The news broke this week about a
Louisiana marketing company that has been permanently banned from automobile
advertising and marketing in North Carolina. Since Arizona, Iowa, Kentucky,
Maryland, Oregon and Pennsylvania joined North Carolina in bringing the case,
there will likely be repercussions for the vendor in other states as well.
On the surface, it looks like a
shady operator got his just rewards. I agree and I think that’s good news for
the auto industry. But let’s look a little further and see how dealers can be affected
by these vendors.
This same marketing company was busted
by the state of Washington back in 2007. In that case, the dealer ended up
paying almost twice the amount in penalties and legal fees as the marketing
company did. In addition, the dealer had to sign a Consent Decree with the
Attorney General that stated among other things: “Any violation committed after
the date of entry of this Consent Decree of any of the injunctive terms of this
Consent Decree shall constitute a violation of an injunction for which civil
penalties of up to $25,000 per violation may be sought by the Attorney General”.
In other words, any advertising missteps this dealer makes will cost it dearly.
This injunction is permanent by the way.
So, the shady operator pays a fine and
continues business as usual with other dealers in other states. Meanwhile, the
dealer pays through the nose, gets his reputation trashed, and has the AG
breathing down his neck forever. Just doesn’t seem right.
In a statement about the case, Assistant
Attorney General Mary Lobdell said: “Washington dealers need to be upfront and
honest in their advertisements and should carefully select the companies they
hire to promote their business. All companies that do business in Washington
must know and operate in accordance with Washington laws. Both dealers and
ad firms can be found in violation of Washington laws if their promotions fail
to include all legally required disclosures. Some marketing firms, especially
those located in another state, may not be familiar with Washington’s car
dealer and consumer protection laws. If these companies use promotions that
mislead or deceive interested buyers, both the marketing firm and the dealer
may be found in violation of Washington laws.”
It doesn’t surprise me that so many
dealerships sign up for these promotions and blindly believe that the vendor is
following the law and covering their back. I must confess I was guilty of the
same thing back in my dealership days. Perhaps it’s the excitement of fantasizing
about how many cars you’re going to sell? I get it – been there, done that.
This post is not meant to villainize
vendors. I can attest to the fact that there are plenty of good marketing
companies and ad agencies out there that practice due diligence. I work with a
number of vendors in reviewing advertisements for compliance before they reach the public. Quite
simply, this should not be an option. Dealers should insist that their vendors
prove that they are following state and federal advertising regulations every time. It just makes good business
sense.
Did I miss the name of the vendor? Great information, but difficult to really protect ourselves by it's use without the name. Surely you cannot be afraid of retribution, I mean, it is already public knowledge, right?
ReplyDeleteI guess we are suppossed to go on a hunt to figure it out...
Thanks for the feedback. Here's a link to the actual news story: http://www.fi-magazine.com/News/Story/2013/01/Auto-Advertiser-Banned-in-North-Carolina.aspx?prestitial=1
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