Refresher on Texas Advertising Rules
There is a lot of confusion in the market surrounding advertising vehicles in Texas. It is important to remember that advertising rules are VERY DIFFERENT for new car dealers vs. independent car dealers. We are constantly bombarded with advertising from new car dealers utilizing the terms “discount”, “rebate”, “sale price” etc.Unfortunately, used car dealers may NOT use the same terms frequently used by franchise dealers. This is based in part on what the rebate or discount is based on. New cars have Manufacturers Suggested Retail Price or M.S.R.P. to have an objective comparison. There has also been some concern by regulatory agencies such as the Federal Trade Commission and Texas Department of Motor Vehicles of “bait and switch” tactics utilized by some dealers. Once a used car is listed at a lower price it must be sold at the lower price.
Relevant rules for automobile dealers may be found in Texas Administrative Code – Chapter 215 Subchapter H. Of particular interest, please note subsection (e) below:
(a) When featuring a sales price of a new or used motor vehicle in an advertisement, the dealer must be willing to sell the motor vehicle for that featured sales price to any retail buyer. The featured sales price shall be the price before the addition or subtraction of any other negotiated items. Destination and dealer preparation charges must be included in the featured sales price.
(b) The only costs and charges that may be excluded from the featured sales price are:
(1) registration, certificate of title, or license fees;
(2) taxes; and
(3) other fees or charges that are allowed or prescribed by law.
(c) A qualification may not be used when featuring a sales price for a motor vehicle such as "with trade," "with acceptable trade," "with dealer-arranged financing," "rebate assigned to dealer," or "with down payment."
(d) Advertising an "internet price," "e-price," or using similar terms that indicate or create the impression that there is a different or unique sales price for an online or internet consumer or transaction is prohibited.
(e) A savings claim or discount offer is prohibited except to advertise a new motor vehicle. No person may advertise a savings claim or discount offer on a used motor vehicle.
(f) Statements such as "up to," "as much as," and "from" shall not be used by a dealer in connection with savings claims or discount offers.
(g) The savings claim or discount offer for a new motor vehicle, when advertised by a dealer, must be the savings claim or discount available to any and all members of the buying public.
(h) If an advertisement includes a savings claim or discount offer, the amount and type of each incentive that makes up the total amount of the savings claim or discount offer must be disclosed.
Again, all advertised statements and representations must be accurate, clear, and conspicuous and all language and terms, including abbreviations, must be used with their common or ordinary usage and meaning (plain language). Remember to advertise a used vehicle for sale, the dealer MUST have the vehicle in their possession at the time of the advertisement AND the title must be assigned to the dealer. Chapter 2301 of the Texas Occupations Code notes that “a dealer may not use false, deceptive, or misleading advertising relating to the sale or lease of a motor vehicle” See 2301.351(3)