Vehicle Advertising Compliance: Regulators On the Lookout for Fake Recall Notices and Other Deceptive Customer Notices

Back in October 2018, the Federal Trade Commission (“FTC”) announced a settlement and proposed consent order involving a Washington, DC, area dealer group relating to allegations that the group mailed thousands of recall notices to vehicle owners with the heading “URGENT RECALL NOTICE,” even though the vast majority of consumers who were sent these notices did not have a vehicle subject to an open recall. The FTC further alleged that the notices were sent to increase business at the dealership and not to alert consumers with actual recalls, in violation of the FTC Act. In addition to settling with the dealer group that was identified in the mailings, the FTC settled claims against a California-based marketing firm relating to its alleged involvement in designing the mail pieces and obtaining vehicle owner addresses. Click these links to see the FTC Press Release and FTC links to the Complaint and related pleadings. Despite this lawsuit, and other recent complaints alleging false recall notice advertising, we have been informed recently that some marketing companies are continuing to promote such programs.

This FTC Consent Order and settlement is a helpful reminder that dealers need to perform careful due diligence on marketing vendor programs, and avoid programs that promise to increase customer traffic and sales by sending out mass mailings that are deceptively designed to look like they are an official government or manufacturer document, or are otherwise specifically targeted at the individual consumer based on select criteria. The federal FTC Act broadly prohibits “unfair and deceptive acts or practices in or affecting commerce.” 15 U.S.C.§ 45(a). Wisconsin law likewise prohibits “false, deceptive or misleading advertising or representations,” and further requires that all statements of fact made to the public relating to motor vehicles for sale or services that are provided be supported by “detailed evidence of the validity and accuracy thereof.” Wis. Admin. Code, Trans 139.03(1) and (2). Representations that a vehicle is subject to a recall or has been specifically identified as in high demand, for example, should be supported by specific evidence supporting such claim for each consumer contacted. The same is true for representations that a consumer has been identified as meeting certain qualifying criteria.

In many cases, dealerships may be independently liable when advertising associated with them is found to be false, deceptive, or misleading. Dealers should, therefore, be wary of vendor representations that their programs comply with federal or Wisconsin law, and they should carefully review all advertising and other public statements before they are conveyed.