Pub. 1 2012 Issue 1

Chairman’s Letter 18 San Diego Dealer T his past June, CNCDA met with several senior DMV enforcement officials to discuss key compliance issues. One topic that was discussed at length is the continued noncompliance by dealers in advertising rebates. This article is intended to clarify California law as it applies to disclosing rebates in advertisements. General Rebate Arithmetic Requirement Rebates are not discounts to the selling price of a vehicle, but payments for the vehicle from a third party. California law therefore prohibits dealers from advertising the net price of a vehicle after a rebate without showing the arithmetic required to get there. Specifically, dealers are prohibited from: “[Advertising] as the total sales price of a vehicle an amount that includes a deduction for a rebate. However, a dealer may advertise a separate amount that includes a deduction for a rebate provided that the advertisement clearly and conspicuously discloses, in close proximity to the amount advertised, the price of the vehicle before the rebate deduction and the amount of the rebate, each so identified.” Vehicle Code Section 11713.16(e) If a vehicle is offered for $30,000, but a rebate is available fromamanufac- turer for $2,500, the dealer cannot simply advertise the vehicle for $27,500, but must also show the rebate amount and the price before the rebate (i.e., “$30,000MSRP - $2,500Manufacturer Rebate=$27,500Net Price to Buyer”). So Many Rebates, So Little Advertising Space After the legislature established this prohibition in 2003, manufactur- ers diversified the types of rebate programs offered—first in the form of finance customer rebates, but more recently targeting very spe- cific groups of qualified purchasers, including military personnel, exist- ing customers (loyalty rebates), cus- tomers of different brands (conquest rebates), and college graduates. With multiple rebates available, and limited advertising space to provide a separate set of arithmetic for each rebate, some dealers have attempted to comply with the law by itemizing all available rebates in one set of arithmetic—resulting in a Advertising Hot Button: Rebate Rebate Rebate Rebate Stacking” By Jonathan Morr i son “ Several state and federal laws impose subjective standards prohibiting untrue or misleading advertisements