Current through Register Vol. 63, No. 9, September 1, 2024
(2) Definitions: For purposes of
this rule, the following definitions shall apply:
(a) "Advertisement," including the terms
"advertise" and "advertising," means any oral, written, pictorial or graphic
notice given in a manner designed to attract public attention and includes, but
is not limited to, public broadcasts, mailings, publications, internet sites,
other internet applications, email, facsimiles and published notices. It
includes, but is not limited to, any statement or representation made in a
newspaper, magazine, or other publication; made on radio, television or
internet; made by instant messaging or text messaging; appearing in any notice,
handbill, sign, billboard, banner, poster, display, circular, pamphlet, flyer,
catalog, letter, direct mail piece, or other printed material; or contained in
any window sticker, price tag, or other point-of-sale display. Advertisement
does not include oral or written communications relating to the negotiation of
a specific transaction initiated by a consumer;
(b) "Advertiser" means the person on whose
behalf any advertising material is published and includes the advertising agent
(if any) used by the advertiser;
(c) "Advertising agent" means any person who
produces, promotes or assists in the sale, production, or placement of any
advertisement or participates in a sales event directly or through its
employees or agents, on behalf of any person;
(d) An "average" person, viewer or listener
means a person other than one allied with or employed by the motor vehicle
industry;
(e) "Broker" means a
motor vehicle broker as defined by ORS 822.047;
(f) "Buy-down rate" means a financing rate
which, due to a dealer's payment of finance charges to a third party, is below
the prevailing market financing rate;
(g) "Buy-rate" means the lowest interest rate
quoted to a dealer or broker by a financial organization for which a consumer
qualifies, based upon the consumer's credit history;
(h) "Capitalized cost" means the amount the
offeror places on a vehicle as the vehicle's value for the purpose of offering
the vehicle for lease to the public, not including any capitalized cost
reductions or taxes, title, license fees, lease acquisition, Department of
Environmental Quality fees, document processing fee, insurance premiums,
warranty charges, and any other product, service, or amount amortized in the
lease. The capitalized cost for the purpose of this definition is the
equivalent of the "offering price" for the purchase of a motor vehicle in a
sales transaction;
(i) "Capitalized
cost reduction" means the total amount of any rebate, cash payment, net
trade-in allowance or non-cash credit that reduces the capitalized
cost;
(j) "Clear and conspicuous,"
including the terms "clearly" and "conspicuously," means that a message,
statement, information, representation or term is conveyed in a manner that is
readily noticeable, will be easily understood by the average person, and is in
a meaningful sequence. In order for a message to be considered "clear and
conspicuous," it shall, at a minimum:
(A) Not
contradict or substantially alter any terms it purports to clarify, to explain
or to which it otherwise relates;
(B) Be in direct proximity to the message,
statement, information, representation or term it clarifies, modifies or
explains, or to which it otherwise relates;
(C) Use abbreviations or terms only if they
are commonly understood by the average person or approved by federal or state
law;
(D) In the case of radio
advertising:
(i) Include the information
required to be disclosed by law and all disclaimers, conditions and limitations
shall be spoken with sufficient deliberateness, clarity, speed and volume so as
to be audible and understandable by the average radio listener;
(ii) Not be obscured by sounds which
interfere with or distract from the disclosure; and
(iii) Provide all necessary information
regarding leases. Any information required in radio advertising by the Federal
Consumer Leasing Act and Oregon law and administrative rules shall be deemed to
be clear and conspicuous if the advertisement complies with 15 USC sec. 1667c(c) and also discloses the capitalized cost of the lease.
(E) In the case of television
advertising:
(i) Include the information
required to be disclosed by law and shall be completely disclosed audibly,
visually, or using a combination thereof;
(ii) If a visual message, be presented
unobscured by other images and in a size and time sufficient to allow an
average viewer to read with reasonable ease;
(iii) If an audible message, be presented
with sufficient deliberateness, clarity, and volume so as to be understood by
the average television listener unobscured by other sounds which interfere with
or distract from the disclosure;
(iv) Have as a minimum height for required
superimposed written copy ("super") in a television advertisement or
advertisements in any other audio-visual medium:
(I) For Standard Definition Television - no
less than 22 video scanlines for capital and lower case letters together, or no
less than 18 video scanlines for use of capital letters only;
(II) For High Definition Television - no less
than double the scanlines required for Standard Definition Television; and
(III) The supers must appear on
the screen for a duration sufficient to allow a viewer to have a reasonable
opportunity to read and understand the statement, representation or term.
(v) Be sufficient if the
super on-screen display time is no less than three seconds for the first line
of text and one second for each additional line. This is a rebuttable
presumption.
(F) In the
case of printed advertising:
(i) Include the
information required to be disclosed by law and shall be in direct proximity to
the terms it purports to clarify, to explain or to which it otherwise relates;
and
(ii) Be of sufficient
prominence in terms of print style, size and contrast as compared with the
remainder of the advertisement so as to be readily noticeable to an average
person in the audience to whom it is directed. Print size which is 8 point type
or larger in display advertisements which are less than 200 square inches in
size or print size which is 10 point type or larger in display advertisements
which are larger than 200 square inches in size shall be rebuttably presumed to
be of sufficient size to be readily noticeable.
