Motor Vehicle Advertising Legislation - PowerPoint Presentation

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Motor Vehicle Advertising Legislation - PPT Presentation

Consumer Protection Office Manitoba Justice October 10 2017 Defining Advertising advertisement means an advertisement placed by a motor vehicle dealer to induce a trade in a motor vehicle ID: 809207

price vehicle advertising credit vehicle price credit advertising dealer information consumer motor advertisement lease fees advertised amount cost charge

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Slide1

Motor Vehicle Advertising Legislation

Consumer Protection Office

Manitoba Justice

October 10,

2017

Slide2

Defining Advertising

"advertisement"

means an advertisement placed by a motor vehicle dealer to induce a trade in a motor vehicle.

Does not currently include manufacturer advertisements

"trade"

includes, without limitation, advertising, buying, selling, leasing or exchanging an interest in a motor vehicle or negotiating or inducing or attempting to induce the buying, selling, leasing or exchanging of an interest in a motor vehicle.

Slide3

Examples of Advertisements

Newspaper, magazine, other publications

Direct mail, flyers

Website ads

Dealer website

Third-party websites (i.e. Kijiji, Autotrader)

Social media

Radio/TV ads

Billboards

Signs (including those displayed in or on a vehicle)

Slide4

Advertising Requirements

“Clear, understandable and prominent”

In a print publication, information must be printed in a font face and size no smaller than those used in the publication’s classified advertisements.

Advertising limitations

If there are practical limitations on the amount of information that can be included in an advertisement, then it must state the means by which a consumer may obtain more information about the dealer or vehicle.

Slide5

Advertising Requirements

These provisions apply to dealers

and

employees

Duty of dealer to ensure compliance

No false advertising

No falsifying information

No false information, representation or promises

Slide6

Applicable Legislation: Sales Transactions

The Consumer Protection Act (CPA)

Part II - Cost of Credit

Part XXIV – Motor Vehicle Advertising and Information Disclosure

Motor Vehicle Advertising and Information Disclosure Regulation

The Business Practices Act (BPA)

Generally applies in all business to consumer transactions

Slide7

The Consumer Protection Act

The CPA and BPA apply to most Manitoba businesses

Provide protection for both goods and services

Examples: Vehicle sales, leases, repairs

The protections provided in the

CPA only apply to consumers

The protections granted to consumers by the CPA cannot be nullified in a contract

Slide8

“All-In” Pricing

If an ad displays a price for a vehicle, that price

must

include

all mandatory fees

the dealer intends to charge

Clearly and prominently

indicate if GST/PST are not included

Mandatory fees include:

Freight, inspection, administration fees

Mandatory warranty or protection packages

Pre-installed products and services i.e. etching, nitrogen, gas

Government levies (air tax, tire stewardship fees, etc.)

Slide9

All-In Pricing Exclusions

A dealer may sell additional products and services that have value

These are optional services

not

mandatory fees

The dealer must fully and truthfully explain each product and service and

allow consumers the right to decline additional items

Slide10

All-In Pricing: Advertised Price

An advertised price must not be calculated based on the inclusion of any deductions such as:

Value of a cash down payment, trade-in vehicle, or after-tax rebate

Consumer’s choice to enter into a credit sale

The price being advertised must be the price available to everyone

Slide11

Availability of Vehicles at Advertised Price

A vehicle may only be advertised if the vehicle is in the dealer’s inventory while the price is in effect

Does not apply to new vehicles that need to be ordered from the manufacturer

Advertisements must show:

The time period, if the price is available for a limited time

The number available, if a limited number of vehicles are available at a certain price

If an advertised vehicle sells during the advertised period a notice must be posted in the business and on the vehicle (if applicable)

Slide12

Price Size in Advertisements

If the amount and timing of payments for a vehicle are included in an advertisement, they must not be more prominent than the total price.

