Three Things To Remember When Selling Vehicles Online

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According to a recent study by JD Power, customers visit an average of 1.4 dealerships before purchasing a vehicle.  As recent as 2005, consumers visited 4.5 dealerships before purchasing.  By using resources available on the internet to gather information, customers can significantly narrow the list of potential vehicles they wish to purchase without having to visit as many dealerships.  Many dealers recognize the power of the internet and resources available to generate leads and traffic. Moreover, state and federal regulators recognize that customers are relying on information provided on the internet when making purchases.  In response, regulators are becoming more inclined to intercede on behalf of consumers and target questionable practices related to advertisements on the internet.  Here are three points to help keep your dealership compliant when marketing and selling vehicles online:

  • Treat Your Online Ads Like Your Offline Ads:  Recently the Federal Trade Commission (“FTC”) published its long-awaited guidelines on how the FTC views practices related to online advertisements.  In summary, the guidelines apply many standards that the FTC applies to advertisements placed in newspapers, television and radio.  For example, when online advertisements include “trigger terms,” like payments or price, dealers must make full disclosure of how they arrived at the price or payment, including down payment, APR, availability, credit score requirements, and so on.  Not only must you make the necessary disclosures and avoid claims that are “unfair,” or “deceptive,” but you also must make sure that these disclosures are legible on a host of devices, including desktop computers and mobile phones.  This requirement mirrors the FTC’s requirement for legible disclosures appropriate to the advertising medium used.  So, download the FTC DotCom Disclosures, review it thoroughly, and remember to be as vigilant with monitoring your online advertisements as you would be monitoring your offline advertisements.
  • Safeguard Consumers’ Data:  In addition to researching pricing and availability of vehicles online, many consumers seek to secure financing by submitting their credit information to dealers.  If your dealership collects nonpublic personal information via online submissions (over email or by a form on your webpage), you must make sure your Safeguards Rule and Red Flags Rule compliance plans address how you protect this information and detect possible identity theft.  You should inventory who has access to this information and where the information is sent.  For example, if you allow sales personnel to receive consumers’ nonpublic personal information on their smartphones or personal email account, your policies should address how you protect this information.
  • Deliver Vehicles At Your “Brick And Mortar” Location:  Even though consumers conduct the bulk of their research online, vehicle transactions typically occur at a dealership’s physical location.  That may not always be the case, especially as more and more consumers rely on the internet to facilitate exceedingly complex transactions.  While you may choose to aggressively market your business online, your goal should be to encourage consumers to take physical delivery at your dealership.  Why?  Some states allow for “cooling off” periods where consumers can rescind the contract if they take delivery of vehicles away from the dealer’s premises.  Also, many states allow consumers to rescind retail installment contracts if both parties have not executed the agreement.  For example, if you print the deal paperwork and mail it to a customer to sign, the consumer may void the contract up to the point your dealership’s representative countersigns the contract.  Furthermore, if you sell and deliver a number of vehicles to consumers in a different state than your state of residence, consumers in that state may seek to sue you in that state’s courts, should a conflict arise.  They may successfully argue that you have availed your business of the state’s jurisdictions by soliciting business within the state.  Requiring consumers to complete the transaction by signing the paperwork, and taking delivery, at the dealership should mitigate risk of consumers bringing these kinds of claims.

Image Courtesy of Edmumds.com

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