Saturday, December 13, 2014

The FTC Strikes AGAIN - What a Surprise!

The Federal Trade Commission started the year by making a major statement regarding how they feel about questionable auto dealer advertising practices with their Operation Steer Clear action in January. Just to remind us that they weren't kidding around, they've apparently decided to end the year with a splash: FTC Takes Action Against Two Auto Dealership Chains For Violating 2012 Orders Prohibiting Deceptive Advertising of Vehicle Costs.

As I predicted in my January 22nd post, The FTC Strikes Again - You Ain't Seen Nothing Yet, dealer advertising is on the FTC's radar and they're not going away anytime soon.

According to media accounts, one of the dealers cited in the most recent action stated "Was it fair? Absolutely not. The reason we settled it was because it was less expensive than to go to court." 

Well, as we parents are so fond of telling our children: "Life isn't fair..."

This dealer and his legal counsel apparently feel that the FTC has not been clear in delineating their expectations regarding compliant advertising. Perhaps that's true, but after attending the FTC's dealer advertising press conference this past March, I'm not sure I completely agree. As I outlined in the post Key Takeaways from the FTC's Dealer Advertising Webinar, it seems to me that the FTC has been pretty forthcoming about their perspectives regarding proper advertising.

I've said it many times before and I'll say it once again: If you’re not sure that your advertising is compliant, don’t guess! It makes sense to have your advertisements reviewed, and edited if necessary, by someone knowledgeable before publication. It may cost a few bucks, but it’s a small price to pay.

$360,000 (plus legal fees) and bad press seems like a really high price to pay for guessing wrong.

For a quick refresher on how regulators view advertising, you may want to check out this post: 10 Advertising Guidelines That Every Dealer Should Be Familiar With.

Tuesday, December 9, 2014

Winning the Battle and Losing the War

Just over 4 years ago, I wrote an article about how much damage an irate customer can do in the digital age: Unhappy Car Buyer Gets 110,000 Views on YouTube.

In a nutshell, the customer’s initial complaint was that the car he purchased had problems and he wanted his money back, but a good portion of the disparaging video he produced dealt with how the customer was saddled with what he felt was an unfair arbitration agreement by the dealer. The customer wanted to have the case heard in court and the dealer wanted to have an arbitrator decide the case.

This case has been going on for over 7 years and it appears that it's finally been resolved. The dealer was able keep the case out of court and with an arbitrator (they won that battle). But - the arbitrator ruled against the dealer and awarded the customer $10,393 plus legal fees of $324,724. Ouch!

As if that's not bad enough, the YouTube video trashing the dealer now has over 1.3 MILLION views!

By the way, this battle was over a used car that sold for roughly $9,000...

The obvious question seems to be: was it worth it?

How does your dealership handle customer complaints???