The drumbeat of enforcement actions against dealers for advertising and related violations continues — this time at the local level. Last month, the New York City Department of Consumer and Worker Protection (DCWP) announced an enforcement action against Honda of the Bronx, and levied over $130,000 in penalties and restitution against the dealership.
Allegations Against the Dealership
The DCWP reviewed 35 deal jackets and found 28 instances where a vehicle was sold for higher than the advertised price, along with other alleged violations. Based on this review, the DCWP alleged that the dealer engaged in numerous prohibited actions, including:
- Advertising Violations: Cars were advertised at one price but sold at a higher price
- Operating Without a License: The business sold cars even when it was not properly licensed by the City.
- Missing Key Disclosure Paperwork: Many buyers were not given required disclosure documents.
- Failure to Disclose Cancellation Options: The dealership withheld cancellation options and forms for consumers.
Again — Advertising Violations Open the Door to Significant Penalties Related to F&I Activity
This case shows several important lessons for dealers.
- First, it’s not just the FTC1 that is focused on dealers, it is also state and even local agencies who are watching dealer practices very closely and aggressively bringing enforcement actions.
- Second, this is another reminder that your advertised price must be at or above the ultimate sales price of the vehicle. The advertising violations are the public-facing trigger that can lead to investigation into F&I practices.
- Lastly, it’s critical to review not only your advertising, but also your deal jackets as well. Thousands of dollars in fines and restitution per deal jacket. The DWCP reviewed only 35 deal jackets, and the penalties were still quite stiff. It can be a big job to do manually, but you must have an idea of what is happening in the deals at your store.
What Can Dealers Do?
ComplyAuto’s Guardian product will automate your advertising compliance, it is a basic starting point in advertising compliance.
In addition, dealers must be auditing their deal jackets. That has historically been a slow and expensive process – but no more. ComplyAuto’s DealCheck Ai will do a real-time deal jacket audit in 30 seconds or less, (and you can now get 50 DealCheck audits for $199/month.2) That’s right, for less than the cost of one or two traditional deal jacket audits, you get 50, and they are faster, more thorough, and customized to your store.
Guardian and DealCheck together provide the tools dealers need to protect themselves and stay out of the regulators’ crosshairs. Leverage the attorneys and compliance experts at the nation’s leading dealership compliance company today. Contact ComplyAuto today to learn more.
- Of course, the recent FTC warning letter to 97 auto dealership groups nationwide was the most high-profile action against dealers. Watch our recent webinar about this topic. ↩︎
- Contact ComplyAuto for details. ↩︎