OAK BROOK, IL – In response to recent repeated violations of advertising regulations, Illinois new-car dealers now must follow stricter rules prohibiting advertising of new-vehicle prices that leave out hidden charges that end up costing consumers more.
Changes to the “Illinois Motor Vehicle Advertising Regulations,” prompted by rules violations, have been approved by the board of directors of the Chicago Automobile Trade Assn., which represents more than 400 Chicagoland new-car dealers.
The stiffer rules take effect immediately. The original regulations were initiated in the 1980s by CATA to protect its members from unfair competition from other retailers by ensuring all dealers played by the same rules.
The Better Business Bureau of Metropolitan Chicago helps police the program and works with CATA to scour ads to ensure compliance. Violators are referred to the Illinois Attorney Generalʼs office for action, ranging from cease-and-desist orders to monetary fines. The penalty is determined by the attorney generalʼs office.
The changes reduce the time dealerships have to correct ad violations and tighten the standards under which a violating dealer is referred to the Illinois attorney generalʼs office for discipline, CATA President Dave Sloan says.
In the past, when BBB reviewers spotted a dealer ad not in compliance, the BBB would send a notice to the alleged offender, who then was given five days to respond. If the dealer didnʼt respond, a second notice was sent, giving the dealer another five days to comply before the attorney general’s office was notified.
Now, Sloan says, the timelines have been reduced to four days following the first notice and three days after the follow-up notice, or seven days total.
While that still seems like a long time, Sloan says, “We want to make sure dealers have time to respond, and some of the violations are legitimate misunderstandings.”
Also in the past, some dealers violated the same rule twice in a 12-month period and only after the third violation was the attorney general notified. Now, a dealer with any two rule violations, not just the same rule, within a 12-month period will be referred to the attorney general.
In most of the cases, the dealer is the one penalized, but in some cases the attorney generalʼs office also will penalize the dealerʼs ad agency. The attorney general doesnʼt have to wait for the BBB to refer a complaint and can act on its own at any time.
Under the stricter regulations, some rules now will fall under a “zero tolerance” code if violated, Sloan says. Those will be referred to the attorney general immediately.
These include dealer ads that list a vehicle price that says it includes all charges except license, title and documentary fee, but excludes such made up charges as “dealer fees” or “environmental fees” that eventually would be added to the final price.
The state only allows dealer ads to exclude license, title, and a document fee – a sum to cover the cost of paperwork set at $166.27 by the attorney general’s office for 2014.
Also on the zero tolerance list, Sloan says, are any ads that deduct limited rebates from the advertised price. Dealers have been known to subtract a $500 military or new-graduate rebate from the advertised price even though those spiffs are available to only certain customers.
Also on the list is advertising with bundled rebates, such as a price minus $1,500 in rebates when the $1,500 refers to a $500 military, a $500 graduate and a $500 factory incentive that are not available to all buyers.
Another violation is advertising that a trade-in value is guaranteed, such as $1,000 on any car that can be driven, towed or pushed into the store as a trade, because the dealer can recoup the $1,000 or any part of it when negotiating the purchase price with the consumer.
Also banned are offers of free gifts, prizes and other incentives with the sale, because dealers are prohibited from offering anything to consumers in connection with selling vehicles where the price is negotiated and dealers can recoup the value of the offer in their negotiated price.
The same applies to offering coupons to consumers to reduce the advertised price.
The intent of the regulations, Sloan says, is “to ensure that the marketplace operates fairly for all dealers.”
