Pay the Lawyers Now or Pay the Attorney General Later

Maybe the title of this article rings a bell; it’s a paraphrase of a catch line from an old commercial for a big transmission repair company. The commercial closed with a mechanic holding some obviously broken piece of equipment he’d just lifted from the inside of a transmission housing, looking into the camera and intoning, “You can pay me now, or you can pay me later.”

 

That old catch line came to mind when I got a call recently from a lawyer representing a dealership that had been called on the carpet by its state’s Attorney General for advertising violations. It seems that the dealership’s website contained ads that used the so-called “triggering terms” identified by federal regulations as requiring additional disclosures in the ads. The dealership folks who had put the website together and who supplied its content had used scads of “disclaimers” in connection with the ads, but the disclaimers were either in “mouse type” or, when spoken or scrolled across the screen, were not intelligible.

 

The dealership had a date with the Attorney General the following day (gulp!) to answer the AG’s complaints about the offending website. The dealership’s lawyer told me that his client didn’t have much by way of a defense, and that he intended to basically “plead guilty” and try to negotiate the lowest penalty he could. He mused that the AG might strip a $150,000 to $300,000 slice off of his client’s rear. A number in that range would be pretty much in line with fines levied by AGs in other states in advertising violation cases.

 

This little story should make you think about your own ads (and, by the way, that includes your website) unless, of course, you just like stroking big checks for compliance penalties.

 

A few questions will help you focus on your advertising compliance efforts:

 

·         Who is responsible for ad compliance at your dealership? Who’s your “ad guru”?

 

·         To whom does your ad guru report and who has the authority to override the guru’s decisions?

 

·         What sort of training in advertising and disclosure laws and regulations have you given to your ad guru?

 

·         What sort of legal and compliance tools, and what sort of budget, does the ad guru get?

 

·         What sorts of records do you keep that reflect the review and approval of ads?

 

OK, I gave away the game a bit by listing these questions. You can tell that I have some “good” and “bad” answers in mind.

 

If you can’t name someone at your dealership, or an outside lawyer, who is responsible for approving every ad and every change to your website, you should designate such a person. If you’ve been relying on your advertisement company or the folks who built your website for advertising compliance, there’s probably no hope for you.

 

If you aren’t using an outside lawyer to review your marketing materials, you’ll need an internal specialist, the ad guru. The ad guru ought to report as high up the dealership chain of command as possible. If he or she answers to a sales manager, then you are basically letting your sales manager make legal decisions.

 

Your ad guru should be certified by the Association of Finance and Insurance Professionals, or by some other group (perhaps your state dealer’s association) that offers such training.

 

The ad guru should have copies of all federal and state laws and regulations at hand, as well as copies of all of the information about ads available on the Federal Trade Commission’s website. Also, there is often a surprising amount of assistance about ad and website compliance available from many state auto dealer associations. Your dealership lawyer can help assemble these materials, and can perhaps provide some training to the ad guru in using them.

 

When the AG comes calling, objecting to a particular ad or website page, you’ll be in much better shape if your ad guru can pull out the file that reflects the approval process and shows why the ad or web content was approved. The AG might still take the position that you’ve violated an ad law or regulation, but I will guarantee you that any penalty assessed won’t be nearly as high as it would have been had you not had any proof of attempted compliance.

 

Will this effort cost money? No doubt—but it’s either pay now, or pay later.

 

Nicole Munro is a partner in the Maryland office of Hudson Cook, LLP. Ms. Munro represents DMS providers, forms printing companies, motor vehicle dealers, sales finance companies, and lenders engaged in motor vehicle finance transactions. She can be reached at 410-865-5430 or by email at nmunro@hudco.com.

 

Copyright CounselorLibrary.Com, March 2011, all rights reserved. This article will appear in Spot Delivery. Single publication rights only, to Dealer Marketing Magazine. HC# 4810-8342-0682 (08/10/11). CounselorLibrary.com LLC produces Spot Delivery and CARLAW. For information, call 410-865-5400 or visit www.counselorlibrary.com.

 

 

 

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