Ensuring Compliance with Illinois Motor Vehicle Advertising Laws

The following article will explain the various laws and regulations related to motor vehicle advertising in Illinois. However, this information is not all-encompassing, and as always dealers should consult with legal counsel to ensure their specific advertising complies with Illinois Law. If you have questions regarding Illinois dealership law, contact Sarah Reusche at sreusche@lavellelaw.com to schedule a consultation.

General Advertising Practices

It is an unfair and deceptive practice to advertise or sell a vehicle without clearly and prominently disclosing all important details right from the start of the offer. Dealers should not use footnotes or asterisks that might confuse or change the main terms of the ad or use a font size smaller than 10 point that is hard to notice.

Dealers should also avoid using inaccurate photos or illustrations, such as showing a fully loaded car when the offer is for a basic model. It is also an unfair and deceptive practice to use confusing or uncommon abbreviations that most people would not understand.

Price Advertising

Advertisements must include all costs to the purchaser in the total price of the vehicle, except for taxes, license and title fees, and documentary service fees if clearly disclosed otherwise. Advertised prices must be honored, allowing purchasers to buy vehicles at the stated price.

Limitations to advertised prices must be clearly and prominently disclosed. For example, claims of "lowest prices" or similar must be substantiated by continual monitoring of competitors' prices and verifiable evidence. Ads with price matching statements like "meet your best offer" must disclose a price matching policy that is consumer friendly.

Price comparisons with higher prices must clearly state their basis, except for certain conditions in the new vehicle context. Comparisons with prices offered by other dealers must be fair and clearly disclosed, or the dealer must specifically identify the other dealer. For new vehicles, claiming savings based on a list price is deceptive unless it is the MSRP or the dealer's former price. Used vehicle price comparisons must be based on a recognized price guide and clearly disclosed, with a disclaimer about varying vehicle values.

Certain terms like "sale" or "discount" must reflect a reasonable reduction from the regular price, with a 5% reduction considered reasonable. Terms like "sale" or “discount” must clearly specify how long they last and which vehicles are included unless the model cannot be reordered from the manufacturer.

Claims of "liquidation sale" or similar must accurately reflect the dealer’s intention to cease operations after disposing of vehicle inventory. And range-based pricing claims must disclose the highest price or lowest discount in the range, and a reasonable number of vehicles at the largest discount must be available.

Terms like "dealer’s cost" must clarify that the dealer's profit is not limited to the amount over an invoice, unless specific conditions are met. Also, "buy-down" rates must disclose if not sponsored or subsidized by the manufacturer, and below-market finance rates must comply with federal lending regulations.

Other Advertising Practices

Demonstrator vehicles must clearly disclose their year, make, model, and demonstrator status. Executive or official vehicles can only be advertised if exclusively used by designated executives or as promotional vehicles. Vehicles previously leased or rented must be clearly labeled as "used" and disclose relevant details.

Cash rebates must be solely funded by the manufacturer and disclosed accordingly. Advertised prices or payments after deducting rebates must be available to all eligible consumers. Also, trade-in allowances must be clearly specified without range ambiguity. Claims of "no money down" must not require any down payment in any form (i.e. financing or cash).

Advertised prices based on shopped price or surveys must meet strict criteria including but not limited to being recent and independent. Also, claims of special manufacturer relationships must not imply greater authority than other dealers.

Additional costs for warranties or services must be disclosed and agreed upon before sale. Offers of free prizes or gifts with vehicle purchase must disclose all terms upfront. Warranties can be included with purchases but cannot be advertised as "free”.

Credit Sales Advertising

Closed-end credit terms cannot be advertised without clearly disclosing: (1) the down payment amount or percentage, repayment terms, and annual percentage rate (APR); (2) for balloon-note financing, the final amount owed at the end of the payment schedule near the triggering terms; and (3) the details of any manufacturer's tiered financing offers. Advertised credit terms must be available to consumers.

Finance rates must be disclosed with applicable conditions such as: (1) the limitations to specific models; (2) the potential price increases due to dealer contributions; (3) the requirements to purchase additional options or services; (4) the impact on final vehicle or option/service prices; (5) the expiration dates or other time-limited conditions; and (6) any other significant terms affecting rate availability. Terms like "bank rates" can only be used if offered by a bank, bank association, or authorized trust company in Illinois.

Assistance with Compliance

Failure to comply with these laws can have astronomical effects on dealerships such as penalties, litigation costs, increased exposure, etc. Legal counsel well-versed in dealership law serves as a proactive partner in ensuring that dealers not only meet but exceed the standards set by motor vehicle advertising rules and regulations, thereby protecting dealers from legal risks and enhancing their reputation with consumers.

If you have questions regarding Illinois dealership law, contact Sarah Reusche at sreusche@lavellelaw.com to schedule a consultation.