Be Careful with “Internet Special” Prices

A lot of stuff finds its way to my email inbox, especially car-related stuff. That’s partly because I’m curious about what dealers and others are doing on the web and it also likely has something to do with all the car and finance related websites I visit. So, I wasn’t surprised to find an email from a local Ford dealer, trumpeting their wares. I decided to waste a few minutes visiting their website to get a feel for how savvy this dealer was regarding compliance issues.

 

 
After clicking on the ‘Used Inventory’ button and scrolling down this dealer’s offerings, I noted that most of the cars and trucks were shown with two prices, like this: “Was $22,500. Special Internet Price $19,995.” That caused my “spidey” sense to tingle (you didn’t know Spiderman was a lawyer?). “Hmmmm,” I said to myself. “I wonder if this car was ever actually offered for sale at $22,500.” If the Attorney General’s (AG) investigators come calling and say, “Mr. Dealer, show us proof that this car was actually offered for sale at $22,500,” would the dealer be able to present such proof?
 
If the AG’s investigators had information that the $22,500 figure had been snatched out of thin air and that the car had never been offered at that price, this dealer could be in a world of trouble. That’s because most states have so-called “unfair and deceptive acts and practices” laws that prohibit the use of false statements in advertising. Some states also have general and dealer-specific advertising laws to the same effect. Some of these laws permit lawsuits against dealers by private parties (some laws don’t even require that the suing party has suffered any damages). Nearly all of the laws permit an action by the state’s AG. Some of these laws even provide for criminal penalties.
 
You might ask where the AG’s staff could possibly come up with information that the advertised cars had never been offered at the “was” prices. Two possibilities spring to mind. The first is mystery shopping. This tactic is commonly used by enforcement authorities and by reporters who deal with consumer issues (i.e., “Channel 5 is On Your Side”). A second very common way for the authorities to get the inside skinny on a dealer’s operations is to interview a couple of the dealership’s ex-employees. Very often, these employees did not leave the dealership’s employ voluntarily and have an axe to grind. If they think they can get some revenge by blabbing to the regulatory authorities, they might just do so. Fired anyone lately?
 
There’s another issue with these ads that’s beyond the scope of this article, and that involves state laws and regulations that require dealers to honor any advertised price. These “special internet prices” would need to be honored in non-internet deals under such laws, but that is another article.
 
If these practices sound familiar—that is, if whoever is posting your stuff on the internet is playing fast and loose with the truth—you need to step back and rethink your process of posting content on the web. If your lawyer isn’t part of the process, it’s possible that you’re overlooking legal issues like these.
 
Tom Hudson is a partner in the law firm of Hudson Cook, LLP. For information, call 410-865-5411, email tbhudson@hudco.com, or visit www.counselorlibrary.com. Based on an article appearing in Spot Delivery, single print publication rights only to Dealer Marketing Magazine. HC# 4826-5171-3285
 
 
 
 

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