What’s Your Best Price?

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 the internet to gather information, customers are significantly narrowing the list of potential vehicles they wish to purchase prior to visiting dealerships.  Before online advertising, dealers often advertised a limited number of vehicles in print, on the radio, or on television.  Now, it is common for dealerships to advertise their entire inventory on their own websites, as well as inventory aggregation websites such as Cars.com or Autotrader.  This leads to higher occurrences of pricing errors and disputes arising from selling a vehicle for a price higher than the price advertised online.

The Federal Trade Commission (“FTC”) recently revised the .com Disclosures, which offer businesses guidance on what types of disclosures businesses should include in their online advertisements to avoid claims of unfair and deceptive practices.  Disclosures should be “clear and conspicuous,” and placed in close proximity to pricing information or triggering terms such as APR, lease payments, and down payments.  If a vehicle is priced incorrectly, a consumer may claim that the dealership’s refusal to honor the posted price constitutes a deceptive practice.  Your goal should be to minimize errors occurring, and promptly correcting any errors you find.  If you fail to do so, consumers may claim that these errors are endemic of the dealership’s deceptive practices.

If you decide to offer “internet only” pricing, you will have to make additional disclosures in your online advertisements.  First, your disclosure should state that the price is only available if the consumer produces something, like a printout of the vehicle display page from your website or the inventory aggregation website.  Also consider excluding prior sales, in case a customer purchases a vehicle and later checks your listings to see what the price posted online is.  If you do not, your failure to honor the advertised price may be deceptive.  This disclosure must be on each vehicle display page, and not only at the bottom of your website’s home page or each department’s webpage.  Your pricing online should be realistic; a customer should be able to purchase the vehicle at the advertised price without making additional down payments, having a particular FICO score, financing the purchase through your dealership, or qualifying for rebates that are not available to all customers.  Remember, if you provide an inventory feed to a third party website, you will be responsible for errors on the third party’s website.  You should review each website to determine whether the disclosures are compliant.

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