Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO: KRS 190.010-190.990
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
190.040(1)(i) requires that
a motor vehicle dealer shall not engage in false or misleading advertising.
KRS 190.073 requires
the Motor Vehicle Commission to promulgate administrative regulations for the
purpose of carrying out the provisions of KRS Chapter 190. This administrative
regulation establishes examples of what constitutes false or misleading
advertising.
Section 1. Definitions.
(1) "Advertising" means any oral, written, or
graphic statement, whether physical or electronic, which offers vehicles for
sale or lease or that indicates the availability of vehicles, including any
statements or representation made in a newspaper, pamphlet, circular, other
publication, in radio or television, social media, on the internet, or
contained in any notice, handbill, sign, billboard poster, bill catalog,
letter, or business card.
(2) "Bait
advertising" means:
(a) An alluring but
insincere offer to sell or lease a product, to obtain leads to persons
interested in buying merchandise of the type advertised and to switch consumers
from the advertised product to another product for a higher price or on a basis
more advantageous to the dealer; or
(b) Advertising a new motor vehicle at a
price that does not include all equipment listed as standard equipment by the
manufacturer without disclosing that fact, or failing to disclose any of that
equipment for the purpose of advertising a low price and baiting the customer
into charges above the advertised price.
(3) "Clear and conspicuous" means a
statement, representation, or term differing from other statements,
representations, or terms being made so as to be readily noticeable to the
person to whom it is being disclosed either by its size, sound, length of time,
color, placement in the ad, or other features.
(4) "Demonstrator" or "program" means a
vehicle of the current or preceding model year that has never been the subject
of a retail sale, and that has been used by dealership personnel for
demonstrating performance ability.
(5) "Executive vehicle" or "official vehicle"
mean, if so advertised, a vehicle that has been used exclusively by an
executive or executives of the dealer franchisee.
Section 2. A licensee shall not use
misleading or bait advertising. A practice shall not be pursued by an
advertiser if the practice will discourage the sale of the advertised product
with the intent and purpose of selling other merchandise instead.
Section 3.
(1) An advertisement for the sale or lease of
new and used vehicles placed by or on behalf of a licensee shall clearly and
conspicuously identify the dealership by including in the text of the
advertisement the business name as it appears on the dealer's license. In a
classified newspaper or similar on-line advertisements, the licensee may, as an
alternative, use the word dealer in the text of the advertisement.
(2) The advertisement of any dealership
inventory on a non-company social media account shall be considered an
advertisement placed on behalf of the dealership subject to these regulations
and the provisions of KRS Chapter 190.
(3) A new or used motor vehicle dealer
advertising the sale or lease of new or used motor vehicles at more than one
(1) licensed location shall use in the text of the advertisement the business
name for each advertised location as the name appears on the dealer's license
for the locations where the advertised vehicles are located.
(4) A new motor vehicle dealer advertising
the sale or lease of new motor vehicles at more than one (1) licensed location
shall specifically identify the makes of vehicles available at each advertised
location.
Section 4.
(1) Except as established in subsection (2)
of this section, if a specific new motor vehicle is advertised by a dealer as
being for sale, that vehicle shall be:
(a) In
the possession of the dealer;
(b)
Shown; and
(c) Sold as advertised,
illustrated, or described at the advertised price and terms, at the advertised
address.
(2) The
advertisement for the sale or lease of a specific new motor vehicle that is not
in stock on the date of the advertisement shall:
(a) State:
1. Not in stock;
2. Order yours now; or
3. Other phrases of similar import that
clearly indicate the vehicle is not available for immediate delivery;
and
(b) Disclose a
reasonable estimate of the period of time in which delivery will be
made.
(3) If an
advertisement pertains to one (1) specific vehicle only, this fact shall be
disclosed in the advertisement. Listing a stock number shall be adequate
disclosure.
Section 5.
The following statements shall not be used in advertising by a dealer, unless
the statements are absolutely true with no qualifications:
(1) Statements such as:
(a) Write your own deal;
(b) Name your own price;
(c) Name your own monthly payments;
(d) Appraise your own car; or
(e) Statements with similar
meaning;
(2) Statements
such as:
(a) Everybody financed;
(b) No credit rejected;
(c) We finance anyone; or
(d) Other statements representing or implying
that no prospective credit purchaser will be rejected because of his inability
to qualify for credit;
(3) Statements representing that no other
dealer grants greater allowances for trade-ins, however stated; and
(4) Statements implying that because of its
large sales volume, a new vehicle dealer is able to purchase vehicles for less
than another dealer selling the same make of vehicles.
(5)
(a)
Claims such as first, largest, biggest, or words of similar import shall not be
used unless they are valid at the time the claims are made.
(b) If the claims are qualified with regard
to area, location, time, or other limitations, upon the direction of the
commission, the dealer shall incorporate within the advertisement the terms of
the qualification.
Section
6. Retail advertising shall not state or imply that the dealer:
(1) Is selling vehicles in a manner other
than through normal retail channels, including use of terms such as wholesale,
factory sale, factory discount; or
(2) Has a special relationship or connection
to the manufacturer that other dealers do not have, including use of terms such
as factory outlet, factory branch, or similar terms used in connection with the
manufacturer's name.
Section
7. It shall be false or misleading advertising to advertise the
sale of a vehicle having only a Kentucky salvage title unless the advertisement
conspicuously discloses that the vehicle has a salvage title and that the
vehicle cannot be registered and operated on the roadways in Kentucky unless
the vehicle is repaired and issued a rebuilt title.
Section 8. Because the amount of trade-in
allowance will vary depending on the condition, model, and age of a buyer's
vehicle, no specific trade-in amount or range of amounts shall be used in
advertising.
Section 9.
(1) An asterisk (*) may be used to give
additional information about a word or term.
(2) Use of one (1) or more footnotes or
asterisks which, alone or in combination, contradict, confuse, materially
modify, or unreasonably limit a principal message of the advertisement shall
not be used.
Section 10.
(1) Any disclosure appearing in
advertisements shall clearly and conspicuously feature all necessary
information in a manner that can be read and understood or that can be heard
and understood.
(2) The minimum
duration of printed language in a television advertisement shall be five (5)
seconds for every three (3) lines.
Section 11. If an advertisement contains an
offer of a discount on a new vehicle, the amount of the discount shall be
stated by reference to the actual dollar figure of the manufacturer's suggested
retail price of the vehicle plus the retail price of dealer-added
options.
Section 12. The words
free, gift, or words of similar import may be used in advertising only if the
advertiser is offering an unconditional gift.
Section 13. The manufacturer's suggested
retail price (MSRP) dollar figure of a new motor vehicle if advertised in local
media by a manufacturer, distributor, or regional advertisement council or
association shall include all costs and charges for the vehicle advertised
including destination charges if those charges are uniform regardless of
destination throughout the state. Destination charges subject to variance
within the state and dealer preparation charges may be excluded from the price,
if the advertisement conspicuously states that the costs and charges are
excluded.
(1) If the price of a vehicle is
advertised in local media by a licensee, the vehicle shall be fully identified
as to year, make, model, and if new or used.
(2) The stated price shall include all
charges that the customer is required to pay for the vehicle, including freight
or destination charges, dealer preparation, dealer handling, additional dealer
profit, additional dealer margin, and undercoating or rustproofing if the
vehicle is already so equipped.
(3)
The advertised price at which the dealer is advertising a particular motor
vehicle shall be the price before consideration for a down-payment, a trade-in
allowance, or other similar allowances.
Section 14. If the words list or sticker or
words of similar import are used in a new motor vehicle advertisement, the
words shall only refer to the actual dollar figure of the manufacturer's
suggested retail price (MSRP) plus the retail price of dealer-added
options.
Section 15. If any
advertisement relates to a lease, the advertisement shall clearly and
conspicuously disclose that the advertisement is for the lease of a
vehicle.
Section 16. A dealer
offering to sell a demonstrator, program, official, or executive vehicle shall
clearly and conspicuously identify former use.
(1) A demonstrator shall be offered for sale
as such only by a dealer who holds a valid sales agreement or franchise for the
sale of the same line make of motor vehicle.
(2) A vehicle advertised as official or
executive vehicles shall not have been sold or leased to a retail customer
prior to the appearance of the advertisement.
Section 17. Motor vehicle financing shall not
be advertised at a reduced interest rate if the cost thereof would be directly
or indirectly borne by the buyer unless the advertisement discloses that rate
shall affect the negotiated price of the vehicle to the buyer.
Section 18. In any action pursuant to this
administrative regulation, truth shall be an absolute defense.
STATUTORY AUTHORITY:
KRS
190.015,
190.020,
190.030,
190.040,
190.058,
190.073