(G) In the case of internet advertising:
(i) Include the information required to be
disclosed by law near, and when technologically possible, on the same screen as
the triggering claim;
(ii) Use text
or visual cues to direct consumers to scroll down a Web page when it is
necessary to view information;
(iii) When using hyperlinks to lead to
information required to be disclosed by law:
(I) Ensure that hyperlinks are obvious;
(II) Ensure that hyperlinks
appropriately convey the importance, nature and relevance of the information
they lead to;
(III) Include
consistent hyperlink styles and format;
(IV) Ensure that all hyperlinks are placed in
direct proximity to relevant information; and
(V) Ensure that hyperlinks take consumers
directly to the information on the click-through page.
(iv) Be displayed prominently prior to
purchase;
(v) Be prominently
displayed so the information is noticeable to consumers in relation to the
size, color and graphic treatment of other parts of the Web page;
(vi) Repeat information on lengthy Web sites
when there are multiple or repeated claims;
(vii) Include audio disclosures when audio
claims are made on the Web site and the audio disclosures must be presented in
a volume and speed so that consumers can hear and understand them;
(viii) Include visual disclosures that are
displayed for a duration sufficient for consumers to notice, read and
understand them; and
(ix) Use clear
language and syntax in such a manner that an ordinary consumer can understand
the information required to be disclosed by law.
OFFICIAL COMMENTARY: Each advertisement shall be
evaluated for its overall impression. The public should not have to weigh each
word, hunt for the hidden meaning of each statement, or search for
inconspicuous disclaimers. Advertisements which place material disclosures in
small print, or inconspicuously bury material at the bottom of the
advertisement are not clear and conspicuous. If on the other hand, the
information does not materially change, limit or alter the offer being made, it
can be placed at the bottom of an advertisement.
15 USC sec. 1667c(c) allows certain required lease disclosures
to be given to a consumer in a radio advertisement by referring the audience to
either a toll free telephone number or a written advertisement that appears in
a publication in general circulation in the community served by the radio
station on which such advertisement is broadcast. All lease advertisements on
the radio must include the following disclosures to comply with Oregon and
Federal law: that the transaction advertised is a lease; the total amount of
any initial payments required on or before consummation of the lease or
delivery of the property, whichever is later; the number, amounts, due dates or
periods of scheduled payments, and the total of such payments under the lease;
and the capitalized cost.
(k) "Dealer" means a person who buys, sells,
trades or exchanges, leases, displays or offers to buy, sell, trade or exchange
motor vehicles either outright or by means of any conditional sale, bailment,
lease, security interest, consignment or otherwise or who is a broker. "Dealer"
does not include any person excluded by ORS 822.015;
(l) "Document processing fee" means any
monies or other thing of value, which a dealer charges to prepare, submit or
prepare and submit documents pursuant to ORS 822.043;
OFFICIAL COMMENTARY: Oregon law and administrative
rules permit dealers to elect to prepare, submit, or prepare and submit
documents necessary to issue or transfer a certificate of title for a vehicle;
register a vehicle or transfer registration of a vehicle; issue a registration
plate; verify and clear a title; perfect, release or satisfy a lien or other
security interest; comply with federal security requirements; or render any
other services for the purpose of complying with state and federal laws related
to the sale of a vehicle. For providing this service, dealers may charge a
purchaser of a vehicle a fee for the preparation of those documents, not to
exceed the amount established by ORS 822.043. This fee is always negotiable;
otherwise it could be classified as a tax. A dealer can process the documents
without charging a fee. In addition to the document processing fee, dealers may
offer consumers the option of electronically filing their title and
registration documents using an integrator. Dealers may charge consumers an
additional fee for this service. Consumers must knowingly agree to pay the
additional fee for this electronic filing service. If a consumer does not agree
to pay the additional fee for the electronic filing service, a dealer may still
electronically submit title and registration documents at no additional cost to
the consumer.
(m)
"Extension sticker" means a label (other than a Monroney sticker or other label
bearing the manufacturer's suggested retail price), affixed to a new motor
vehicle, displaying the offering price of the motor vehicle;
(n) "False advertisement" means any
advertisement which is false, misleading or deceptive in a material respect. In
determining whether any advertisement is false, misleading or deceptive, not
only representations made or suggested by statement, word, design, device,
sound or any combination thereof will be taken into account, but also the
extent to which the advertisement fails to reveal facts material in light of
representations made;
(o)
"Financial Organization" means any person who finances a sale or lease of a
motor vehicle for a third party or purchases a retail installment contract from
a dealer;
(p) "Manufacturer" means
any entity which:
(i) Manufactures or
assembles new motor vehicles for sale or distribution;
(ii) Distributes new motor vehicles through
franchised dealerships;
(iii) Is
engaged in the business of importing new motor vehicles for sale or
distribution to dealers, through distributors, or to factory branches; or
(iv) Is a subsidiary of a
manufacturer including one that offers motor vehicle financing.
(q) "Manufacturer's Suggested
Retail Price" or "MSRP" means the Monroney price, or if there is no Monroney
sticker, then the total price of the vehicle after all factory installed
options and factory costs have been added together, less any option package
savings offered by the manufacturer;
(r) "Monroney sticker" means the label
required by the Automobile Information Disclosure Act,
15 USC
1232;
(s) "Motor Vehicle" means any self-propelled
vehicle normally obtained for personal, family, or household purposes,
including all terrain vehicles, snowmobiles, self-propelled motor homes,
personal watercraft, boats and, for the purposes of this definition, any motor
home, recreational vehicle or trailer pulled by a self-propelled vehicle. Motor
vehicle does not include aircraft;
(t) "Negative equity" means the amount by
which an existing lien on a trade-in vehicle exceeds the true market value of
the trade-in vehicle;
OFFICIAL COMMENTARY: In layman's terms, if a
consumer has negative equity on his/her vehicle, it means the consumer owes
more on the vehicle than it is actually worth. While the "true market value" of
a vehicle may vary, it can be determined by using a motor vehicle price guide
trade publication and the average sale price of the vehicle at regional vehicle
auctions. While these publications are relevant, they are not determinative.
Depending upon the supply and demand for a given vehicle, it could be worth
more or less than its "book" value.
(u) "Negative equity adjustment" means an
amount which is added to both the purchase or lease price of a vehicle and the
trade-in allowance for the trade-in vehicle in a transaction;
(v) "Offering price" means the full cash
price for which a dealer will sell or lease a motor vehicle to every consumer
or member of the general public without exception, excluding only taxes,
license and registration costs, Department of Environmental Quality (DEQ) fees
and a document processing fee;
OFFICIAL COMMENTARY: Examples of correctly
calculated offering prices are as follows:
(A) A car's MSRP is $10,000, license and
registration are $100, undercoat is $100, dealer-added options are $2,000 and
the document processing fee is $115. A financial organization offers a $1,000
rebate to qualified consumers. The offering price of the vehicle is $12,100.
The offering price cannot include the $115 document processing fee or the
$1,000 rebate that is not available to all consumers without exception.
(B) A motorcycle's MSRP is $5,000,
license and registration are $50, delivery, assembly and setup costs the dealer
$250, custom accessories are $500 and the document processing fee is $115. The
offering price of the vehicle is $5,750. The costs of delivery, assembly, setup
and all accessories must be included in the offering price in any advertisement
or quoted offering price given during the sales negotiation of the motorcycle
and cannot be added in as fees or extras after the selling price of the
motorcycle is agreed upon between the dealer and consumer. The advertised
offering price does not need to include the license and registration or
document processing fee. While the dealer may choose to prepare title and
registration documents and may charge a fee for this service, nothing in this
or any other rule requires a dealer to charge any document processing fee.
Whether the consumer will pay any fee for this service and, if so, its amount,
up to the maximum allowed by law, is always negotiable between the consumer and
the dealer.
(w) "Person"
means natural persons, corporations, trusts, partnerships, incorporated or
unincorporated associations, and any other legal entity except bodies or
officers acting under statutory authority of this state or the United States
and includes, but is not limited to, dealers, brokers, manufacturers,
publishers, advertisers or advertising agents;
(x) "Personal Watercraft" means a jet ski or
other aquatic device of similar design;
(y) "Publish" means to disseminate, mail, or
otherwise make available to the public at large, or any section of the public,
in whatever form and by whatever means any information;
(z) "Publisher" means any person who
publishes any advertisement;
(aa)
"Rebate" means:
(i) The payment of money to a
consumer or payment to a person on behalf of a consumer on the condition that
the consumer purchase or lease a motor vehicle; or
(ii) The return of any part of a payment made
by a consumer in conjunction with the sale or lease of real estate, goods or
services and includes, but is not limited to, an offer of a future cash refund,
a direct or indirect payment of money to a consumer or a voucher for future
payments.
(bb)
"Recreational vehicle" has the meaning given that term in ORS 650.300;
(cc) "Sale," "Sell" or "Buy" means
any transaction for the sale, purchase, trade, exchange or lease of a motor
vehicle;
(dd) "Spot Delivery" or
"Spot Delivered" means that a consumer has taken possession of a motor vehicle
from a dealer or broker and the consumer has committed to buy or lease the
vehicle, whether or not there is a finalized transaction or final approval of
financing;
OFFICIAL COMMENTARY: Spot delivery occurs when a
consumer signs a purchase order, lease agreement or retail installment contract
for a motor vehicle and the consumer takes possession of the vehicle "on the
spot," prior to a financial organization purchasing the retail installment
contract or lease agreement from the dealer or a consumer presenting a dealer
with payment for the full purchase price of the vehicle.
(ee) "Taxes, license and registration costs"
means those usual taxes, charges and fees payable to or collected on behalf of
governmental agencies and necessary for the transfer of any interest in a motor
vehicle or for the use of a motor vehicle;
(ff) "Used vehicle" means any vehicle which
has been previously:
(i) Delivered to any
person for his/her discretionary use for personal or business purposes and for
more than a test drive before a contemplated purchase or preparation for sale;
(ii) Titled or registered to any
person, whether or not it was used for the person's own discretionary personal
or business purposes; or
(iii) Spot
delivered.
OFFICIAL COMMENTARY: See Weigel v. Ron Tonkin
Chevrolet Co., 298 Or 127, 690 P2d 488 (1984). Vehicles that would be
considered "used" include, but are not limited to: new vehicles that are spot
delivered to a consumer, then subsequently returned to the dealer for any
reason, including, but not limited to, the inability of the dealer to sell the
retail installment contract; demonstrators and company cars that have never
been sold to a retail customer, but have been driven for purposes other than
test drives or moving, including use by the dealer, the dealer's employees, the
dealer's corporate officers or anyone else; and all vehicles that have been
driven more than the limited use necessary in moving or test driving a new
vehicle prior to purchase or delivery to a consumer.
(gg) "Vehicle identification
number" or "VIN" means a number, a letter, a character, a datum, a derivative,
or a combination thereof, used by the manufacturer or a Department of Motor
Vehicles for the purpose of uniquely identifying a motor vehicle. For the
purpose of this definition, any time a motor vehicle advertisement requires the
publication of a "vehicle identification number," use of the last six numbers,
letters or other characters will constitute compliance with the rule;
(hh) "Wholesale" means the sale of
motor vehicles, goods or services for resale by a dealer, broker or other
person, as opposed to the sale of motor vehicles, goods or services to the
ultimate consumer;
(ii) "Yield
Spread Premium" means the difference between a higher interest rate quoted to a
consumer by a dealer or broker and the buy rate offered to the dealer or broker
by a financial organization.
(3) Violations: Failure by a person, in the
course of the person's business, vocation or occupation, to comply with this
rule constitutes unfair or deceptive conduct in trade or commerce.
(a) Mandatory Posting of Offering Price - For
any motor vehicle offered for sale or lease in an advertisement that states an
offering price or capitalized cost for the motor vehicle, the dealer shall
affix to the motor vehicle a clear and conspicuous label or extension sticker
that states the advertised offering price of the motor vehicle listed in the
advertisement. If a motor vehicle bears a label which states a MSRP and the
MSRP is the offering price or capitalized cost for the vehicle, no additional
label or extension sticker is required;
(b) Extension Sticker - A dealer shall affix
an extension sticker to any motor vehicle offered for sale bearing a Monroney
sticker or a label stating a MSRP that states the offering price of the vehicle
if the offering price is greater than the Monroney sticker price or the stated
MSRP;
(c) Offering Price - Any
price stated in an advertisement or in a written or oral price quotation given
to a consumer shall be the offering price, excluding only taxes, license,
registration costs, DEQ fees and a document processing fee;
OFFICIAL COMMENTARY: A vehicle has one offering
price. This rule is to ensure that dealers do not add in hidden or undisclosed
costs after the price for a vehicle has been advertised or negotiated with a
consumer or charge different prices depending on where a consumer sees an
advertised offering price. Examples of potential violations are as
follows:
(A) A vehicle is advertised
or offered for sale at the dealership for $10,000. After the consumer accepts
the dealer's offer and agrees to purchase the vehicle, the dealer learns that
the consumer has a poor credit history. The financial organization to which the
dealer sells the retail installment contract charges the dealer a premium of
$500 to accept the retail installment contract. The dealer then tries to add
this $500 to the contract with the consumer as a "loan fee." This practice is
unlawful;
(B) A person advertises a
vehicle for $20,000 in the local newspaper. The vehicle has $1,500 worth of
after-market accessories on the vehicle. When the consumer arrives at the
dealership and wants to purchase the vehicle, the salesperson tells the
consumer that the price is $21,500 with the added accessories. This practice is
unlawful. If the dealer wants reimbursement for these options, the dealer
should ensure that amount is included in any advertised price;
(C) A motorcycle dealer charges $350 to set
up and assemble a motorcycle. This amount must be included in any offering
price advertised and cannot be noted only by disclosure at the bottom of the
advertisement with the use of an asterisk. Further, any price displayed on the
motorcycle or price quoted to a consumer during negotiations must include this
amount; and
(D) A vehicle is
advertised or offered for sale at the dealership for $10,000. After the
consumer accepts the dealer's offer and agrees to purchase the vehicle, the
dealer tries to add a $200 "processing fee" if the consumer wants to pay for
the vehicle by personal check, certified bank check, debit card or credit card.
A dealer may not add a fee for payment by personal check or certified bank
check. However, if "pass through" swipe fees for a debit card or credit card
are permitted under a merchant account agreement, those swipe fees must be
disclosed in advance and separately stated on the purchase order, lease
agreement and retail installment contract; a dealer may not add swipe fees to
the offering price or negotiated price.
(d) Limitations on Offering Price - An
extension sticker shall accurately itemize and describe the charge(s) added to
or subtracted from the MSRP to reach the offering price. No charge may be added
for goods or services not actually provided. No charge may be added for
services required by the manufacturer or distributor which are performed by a
dealer prior to delivery of a motor vehicle to a retail consumer. No charge may
be added for any overhead expense such as warehousing, flooring, advertising,
and clerical costs. No charge may be added for transportation costs charged by
the manufacturer or distributor to the dealer and included in the MSRP. In the
case of inland freight, setup and dealer preparation, the charge listed must be
the dealer's actual cost for freight from the port of entry to the dealership,
and the actual cost of setup and dealer preparation and not included in the
MSRP;
(e) Additional Dealer Mark-up
- If the offering price of a new motor vehicle is greater than the MSRP, the
portion of the difference shown on the extension sticker between the offering
price and the MSRP not representing additional goods or services shall be
described as "additional dealer profit," "additional mark-up" or by a term of
similar import;
(f) Unconscionable
Add-on Pricing - A person may not make false or misleading representations
concerning the nature or amounts of charges for additional goods, accessories,
services, products or insurance sold in conjunction with the sale or lease of a
motor vehicle by selling them at a price which is unconscionably higher than
the price used by the person for the sale of the same or substantially similar
goods, accessories, services, products or insurance to other consumers;
OFFICIAL COMMENTARY: This rule does not limit a
dealer's ability to mark up or down the selling price of a product or service
in the normal course of business. This includes offering special discounts to
repeat customers or volume discounts to purchasers of large quantities of
products or services. However, sometimes dealers try to unlawfully take
advantage of the most vulnerable consumers, such as those who are illiterate,
have a physical infirmity, have a mental handicap, are unable to understand the
English language or have other limitations.
(g) Disclosing Document Fee - A document
processing fee may be separately stated in all advertisements and sales
documents. If separately stated, the disclosure shall be clear and conspicuous;
(h) Document Fee Not Government
Required - A person shall not represent a document processing fee as a
governmental fee or one required by government;
(i) Vehicle Availability - A dealer or broker
may not advise prospective customers that an advertised vehicle is available
when the vehicle is not available for sale, or that an advertised vehicle is
not available for sale when the vehicle is available for sale;
(j) Undisclosed Price Packing - A dealer or
broker may not sell or lease a motor vehicle to a consumer with the cost of any
additional goods, accessories, services, products or insurance added to the
sale or lease, without the consumer's actual knowledge, written consent and
individual itemization of all such additional costs listed on any purchase
order, lease agreement and retail installment contract;
(k) Undisclosed Fee Payments - A dealer who
sells or leases a motor vehicle to a consumer and makes any payment to any
non-employee third-party in conjunction with the sale or lease, other than a
referral fee of $100 or less (also known as a "bird-dog" payment), must
specifically itemize such payment on the consumer's purchase order, lease
agreement and retail installment contract;
OFFICIAL COMMENTARY: This rule is intended to
apply to a payment of more than $100 made to a single individual or business
entity. For example, if two unrelated individuals refer a purchaser to a
specific dealership, each individual may receive a payment of $75 and the
dealer does not need to specifically itemize the payments. However, the dealer
may not make a payment of $75 to a dealership and $75 to the owner of the
dealership and fail to itemize the $150 payment on the purchase order, lease
agreement and retail installment contract.
(l) False Representations Regarding Financing
or Goods - A person may not falsely represent to a consumer that, unless the
consumer purchases additional goods, accessories, services, products or
insurance, the person will not sell or lease a motor vehicle to the consumer or
cannot provide credit or financing for the consumer. A person may not falsely
represent to a consumer that additional goods, accessories, services, products
or insurance are free or included in the price of a motor vehicle or the
financing;
OFFICIAL COMMENTARY: Nothing in this rule
prohibits a dealer from ensuring that a consumer has motor vehicle insurance
required by law or according to the terms of financing in order to protect the
collateral financed. No person, however, can make false statements regarding
any requirement to purchase products or services. This rule does not prohibit
dealers from adding tangible accessories, which enhance the value and
marketability of a vehicle to some of their inventory, and including the
tangible accessories in the offering price of the vehicle. If a dealer adds
high profit aftermarket products, including, but not limited to, paint
protector, door edge guards and glass etching, to its vehicles which do not
correspondingly increase the actual cash value of the vehicles, such practice
would be carefully scrutinized as a possible violation of this rule.
(m) Payment Price Packing - During
negotiations for the sale or lease of a motor vehicle, a dealer or broker may
not quote to a consumer a monthly payment or total price for the sale or lease
of a motor vehicle that includes the cost of any additional goods, accessories,
services, products or insurance, including, but not limited to, service
contracts, security products, protectants, credit life or gap insurance, that
are sold in conjunction with the sale or lease of a motor vehicle, unless the
dealer or broker also clearly and conspicuously separately delivers in writing,
during negotiations and prior to any purchase order, lease agreement or retail
installment contract being executed by a customer:
(A) The individual price of each additional
good, accessory, service, product or insurance; and
(B) The total cost of the lease or sale of
the vehicle and the monthly payment, without such additional items included.
OFFICIAL COMMENTARY: This rule addresses the
practice that is commonly referred to as "packing," or the "presumptive sale."
"Packing" is the deceptive practice of misrepresenting monthly payments or
total cost of a vehicle to consumers during motor vehicle sales and lease
negotiations in order to surreptitiously facilitate the sale of additional
motor vehicle related goods, accessories, services, products or insurance.
Consumers are entitled to be treated in a fair and non-deceptive manner during
negotiations to buy or lease a motor vehicle, including the right to receive
timely, accurate and non-misleading information about the cost of the vehicle
and all related goods, accessories, services, products or insurance they are
buying or leasing. Some dealers have used "packed" payment schemes and poor
disclosures to trick consumers into believing that services such as credit
insurance, vehicle service contracts, chemical protection, and security devices
are included at no additional cost or provided "free" in the purchase or lease
agreement; or that they are discounted when they are not. Others have quoted
monthly payments calculated upon interest rates far in excess of what they
believe will be the final interest rate or simply add an extra $40 or more to
the monthly payment than what is needed to cover the price of the vehicle. They
use this inflated quote in order to build in some "legroom" to later add other
optional products and services to the transaction with the extra cost hidden or
appearing lower to the consumer. Because the monthly payment does not increase
and because the consumer believes the products are "free" or discounted, most
consumers do not object when the products are included in the final contract.
