Understanding Dealer Compliance and Advertising Rules in California
For retail vehicle dealers in California, compliance with advertising and licensing regulations is essential. Dealers must ensure transparency and accuracy in their communications to maintain consumer trust and comply with state laws. The DMV Vehicle Industry Registration Procedures Manual §6.035 explicitly restricts used or nonfranchised dealers from selling new vehicles of a line-make they are not franchised to represent.
Key Advertising Requirements
- Dealer Identification: All advertisements must clearly include the dealership’s name and license number. Using terms like “Dlr” or “Dealer” is insufficient.
- Accurate Representation: Vehicles advertised must be in the current inventory and ready for sale. Advertisements should not misrepresent the vehicle’s model year, condition, or availability.
- Truthful Pricing: Price terms should be entirely transparent, and downpayments, APR, and total payment duration must be included. Claims of “No Down Payment” should only be made if the offer is truly applicable.
- Legal Compliance: Every advertisement is considered an attempt to induce a sale and is subject to detailed regulation under California Vehicle Code §§ 11713 and 11713.1, and Business and Professions Code § 17500.
Prohibited Advertising Practices
California law prohibits certain unethical advertising strategies, such as bait-and-switch tactics and the advertisement of unavailable vehicles. Dealers must refrain from using deceptive practices to lure customers under false pretenses. Violations can lead to significant penalties and enforcement actions, including the revocation of dealership licenses.
Enhancing Compliance Through Training
Ensuring all dealership staff understand and comply with advertising laws is crucial. Training programs should focus on adherence to legal standards, correct identification of inventory, and proper documentation. Regular audits and reviews help reinforce compliance and prevent violations.
For more detailed guidance, dealers should refer to the specific restrictions outlined in the DMV’s manual mentioned above. By rigorously adhering to these regulations, retail dealers can maintain good standing with regulatory authorities and build lasting trust with their customers.
