DMV Advertising and Sales Practices 3 — Questions and Answers
Question 1: A salesperson tells a customer a used vehicle has never been in an accident when they have no knowledge of the vehicle's history. This statement is:
- Acceptable puffery
- A misrepresentation that could expose the dealer to liability (Correct answer)
- Required disclosure under the Buyers Guide
- Protected free speech
Correct answer: A misrepresentation that could expose the dealer to liability
Making a definitive claim about accident history without verification is a misrepresentation that can expose the dealer to legal liability.
Question 2: The term 'invoice price' in advertising refers to:
- The price the dealer charges the customer
- The manufacturer's suggested retail price (MSRP)
- The price the dealer paid to the manufacturer or distributor (Correct answer)
- The price after all rebates are applied
Correct answer: The price the dealer paid to the manufacturer or distributor
Invoice price refers to the amount the dealer was charged by the manufacturer or distributor, not the final consumer price.
Question 3: An advertisement uses fine print to contradict or take back a bold headline claim. Under FTC guidelines, this practice is:
- Acceptable as long as the fine print is readable
- Permissible if the headline is technically true
- Deceptive because disclaimers cannot contradict the main message (Correct answer)
- Required to balance promotional content
Correct answer: Deceptive because disclaimers cannot contradict the main message
The FTC holds that fine print disclaimers cannot be used to contradict a headline claim — the overall net impression must not be deceptive.
Question 4: Which of the following is an example of permissible 'puffery' in automotive advertising?
- 'This vehicle gets 35 MPG on the highway'
- 'Lowest prices in the state' (Correct answer)
- 'Certified by CARFAX as accident-free'
- 'Zero dealer fees on all vehicles'
Correct answer: 'Lowest prices in the state'
Puffery involves vague, subjective boasts like 'lowest prices' that no reasonable consumer would take as a factual claim — unlike specific mileage or certification statements.
Question 5: A dealer advertises a vehicle at a 'sale price' that is actually the standard everyday price. This violates advertising rules because:
- Sale prices must be approved by the manufacturer
- Implying a discount when none exists is deceptive (Correct answer)
- All prices must be listed as MSRP
- Sale terms must last at least 30 days
Correct answer: Implying a discount when none exists is deceptive
Using the word 'sale' implies a reduction from a former price — advertising a regular price as a sale price is deceptive.
Question 6: A dealer includes a $500 administrative fee in the final contract that was not mentioned in the advertisement. This practice is best described as:
- A standard closing cost acceptable in all states
- A hidden fee that may violate advertising and consumer protection laws (Correct answer)
- An optional charge that is customary in the industry
- A permissible dealer markup disclosed at delivery
Correct answer: A hidden fee that may violate advertising and consumer protection laws
Failing to disclose mandatory fees in advertising and then adding them at closing can constitute deceptive advertising and violate consumer protection statutes.
Question 7: Comparative advertising that makes specific claims about a competitor's product must be:
- Pre-approved by the competitor being compared
- Filed with the state DMV before publication
- Truthful, substantiated, and not misleading (Correct answer)
- Limited to price comparisons only
Correct answer: Truthful, substantiated, and not misleading
Comparative advertising is legal but must be truthful, based on substantiated facts, and must not create a false or misleading impression about the competitor.
DMV Advertising and Sales Practices 3
A salesperson tells a customer a used vehicle has never been in an accident when they have no knowledge of the vehicle's history.
This statement is: