ Fine print and mouse print do not constitute clear and conspicuous disclosure.]

[(22)](u) Invoice or Cost. The terms "invoice" or "factory invoice" may be used as long as the dealer is willing to show the factory invoice to the prospective buyer. The term "cost" may not be used.

[(23)](v) Rebate Offers. "Rebate", "cash rebate", or similar terms may be used only when it is clearly and conspicuously stated who is offering the rebate.

[(24)](w) Buy-down Interest Rates. No buy-down interest rate may be advertised unless the dealer discloses the amount of dealer contribution and states that the contribution by the dealership may increase the negotiated price of the vehicle.

[(25)](x) Special Status of Dealership. An automotive advertisement may not falsely imply that the dealer has a special sponsorship, approval status, affiliation, or connection with the manufacturer that is greater or more direct than any other like dealer.

[(26)](y) Price Equaling. An advertisement that expresses a policy of matching or bettering competitor's prices shall fully disclose any conditions that apply and specify the evidence a consumer must present to take advantage of the offer. The evidence requirement may not place an unreasonable burden on the consumer[ by,]; however, for example requiring the consumer to [produce a signed contract from another dealer or to find a vehicle with the identical features]bring a written offer made to that consumer by an authorized representative of a dealership on a substantially similar vehicle would be considered reasonable.

[(27) Van Conversion Advertisements. A dealer may advertise a modified vehicle using the conversion firm's name and may refer to the chassis manufacturer in a less prominent manner, but may not advertise a modified vehicle solely by a chassis manufacturer's name unless enfranchised to sell that make of vehicle.

(28)](z) Auction. "Auction" or "auction special" and other terms of similar import may be used only in connection with vehicles offered or sold at a bona fide auction.

[(29)](aa) Layout and Type Size. The layout, headlines, illustrations, or type size of a printed advertisement and the broadcast words or pictures of radio, [or ]television, or electronic medium advertisements may not convey or permit an erroneous or misleading impression as to which vehicle or vehicles are offered at featured prices.

[(a)](i) When an advertisement contains a picture of a vehicle along with a quoted price, the vehicle pictured must be [the exact]a similar model with [identical]similar options and accessories as the vehicle advertised.

[(b)](ii) No advertised offer, expression, or display of price, terms, down payment, trade-in allowances, cash difference, savings, or other material terms may be misleading and any necessary qualifications shall be clearly, conspicuously, and accurately set forth to prevent misunderstanding.

[(c)](iii) Qualifying terms and phrases shall be clearly, conspicuously, and accurately set forth as follows:

[(i)](A) in bold print and in type of a size that is capable of being read without unreasonable extra effort;

[(ii)](B) in terms that are understandable to the buying public; and

[(iii)](C) in close proximity to the qualified representation and not separated or buried by asterisk in some other part of the advertisement.

(bb) An advertisement must disclose a salvage or branded title as prominently as the description of the advertised vehicle.

 

KEY: taxation, motor vehicles

Date of Enactment or Last Substantive Amendment: [June 27, 2008]2009

Notice of Continuation: March 14, 2007

Authorizing, and Implemented or Interpreted Law: 41-3-210