Advertising and Sales Practices Flashcards
7 cards from real DMV practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Advertising and Sales Practices flashcards as text
A dealer advertises a vehicle as 'certified pre-owned' when it has not passed the manufacturer's official CPO inspection. This is:
Answer: A misrepresentation that violates advertising standards
Using a manufacturer's CPO designation without meeting the manufacturer's program requirements is a misrepresentation of the vehicle's status and warranty coverage.
A dealer requires all customers to purchase add-on products (e.g., paint protection, gap insurance) as a condition of the advertised sale price. This practice may violate:
Answer: Consumer protection laws prohibiting tie-in sales and deceptive advertising
Requiring consumers to purchase unwanted add-ons as a condition of the advertised price is a form of deceptive pricing that may violate state consumer protection statutes.
The annual percentage rate (APR) disclosed in a vehicle financing advertisement must:
Answer: Be calculated according to the formula prescribed by Regulation Z
Regulation Z requires APR to be calculated using a standardized formula so that consumers can accurately compare financing offers across lenders.
A dealer's advertisement states 'no credit check required.' The dealer then pulls a consumer's credit report without their knowledge. This action potentially violates:
Answer: The Fair Credit Reporting Act (FCRA) and the advertised representation
Pulling a credit report without authorization violates FCRA, and the practice also contradicts the dealer's own advertised terms, creating dual legal exposure.
When advertising a lease, which disclosure is triggered under the Consumer Leasing Act if a specific payment amount is mentioned?
Answer: The total of all lease payments and the residual value must be disclosed
The Consumer Leasing Act (Regulation M) requires that ads citing a specific payment amount also disclose the total of all payments and the residual value at lease end.
A dealer's advertisement says 'all vehicles must go — selling at a loss!' In reality, the dealer maintains normal profit margins. This statement is best classified as:
Answer: A potentially deceptive factual claim if profit margins are normal
Claiming to sell 'at a loss' when actually making standard profits is a specific factual claim that could be found deceptive if consumers rely on it.
A dealer runs an ad with the headline '0 down, 0 payments for 90 days' but the fine print notes interest accrues from day one. The ad is MOST LIKELY:
Answer: Deceptive because the headline creates a false impression not cured by buried fine print
When a headline creates the impression of no cost, fine print disclosing accruing interest does not cure the deception — the net impression remains misleading under FTC standards.