DMV Advertising and Sales Practices 4 — Questions and Answers
Question 1: A dealer advertises a manufacturer's cash rebate as a 'dealer discount.' This is:
- Acceptable since the savings amount is the same
- Deceptive because it misrepresents the source of the savings (Correct answer)
- Required by manufacturer co-op advertising agreements
- Permitted if the rebate amount is accurately stated
Correct answer: Deceptive because it misrepresents the source of the savings
Misrepresenting a manufacturer's rebate as a dealer discount misleads consumers about who is providing the savings and can distort price negotiations.
Question 2: Under the Truth in Lending Act (TILA/Regulation Z), which 'trigger term' in an ad requires full credit disclosure?
- 'Financing available'
- 'Call for pricing'
- 'Down payment of $1,500' (Correct answer)
- 'Ask about our payment options'
Correct answer: 'Down payment of $1,500'
Stating a specific down payment amount is a Regulation Z trigger term that requires disclosure of the APR, number of payments, and total of all payments.
Question 3: A dealership's TV commercial features a vehicle at a specific price, but that vehicle has already been sold. How long does the dealer typically have to update or remove such an advertisement?
- 30 days from the original air date
- Until the next billing cycle with the TV station
- A reasonable time after the vehicle is sold, often 24–48 hours under state rules (Correct answer)
- No deadline applies to broadcast media
Correct answer: A reasonable time after the vehicle is sold, often 24–48 hours under state rules
Most state regulations require dealers to remove or update ads within a short, reasonable period after a vehicle is sold to avoid misleading consumers.
Question 4: A dealer places an ad claiming vehicles are 'priced below invoice.' Which of the following statements is TRUE?
- This claim is always illegal
- The dealer must be able to substantiate this claim with documentation (Correct answer)
- This claim requires FTC pre-approval
- Below-invoice claims are only regulated for new vehicles
Correct answer: The dealer must be able to substantiate this claim with documentation
Price claims like 'below invoice' must be substantiated with actual cost documentation; if challenged, the dealer must prove the claim is accurate.
Question 5: Which of the following vehicles is EXEMPT from the FTC Used Car Buyers Guide requirement?
- Vehicles sold at auction to the public
- Vehicles with fewer than 10,000 miles
- Vehicles sold between private parties (not dealers) (Correct answer)
- Vehicles older than 10 years
Correct answer: Vehicles sold between private parties (not dealers)
The FTC Used Car Rule applies to dealers — private party sales between individuals are exempt from the Buyers Guide requirement.
Question 6: A salesperson promises a customer a specific trade-in value verbally but the written contract reflects a lower amount. Which document governs the transaction?
- The verbal agreement, since it was made first
- The written contract, as it is the binding legal document (Correct answer)
- Whichever amount is higher, per consumer protection law
- The trade-in appraisal form, if signed by both parties
Correct answer: The written contract, as it is the binding legal document
In most jurisdictions, the signed written contract supersedes verbal promises — consumers should verify all representations are in writing before signing.
Question 7: A dealer's social media post shows a vehicle with modified equipment not standard on that model without disclosure. This post is likely:
- Acceptable because social media is informal
- A potential deceptive practice if consumers believe the modifications are standard (Correct answer)
- Permissible since the post does not state a price
- Required only if the dealer sells the shown vehicle
Correct answer: A potential deceptive practice if consumers believe the modifications are standard
Depicting non-standard equipment without disclosure can mislead consumers about what they will receive, making it potentially deceptive regardless of the medium.
DMV Advertising and Sales Practices 4
A dealer advertises a manufacturer's cash rebate as a 'dealer discount.' This is: