Friday, May 20, 2011

Who’s Writing Your Online Ads?

I recently saw a vehicle advertised on a dealer website that caught my attention. This pre-owned car was advertised as a “CarFax One Owner”. Upon further investigation, I discovered that the “one owner” was a rental car company.

Even though the “one owner” statement may have been technically true, the description of the vehicle blew my mind: “With just one previous owner, who treated this vehicle like a member of the family, you'll really hit the jackpot when you drive home with this terrific car”. (Now I know that Enterprise has been advertising lately that they are a “family company”, but I’m not sure that this is what they had in mind…).

I was intrigued by this statement, so I kept sniffing around. It turns out that the dealership is part of a large dealer group and I noticed that similar statements were advertised on prior rental vehicles in some of their other stores as well. For example:

“This 2010 Elantra is for Hyundai fans that are searching for that babied, one-owner creampuff.”

“From the looks of it, I'd say this car has been garage kept and babied regularly. If only my wife treated me as nice!!!”

So, are these statements just harmless puffery that is intended to make the vehicles stand out? Perhaps, but I can’t help but speculate that representing that a rental car has been treated like a “member of the family”, “babied”, and “garage-kept” might not go over too well with an attorney general, judge or a customer who understandably thinks that “one owner” means one private owner.

Depending on the dealership, online advertising may be handled by any number of people such as a used car manager, internet manager, or perhaps an outside vendor. I realize that whoever wrote these ads may not have knowingly tried to deceive anyone. Perhaps they weren’t aware that the cars were rentals and just relied on the fact that CarFax identified the vehicles as “One Owner”. However, if an ad is deemed to be deceptive or misleading, an advertiser will likely have liability regardless of whether there was intent to deceive. A dealer has the legal duty to investigate the accuracy of any statements made in advertising; therefore it is vital that anyone who is responsible for writing advertisements be well aware of advertising regulations.

Bear in mind that even though the dealerships will likely disclose the vehicles’ previous histories at some point, the dealer may still not be off the hook. Some advertising regulations indicate that if the first contact with a consumer is secured by deception, a violation may occur even though the true facts are made known to the buyer before he enters into the contract of purchase or lease.

It’s important to keep these concepts in mind when preparing an advertisement:

• Advertising is considered deceptive or misleading if “members of the public are likely to be deceived” or the advertisement has a “tendency or capacity to mislead the public”.

• Since statements and representations in advertisements are evaluated based on their tendency to deceive, no actual harm to consumers may need to occur for there to be a violation.

• The fact that others were, are, or will be engaged in like practices will not be considered a defense.

• Statements susceptible to both a misleading and a truthful interpretation will likely be construed to be deceptive.

• Puffery is defined as an advertising or sales presentation relying on exaggerations, opinions, and superlatives, with little or no credible evidence to support its vague claims. Puffery may be tolerated to an extent so long as it does not amount to misrepresentation (false claim of possessing certain positive attributes or of not possessing certain negative attributes).

The rules for good advertising are mostly common sense. Make sure your message is clear, truthful, easy to understand, and not subject to multiple interpretations. It’s not just about staying within legal guidelines either. Show your customers that you play by the rules – chances are they’ll thank you for it.

Sunday, May 8, 2011

Reputation Management Is Not Rocket Science

There are a number of good reasons for operating an ethical and legally compliant dealership, not the least of which is staying out of a courtroom. Perhaps the most important - and most often overlooked - reason is increased customer satisfaction. There are times when an employee may feel that he or she came out the winner by bending the rules a little, but what about the dealership’s reputation? What about the customers who were mislead? It seems like there might be some losers in the game.

Customers often make decisions during a vehicle sale transaction that they come to regret after the “ether has worn off”. Perhaps they read the contract more carefully after they got home or showed it to a relative, friend, neighbor, etc. The customer may notice some imperfections on the vehicle in the light of day and have it inspected by a mechanic or body shop or run a vehicle history report. If there is a concern, some customers will let the dealer know while others will just chalk it up to (bad) experience.

Now, if the dealer is lucky enough to get a chance to rectify the customer’s concern, how will the complaint be handled? Will it be “Sorry, all sales are final” or “You signed the contract”?

What about the customer that doesn’t bother to report the concern? You can be sure they’re telling somebody about the transaction. Or perhaps they’re telling thousands of people via social media?

Here are some examples of after-sale situations that can cause potential customer satisfaction nightmares:

• The customer sees your advertisement for a price lower than was charged for the vehicle.

• The customer discovers additional charges on the contract for items that he or she thought were included in the price of the vehicle.

• The customer discovers that F&I products were sold at much-higher-than-market prices.

• The customer discovers additional charges on the contract for items that he or she never agreed to purchase.

• The customer gets a call from the lender who asks for verification that the vehicle has a sunroof – and it doesn’t.

• The customer discovers that the price of the vehicle was raised to cover negative equity on the trade-in when after being told that the dealer agreed to purchase the trade-in for the full loan balance.

• The customer gets a call from the lender asking for verification of an income amount which is much higher than what was written on the credit application.

• The customer discovers that the vehicle purchased had undisclosed prior damage.

• The customer runs a vehicle history report and discovers that the vehicle purchased was an undisclosed previous rental, a prior demo, flood damaged, etc.

• The customer brings the vehicle in for repairs and discovers that the warranty or service contract coverage or term was misrepresented.

Sure, you made the deal. But is it really worth putting the reputation that you have worked years to build at risk? Take compliance and ethical behavior seriously. A commitment to honesty and fair dealing will protect your company, your employees, your customers and, most importantly, your good name.