RALEIGH, N.C. -

A dealer has to be concerned with advertising regulation and rules while marketing his own vehicles, but also needs to be careful when enlisting the help of others. A recent case that dealt with  a Louisiana-based marketing firm allegedly pitching false sales events and advertising at North Carolina dealerships focused on this very issue.

North Carolina Attorney General Roy Cooper said late last week that “Using false promises and bogus prizes to lure customers is no way to do business. Consumers deserve straight-forward information when they’re preparing to make such a big purchase.”

He was referring to Level 10 Marketing, which as alleged in Cooper’s complaint, had sold advertising and sales packages to North Carolina auto dealers designed to increase sales of the dealers’ used-vehicle inventories.

Though this court case came down hard on the marketing firm involved, The Car Counselor to the automobile industry Keith Whann cautioned that dealers can bear the brunt of a out-of-dealership dishonest advertising campaign gone awry, as well.

Especially one that involves promoting weekend sales designed to clear out older inventory on a lot.

“The first thing is the dealer and dealership needs to remember that anything that these (marketing and advertising firms) companies do, the dealership is liable for,” Whann said. “Often, they (dealers) think since an independent contractor came in or some other company, and they have insurance, then it may be alright. But, that is just not the case. You are going to be liable for all of that.”

Highlighting the case in more detail, the marketing firm has been permanently banned from automobile advertising and marketing in North Carolina, Cooper said in a statement. North Carolina joined Arizona, Iowa, Kentucky, Maryland, Oregon and Pennsylvania in bringing the case.

Apparently, the marketing material  falsely claimed that the sales events involved vehicles brought in from elsewhere by using terms such as “lender’s inventory sale” or “repossessed vehicle event” and used other misleading terms to create a false sense of urgency, such as “emergency disposal,” and “liquidation.”
 
Furthermore, the company advertisements also claimed that used vehicles would be sold at “90 percent off original price,” which was actually a comparison with the Manufacturer’s Retail Price (MSRP) of the vehicle when new, according to the complaint, and falsely claimed that “some vehicles will be available for $1 down, $114 per month,” according to Cooper.

What Dealers Should Watch Out For

To give dealers an idea of what they should keep an eye out for to avoid such a situation themselves, Auto Remarketing chatted with Whann to offer dealers some “red flags” as well as questions they should pose before agreeing to working with an outside advertiser to promote weekend event sales, in particular.

“When you are selling cars, remember that in most states, you can only sell a car if the dealership owns the car on one side, and you are dealing with a licensed sales person,” Ohio attorney Whann said.

“So the question comes when you deal with a company such as this, ‘What are they doing, and do they need come kind of licensing?’” he added.

In other words, don’t simply be allured by the promise of driving traffic.

And the biggest issue here is knowing all these statements being made on behalf of the dealership are true, Whann noted.

But he also stressed he realized these weekend sales events are designed to create more room on the lots.

“Virtually all these event sales that occur, you are trying to create some sense of urgency. And everyone gets that. You want the belief in the customer’s mind that there is a good deal or opportunity, but you have tell them the truth,” Whann said.

He also explained that in the digital age, it is becoming harder and harder to “fool” a consumer.

“Today, in this day and age, you are praying on someone naivety in thinking they are somehow getting the deal of their lifetime on this car,” Whann said. “But, now, more than ever, in this electronic age, it is so easy for people to check into these things and to get information on them. There is no getting around it; you are going to get caught.”

Whann went on to say there is no “shortcut” to holding a successful event sale.

“If you want to have a valid event sale, and you are overstocked or you are going to get aggressive in pricing or you have some additional lenders on hand,  you can tell the truth and the whole story and do it right,” he said.

Also, experienced dealers know their market best and what works for their audience, a fact they shouldn’t forget when working with advertising firms, Whann said.

If a marketing firm comes in and tells you they can sell half your monthly income in one weekend, for example, Whann said, dealers should “scratch their head” and wonder how exactly the company plans to do this.

“If it sounds too good to be true, it probably is,” he added.

So, what are some ways to make sure and avoid this type of problem?

“When all else fails, you want to keep yourself surrounded by advisors who understand the industry — from a business perspective, from a legal and regulatory perspective, from an accounting perspective. You need advisors who are able to tell you the right thing,” Whann said.

He also offered the following five questions to keep in mind when presented with a marketing or advertising plan by an outside firm:

1.    Is this something I can do as a dealer, without outside help?
2.    Are these people acting appropriately under my dealer’s license?
3.    Do we need to be licensed as a sales person?
4.    Are there any problems with the contracts and agreements?
5.    Are all the promotional and marketing materials accurate and in compliance with the law?

“The umbrella over this whole thing is simply tell the truth,” Whann concluded.

Editor’s Note: Stay tuned to Auto Remarketing for more information on this case as well as tips and tools from dealers and advertising experts on how best to advertise a weekend event sale.

Sarah Rubenoff can be reached at srubenoff@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.