FTC’s “Operation Steer Clear” Targets Auto Dealers’ Deceptive Trade Practices

On January 9, 2013 the Federal Trade Commission (“FTC”) announced enforcement actions against nine automobile dealerships over allegations of deceptive and unfair trade practices.  The FTC alleged that these dealers violated the FTC Act, which prohibits businesses from making false or misleading statements regarding products and services.  The complaints filed by the FTC also included allegations that the dealers violated the Consumer Leasing Act and the Truth in Lending Act by failing to disclose fees, interest rates, and other credit related terms.

Of particular interest is the FTC’s complaint involving a dealer’s advertisement of a purchase price reduced by a down payment.  For example, the dealership advertised a 2008 Chevrolet Tahoe for $17,995 and included in the disclosure that the price was “after $5000 down.”  Even though the advertisement disclosed that the price was conditioned upon the consumer making a down payment of $5000, the FTC alleged that the advertisement was deceptive because the vehicles “are not available for purchase at the prices prominently advertised” since consumers “must pay an additional $5000 to purchase the advertised vehicle.”  Based on anecdotal observation, this practice is far more common than many dealers may believe.

Dealers should closely review their own advertisements to see whether they may be deemed deceptive.  If you have advertisements that show a price contingent upon making a down payment, you should  avoid making these kinds of offers.  If you advertise lease or installment payments, you must make sure that you properly disclose any “trigger terms,” such as APR, duration of the loan, and any additional fees associated with the purchase or lease.  Payments that are “No Money Down” must really be no money down.  If the consumer must pay more to obtain the advertised payment or price, then the offer may be deceptive.

Another Approach to Creating Video Content for Dealerships

One of my first posts on this blog illustrated different approaches dealers take when creating videos that showcase their products.  You can find the original post here.  Some dealers rely on automation to create video content for each of their vehicles.  While extremely easy to do, many criticize this approach because of inherent flaws with videos that lack a human touch, such as proper pronunciation of words and compelling descriptions of the vehicle itself.  If you’re looking for a “middle ground” approach between a video walk-around and a slide show, take a look at this video by Suzuki of Wichita.    Here are some of the things I think Suzuki of Wichita did right with this video:

  • The narrator discussed the features/benefits of the vehicle clearly and (I’m assuming) used some kind of mic in an area without much background noise.  Doing this made the presentation seem more professional and polished.  I got the impression that the narrator planned what he was going to say and stayed on point while narrating the video.  This added to the overall quality of the video as well.
  • They added graphics to highlight certain selling points of the vehicle.
  • There was a call to action at the end of the video.

While I think there are certain strengths and weaknesses to whatever format dealers adopt when producing videos, whether they use slide shows or more traditional walk-around videos (see Saabkyle04’s YouTube Channel for examples), I like that Suzuki of Wichita was willing to experiment with a video that merges the two and ends up creating something that is pretty original and compelling.  What are your thoughts?  Are there other dealers you know of that are using video effectively?

Resources for Dealers Looking to DIY Post Videos to YouTube

There is a lot of buzz right now about dealerships using social media to connect with customers.  Whether you sell cars, boats, motorcycles, ATVs or anything else, your business can leverage social media by creating and distributing video for your own website and social media assets.  The process of creating and posting videos online can seem daunting at first, but luckily there are resources available to help you get up to speed.  I’ve previously shared an example of someone doing a great job making YouTube videos about automobiles here.  Above is the first in a series of videos created by Elise Kephart of Phone Ninjas (YouTube Channel: ElisePhoneNinjas), showing how to shoot, edit and upload videos to YouTube.  Ms. Kephart’s technique takes a different approach than the one I previously wrote about.  That video was meant as a one-to-YouTube’s audience communication, in a similar way a television ad reaches all viewers including those who have not expressed an interest in doing business with you.  These videos demonstrated by Ms. Kephart are used as a way to communicate one-on-one with a prospective customer who has an existing relationship with the dealership, or is a new customer who has contacted the dealership for information and a price quote on a particular vehicle.  For example, using Ms. Kephart’s techniques, a sales person can make a quick video of the vehicle of interest tailored specifically to the inquiring customer, post it to YouTube, and then send the link to video to the customer via email.  This is light-years ahead of the current process at many dealerships, which relies heavily on impersonal email templates generated through a Customer Relationship Management (“CRM”) system to convey information to the customer and follow-up on the customer’s inquiry.

Here’s an example of a dealership that has used Ms. Kephart’s approach:

In the spirit of full disclosure, I do not have any type of relationship with Phone Ninjas or Ms. Kephart.  I became familiar with her work by frequenting sites such as Automotive Digital Marketing and Dealer Elite.  Do you have any tips on shooting, editing and uploading videos to YouTube?