Image used solely to illustrate prominence of total price and payment amount

Slide13

Photographs

An advertisement can use a photograph of a vehicle that is not the motor vehicle for purchase or lease only if:

It is a reasonable representation of the vehicle available for purchase or lease; and

The advertisement indicates the vehicle in the photograph is not the vehicle for sale

reasonable representation

means the same make, model, year, trim level, condition

Slide14

Photographs – Vehicle Series or Line

If the advertisement includes a photograph from a certain series/line, but it is not the vehicle for purchase or lease, then this must be stated in the advertisement.

Slide15

Photographs – Different than Base Model

If the photograph featured in an advertisement has options that are not available in the base model, then both prices for both models need to be listed in the same size font.

Slide16

Advertising Statements

No minimum value trade-in allowance guarantee

Push, pull, drag for $1,000 off!

No claims of comparison or superiority unless substantiated

Hands down, Manitoba’s best dealer!

2016

Consumer’s Choice Award – Friendliest Dealer

Ads must not imply that a person is encouraged to breach a contract with another dealer in order to purchase/lease a vehicle from the advertising dealer

“

We’ll beat your best deal!”

Slide17

Advertising: Cost of Credit Requirements

Advertising and disclosure requirements for credit agreements and leases fall under the CPA:

Part II Division 2 – Fixed Credit

Part II Division 4 – Leases

Both parts contain rules for

representative transactions

Slide18

Cost of Credit – Credit Sales

Fixed Credit:

if you are advertising an interest rate or payment amount, you must indicate:

For example...

. ....

Cash

price

.......

$30,

000

Term of the loan

..........

48 months

Annual

percentage rate (APR)

....

5.99%

Cost

of credit*

..... ..

$7600

*Only if it involves a non-interest finance charge

Slide19

Example: Credit Sale Advertisement

Payments based on 4.9%, 0 down

Price $14,995, 60 month term, 0% APR, cost of credit $3,024.11

Slide20

Examples of Non-Compliant Advertisements

Slide21

Cost of Credit – Leases

Fixed credit:

if you are advertising an interest rate or payment amount, you must indicate:

That the agreement is a lease

The term of the lease

Any amount and timing of any payment that would be required at or before the beginning the term

The timing and amount of the periodic payments

Any other amount that the lessee would be required to pay in the ordinary course of events;

The APR (annual percentage rate)

The KM allowance

and the charge for exceeding that

Slide22

Example: Lease Advertisement

Lease payments assuming $1,000 down, terms and interest rates TBD

Lease price ($25,000) @60 month term. 6% APR, Cost of borrowing $4525. $250 bi-weekly payments. KM allowance 30,000km. Mileage charge of $0.15/km over.

Slide23

Cost of Credit – Representative Transaction

Use when credit prices are advertised for multiple vehicles in the same advertisement

Indicate in the fine print as a ‘Representative Transaction’ or ‘Representative Example’

Indicate in

each individual item

advertised

For all vehicles, price or payment reflect $1000 finance credit. See dealers for terms and rates.

Representative transaction: $15,000, 60 months, 7.25% APR, $0 down, GST/PST extra

Slide24

Vehicle Information Disclosure

Dealers must disclose specific information on the bill of sale

and

orally

Information must be to the best of the dealer’s knowledge and belief

based on information the dealer knew or ought to have known using reasonable care and due diligence

Slide25

Vehicle Information Disclosure

Provisions can be found in CPA (moved from BPA in 2015)

All staff should be familiar with the official Manitoba regulation

Clause 16(1)(b) was amended for clarity:

Motor vehicle information disclosure

16(1)

For the purpose of section 234 of the Act, a motor vehicle dealer must ensure that the following information is disclosed in any contract that it enters into to sell or lease a new or used motor vehicle to a consumer:

(a) the vehicle identification number;

(b) a statement as to whether

or not

(

) the motor vehicle is new or used

Slide26

BPA: Unfair Business Practices

“False, misleading or deceptive practices”

Doing or saying anything, or failing to do or say anything, that could reasonably mislead or deceive a consumer, for example:

Misrepresenting the purpose of an additional charge

Telling the consumer that the vehicle cannot be purchased without accepting an additional charge

Failing to disclose a “material fact” (e.g. not informing a consumer of structural damage to the vehicle)