(n) Disclosure of
Service Contract Coverage - A person may not misrepresent or fail to clearly
and conspicuously disclose the following terms or conditions of a service
contract sold in conjunction with the sale or lease of a motor vehicle: the
length of the coverage, what parts or systems of the vehicle are covered by the
contract, any exclusions in the coverage, and that there may be an existing
manufacturer's warranty which provides the same or similar coverage. If a
person advertises that a vehicle has an existing manufacturer's warranty or the
person knows a vehicle has an existing manufacturer's warranty, the person must
disclose the terms of the remaining warranty coverage;
(o) Disclosure of Material Nonconformities
and Defects - Prior to the sale or lease of a motor vehicle, a dealer or broker
shall disclose existing material nonconformities and defects about which the
dealer or broker knows or negligently disregarded when the dealer or broker
should have known. This includes, but is not limited to if repairs have not
been performed pursuant to a safety recall and the needed repairs can be
identified through a VIN search;
OFFICIAL COMMENTARY: Unless explicitly disclosed
prior to a sale or lease, a motor vehicle that is offered for sale or lease to
the public is represented, either directly or by implication, to be roadworthy
when it is sold, to have an unbranded title and to have no undisclosed material
defects. A dealer is not required to guarantee, warrant or represent that a
used vehicle will not have any mechanical problems or undetected material
defects once the vehicle is sold. However, for used vehicles, even if the
dealer states on the FTC Buyers Guide ("As Is") that the dealer is not
providing a warranty, the dealer must still disclose material defects about
which the dealer knew or should have known. See Parrott v. Carr Chevrolet, 156
Or App 257 (1998), aff. 331 Or 537 (2001) and Hinds v. Paul's Auto Werkstatt,
107 Or App 63, 810 P2d 874 (1991). For new vehicles, even if the dealer does
not need to disclose damage and repairs under ORS 650.155(6), the dealer must
still disclose material defects about which the dealer knew or should have
known. See BMW of North America v. Gore, 517 US 559 (1995). The dealer is in a
superior position to inspect and determine the condition of a vehicle prior to
marketing the vehicle. It is an easy matter, through a number of industry and
internet sources, for a dealer or broker to review a vehicle's title, damage
and ownership history. Examples of negligent disregard of some things that
should put a dealer on notice and trigger its duty to disclose might include,
but is not limited to, a large pool of oil or antifreeze under the vehicle,
dark colored smoke coming from an exhaust pipe, water stains on carpet or
doors, a different color paint than the body under the hood or in the trunk or
tires that are worn very unevenly. A dealer does not need to create an
exhaustive list of every ding, paint scratch, fabric tear or discoloration
clearly visible upon inspection by an average consumer. When a dealer sells a
vehicle to an individual that is registering the vehicle in a metro area that
requires that the vehicle pass DEQ emissions testing to be roadworthy, the
dealer must ensure that the vehicle can pass the DEQ emissions test at the time
of sale.
(p) False or
Unsubstantiated Representations - A person may not make a misrepresentation or
a false or incomplete statement of fact in conjunction with the sale or lease
of a motor vehicle, or any other representation or statement which the person
does not have sufficient information upon which a reasonable belief in the
truth of the representation could be based;
(q) False Statement of Broker Fees - A broker
may not misrepresent the source or nature of any profit, compensation or fee
which the broker will receive for its services or cause a consumer to believe
the services are free or at no cost to the consumer, when they are not;
OFFICIAL COMMENTARY: Brokers are a fiduciary of a
consumer on whose behalf they have agreed to negotiate the purchase or lease of
a vehicle. Unlike a dealer, a broker is not engaging in an "arm's length"
transaction. Brokers market their services to act in the consumer's best
interest. They are in an agency relationship. The consumer has a right to rely
on that relationship. For example, a broker who tells a consumer that the
broker may be receiving compensation from a dealer as part of the transaction,
when the funds for that payment were part of the total amount paid by the
consumer as part of the purchase or lease, is misrepresenting the nature of the
transaction and making a false statement as to the source of the funds the
broker will be receiving. The correct disclosure would be that the broker has
added its fee to the price which it negotiated with the seller on behalf of the
consumer. While ORS 822.047 does not require the broker to disclose the amount
of its profit, once the broker undertakes to act on behalf of a consumer, or do
anything that could cause a consumer to believe the broker is acting on the
consumer's behalf, the dealer or broker may no longer engage in self-dealing,
but must act in the consumer's best interest. Further, if a consumer asks what
the fee is for the service, the broker may not misrepresent the amount of the
fee being charged. In no case may the broker misrepresent the nature of the
charge, the amount of the fee or in what way the fee for the broker's service
is paid.
(r) Disclosure of
Dealer/Broker Status - A dealer or broker may not misrepresent or fail to
disclose whether it is acting as a dealer or broker when it has done anything
to cause a consumer to believe it is acting as a broker for the consumer in the
purchase or lease of a motor vehicle;
OFFICIAL COMMENTARY: It is well established in law
that a broker is in a fiduciary relationship with its client. As such, a broker
occupies a position of such power and confidence with regard to the property of
another that the law requires brokers to act solely in the interest of the
person whom they represent and in good faith. Fiduciary duties can be grouped
into three categories:
(A) Duty of
Loyalty. A fiduciary must act in accordance with the interests of the
beneficiary, and not his own interests;
(B) Duty of Candor. A fiduciary must not
withhold information from the beneficiary, particularly with respect to the
fiduciary's dealings with the beneficiary; and
(C) Duty of Care. A fiduciary must act with
some degree of care with respect to the beneficiary. This is usually formulated
as a duty to exercise the care that an ordinarily prudent person would in
similar circumstances.
In Oregon, only one type of dealer license is required, whether
the licensee acts as a dealer or broker. This can lead to confusion by a
consumer. If the consumer believes the person the consumer contacted was a
broker, the consumer expects that person to act in the consumer's best
interest. Brokers have an obligation to ensure the consumer knows what the
broker's business status is in relation to the transaction and whether the
consumer is dealing with it as a broker or a dealer. If a consumer first
contacts a dealer who does not have a vehicle in its own inventory that the
consumer wishes to buy or lease, and the dealer agrees to find, negotiate or
arrange the purchase or lease of a specific vehicle for the consumer from a
third party, a broker relationship may be created. If the dealer, without
placing any obligations on the consumer, finds the desired vehicle, purchases
it and places it into the dealer's own inventory, the dealer may thereafter
negotiate and sell or lease the vehicle to the consumer and still remain a
dealer. However, a dealer may become a broker under several circumstances,
including, but not limited to, the following: the dealer places a contractual
or monetary obligation on the consumer in order to arrange or negotiate the
purchase or lease of the vehicle; the dealer makes any statement which could
cause an average consumer to believe the dealer was acting as an agent of the
consumer (such as saying the dealer would negotiate the best price for the
transaction); or the dealer arranges the transaction for the consumer through
another dealer and receives any compensation from the consumer or other dealer.
(s) False Credit
Applications - No person shall for any motor vehicle transaction:
(A) Knowingly prepare, participate or assist
in the preparation or submission of a false, misleading or deceptive credit
application;
(B) Direct any person
to prepare or submit a false, misleading or deceptive credit application;
(C) Request or allow a consumer to
sign a blank or incomplete credit application; or
(D) Knowingly accept or submit a false,
misleading or deceptive credit application.
(t) Illusory or Deferred Down-Payments and
Hold Check Agreements - In any transaction for a motor vehicle:
(A) No person shall request or accept from a
consumer as payment for any part of a purchase or lease, or list the same as a
down payment on any purchase order, lease agreement, retail installment
contract, or credit application, any of the following:
(i) A promissory note for future payment,
without clearly disclosing on the purchase order, lease agreement, retail
installment contract, and credit application: the amount of the promissory note
given by the consumer, the terms of repayment, any interest rate and that such
amount is in the form of a promissory note;
(ii) A check that the person knows or should
have known is drawn upon an account with insufficient funds, without clearly
disclosing on the purchase order, lease agreement, retail installment contract,
and credit application: the amount of such check, the terms of repayment, that
there were insufficient funds in the checking account at the time the check was
drawn and the date the check is expected to have sufficient funds available for
its payment; or
(iii) A post-dated
check that the consumer has given the person for payment at a future date,
without clearly disclosing on the purchase order, lease agreement, retail
installment contract, and credit application: the amount of such check, that
the check is post-dated, and the date the check is due and payable.
(B) No person shall accept any
check listed in (t)(A)(ii) or (iii) above without having a written hold check
agreement, clearly disclosing on the purchase order, lease agreement and retail
installment contract all terms and conditions of the hold check agreement, and
disclosing the fact that there is a hold check agreement to any financial
organization to which credit is requested;
(C) No person shall accept any payment listed
in (t)(A)(i), (ii) or (iii) above without properly listing and identifying such
payment in any retail installment contract or lease agreement; and
(D) No deferred portion of a down payment may
be treated as part of the down payment if it is payable later than the due date
of the second otherwise regularly scheduled payment and is not subject to a
finance charge.
(u) Yield
Spread Premium Disclosure - Any dealer or broker that charges a consumer a
yield spread premium:
(A) Shall clearly and
conspicuously disclose in writing, prior to the consumer applying for credit or
executing a purchase order, lease agreement or retail installment contract:
(i) That the dealer or broker may receive
additional compensation from the consumer for arranging the sale of the retail
installment contract which may be in the form of a fee or additional loan
points; and
(ii) That interest
rates quoted by the dealer or broker may be negotiable; and
(B) Shall not, during the
negotiation for the sale or lease of a motor vehicle, quote a monthly payment
calculated using an interest rate that is more than three points higher than
the buy rate, unless the dealer or broker discloses in writing the yield spread
premium to the consumer, if the dealer or broker quoting the rate knows the
consumer's credit score or has the ability to obtain the consumer's credit
score at the time the monthly payment is quoted.
(v) Misleading or Deceptive Tying
Requirements - If a person represents or implies that the person requires a
consumer to purchase anything additional in conjunction with the sale or lease
of a motor vehicle, including, but not limited to, any goods, accessories,
services, products or insurance, the person will not sell, lease or enter into
a retail installment contract for any motor vehicle without the sale of such
additional items to every other consumer.
(w) Deceptive Financing Representations - No
dealer or broker shall falsely represent that a transaction is conditioned upon
the consumer entering into a retail installment contract with the dealer that
the dealer can sell to a financial organization when in fact the consumer is
able to finance the transaction through other means or sources;
(x) Unlawful Spot Delivery - No dealer or
broker shall spot deliver a vehicle to any consumer unless the dealer or broker
has a reasonable basis to believe that the dealer will either keep the retail
installment contract ("buy here pay here") or be able to sell the retail
installment contract to a financial organization at the exact terms quoted to
or agreed to by the consumer at the time of delivery;
(y) Misrepresentation Regarding Failure to
Sell Retail Installment Contract - No dealer or broker, who has spot delivered
a vehicle to a consumer and thereafter fails to complete the transaction in
accordance with the terms offered in the purchase order, lease agreement or
retail installment contract, shall misrepresent to a consumer why the
transaction cannot be completed according to the terms offered or agreed upon;
(z) Anti-Bushing Rule - In any
transaction in which the dealer or broker has spot delivered a vehicle to a
consumer and the consumer does not qualify for the terms offered, the dealer or
broker shall, prior to offering, negotiating or entering into new terms for the
purchase or lease of a vehicle:
(A) Inform
the consumer that the consumer is entitled to have all items of value received
from the consumer as part of the transaction, including any trade-in and down
payment, returned to the consumer;
(B) If the consumer is physically present
when the dealer or broker informs the consumer that the consumer does not
qualify for the terms offered, return all items of value received from the
consumer as part of the transaction; and
(C) If the dealer or broker informs a
consumer by telephone or other means, without the consumer present, that the
consumer did not qualify for the terms offered, clearly disclose the consumer's
right to receive the immediate return of all items of value given by the
consumer as part of the transaction when the consumer returns the spot
delivered vehicle. The consumer's down payment and trade-in must be actually
available to the consumer should the consumer wish to rescind the transaction
and not enter into a new transaction. If a consumer has paid a down payment
with a check, the dealer is not required to refund the down payment until the
consumer's check has cleared.
OFFICIAL COMMENTARY: ORS 646A.090 gives both
dealers and consumers specific rights when it is necessary to unwind a spot
delivery transaction. The consumer has an absolute right to walk away from the
deal and get back his/her trade-in and down payment if the dealer is not going
to honor the original agreed upon offer.
(aa) Unlawful Negative Equity Adjustment - No
person shall make a negative equity adjustment in the sale or lease of a motor
vehicle;
OFFICIAL COMMENTARY: Under Regulation Z, if the
amount of an existing lien exceeds the value of a trade-in, a creditor must
disclose the down payment as zero and not a negative amount on the down payment
line of the retail installment contract. To illustrate, assume a consumer owes
$10,000 on an existing motor vehicle retail installment contract or loan and
that the trade-in value of the motor vehicle is only $8,000, leaving a $2,000
deficit. The creditor should disclose a down payment of $0, not -$2,000.
(bb) Negative Equity
Disclosure - Any negative equity of a vehicle taken in trade as part of any
motor vehicle transaction shall be clearly and conspicuously disclosed in any
purchase order, lease agreement and retail installment contract.
(cc) Consignment Sales - If a person takes a
vehicle on consignment, the person may not falsely represent or imply the
amount that a potential purchaser has offered to pay for the vehicle or the
amount that the consignor has agreed to accept for the sale of the vehicle.
OFFICIAL COMMENTARY: When a dealer takes a vehicle
on consignment, the dealer is acting as an agent for the consignor. The dealer
may not tell a prospective customer that the consignor will not accept a
particular offering price for a vehicle when that offering price is above the
price the consignor has agreed to sell the vehicle for. Additionally, the
dealer may not misrepresent or fail to disclose an offering price to the
consignor. It is unlawful for a dealer who takes a vehicle on consignment to
ask the consignor to agree to a reduction in the amount listed in the
consignment agreement when the dealer has received an offering price from a
prospective customer that is higher than the amount the consignor has agreed to
sell the vehicle for because the dealer wants to negotiate a higher profit for
the dealer from the sale of the vehicle.
(dd) Dealer Cost - A dealer shall not
misrepresent or fail to disclose the MSRP of a new vehicle. A dealer shall not
state or imply that the MSRP is the dealer's cost.
OFFICIAL COMMENTARY: When negotiating the sale of
a vehicle, a dealer may not misrepresent or fail to disclose the MSRP of the
vehicle. For example, the Monroney sticker shows that the MSRP of a vehicle is
$30,000. The dealer posts an extension sticker that shows the dealer added
$5,000 of additional dealer profit and the dealer's offering price is $35,000.
When negotiating the vehicle, the dealer fails to disclose to the potential
purchaser that the MSRP of the vehicle is $30,000 and the dealer's offering
price is $35,000. It is unlawful if the dealer represents to the consumer that
the "market price" of the vehicle is $35,000 and the dealer is offering the
consumer a $3,000 savings by starting negotiations at $32,000. Similarly, if
the dealer obtains a vehicle through a dealer trade, the dealer must disclose
that the MSRP of the vehicle is $30,000 and cannot represent to the consumer
that the vehicle is $35,000 without also disclosing the MSRP and that the
$35,000 offering price includes $5,000 of dealer mark-up.
(ee) Provide Copy of Contract - A dealer must
provide the purchaser of a vehicle a copy of all documents signed or initialed
by the purchaser or that are material to the terms of the sale.
OFFICIAL COMMENTARY: When a consumer signs a
purchase order, lease agreement or retail installment contract, the dealer
should promptly provide a consumer with a signed copy of the agreement for the
consumer's records. The dealer should also provide the consumer with any other
documents that are material to the terms of the sale, such as a "we owe" form
that reflects that the dealer will perform post-delivery repairs.
(ff) Document Processing Fee - If
a dealer collects money from or charges a purchaser a document processing fee,
the dealer must prepare and submit all documents to complete the transaction as
permitted by law.
Stat. Auth.: ORS 646.608(1)(u)
Stats. Implemented: ORS
646.608(1)(u)
