BHPH Dealer Websites: Dos and Don’ts

By Jeffrey Bellant October 19, 2023
 When dealerships offer a “down payment” deal on their website it should include the price, the down payment, the terms and APR.  Without the inclusion of the APR a dealer could be in compliance violation. The dealer could use an example of a deal that includes this information. When dealerships offer a “down payment” deal on their website it should include the price, the down payment, the terms and APR. Without the inclusion of the APR a dealer could be in compliance violation. The dealer could use an example of a deal that includes this information.

Leaders from Texas-based Ignite Consulting Partners offered some dos and don’ts for dealer websites during one of its monthly webinars earlier this year. Steve Levine, chief legal and compliance officer, and Richard Hudson, managing partner, were asked to look at websites of some 20 groups to determine any potential problems. Generally speaking, dealers are so focused on selling cars that the person in charge of the website forgets about the other parts of the business.

In this experiment, however, the dealers were part of 20 groups and generally did a better job of avoiding compliance problems than a typical dealer, Levine said. He kicked off the discission with a warning about “trigger terms,” using terms such as “down payment,” payment terms,” etc., which when used require the use of APR.

In almost every case of this experiment, the typical trigger term used was “down payment,” such as “this car is available for $1,200 down.”  When dealers include a down payment, it should include the price, the down payment, the terms and APR. The dealer could simply use an example of a deal that includes this information, “If you want to have a banner of something on the home page, “Down payments starting as low as…” that’s OK,’ Levine said. “That’s not a violation because it’s not talking about a specific vehicle being advertised.”

Steve Levine, chief legal and compliance officer.

However, the problem arises when a dealer advertises down payments starting at $300, when they haven’t done a car deal with a $300 down payment all year, he said. “You want it to be representative of what you’re actually doing,” Levine said. “This is a big one to pay attention to because the regulators are all over payment terms.” Another key issue is the privacy notice. These must be handed out to the buyer, Hudson added that when it comes to your website, you have to make sure disclosures and information on privacy notices, etc., are clear and conspicuous – easy to find. Levine added he often finds the privacy notice at the bottom of the scroll in very tiny print, which is not what you want. “Put it in the ‘About Us’ section so that it’s prominent,” Levine said.

Another issue is that the website provider may also put a privacy notice on the site, making it unclear whose privacy notice is being referred to. Websites also have to be careful when they market the term “bad credit,” which ends up on a lot of buy-here, pay-here dealers websites. “I have to tell you folks, I really wouldn’t be leading with ‘bad credit,’ Levine said. “They already know they have bad credit. Why do you want to make them feel bad?” Hudson said part of avoiding compliance issues is having good relationships with customers. That happens when you focus instead on providing a solution to their financing problem, not putting a spotlight on their past credit problems.

Levine also warned dealers who advertise “credit repair” or “credit building.” This might include the dealer who promises that if the customer paid on time, their credit score would go up. “Not necessarily,” Levine said. “What if they’re paying you, but not paying anyone else?” Hudson said the other issue is that the message implies that the dealer is either affiliated or part of a credit repair organization. “(Those companies) are subject to some pretty heavy regulation, so you want to avoid that,” Hudson said.

In fact, if a dealer is furnishing data to one of the credit reporting agencies, there is an agreement and you may be violating it by making these types of promises, Hudson added. Levine reiterated that many problems occur when dealers aren’t aware of what’s on their sites, such as in the FAQ section which may include promises or information the dealer isn’t aware of. The loose use of the term “warranty” is also something used vehicle dealers should avoid. “It’s very important to say, ‘limited warranty,’” Levine said. He added, however, dealers should heavily promote a limited warranty if they have one. “If you have a limited warranty, I don’t even care if it’s a 30-day 1,000 mile warranty, that puts you in the top (percentage) of used car dealers,” Levine said. “If I was in your shoes, I would tout (my limited warranty) and sing it’s praises. “It’s a difference maker.”

He said it’s a big opportunity for dealers to draw in customers so they should promote it. One problem Levine has observed involves discrepancies between what the website says about the limited warranty and what the actual documents the customer signs say about the dealership’s limited warranty. Service departments are another area that dealers don’t promote them enough. “That is a defining characteristic and you have to let folks know (about it),” Levine said. “This is an opportunity to separate yourself from the pack.”

However, Ignite Consulting Partners also sees a lot of complaints about scheduling appointments or the dealership being backed up. Using the website to encourage customers to schedule appointments in advance and explaining that it gets busy near the weekend, etc. “That’s the No. 1 complaint, “Hudson said. “It has to do with setting expectations. Set realistic time frames.” Another issue that draws scrutiny is the issue of “certified” vehicles. “The Federal Trade Commission (FTC) does not like certified claims unless it’s really accurate,” Levien said. “For instance, if you’re part of the NIADA CPO program, that’s fine, You can brag about that all day long.” But some dealers identify a car as “certified” without defining what makes it certified.

Hudson said dealers who offer a 100-point check and offer an itemized checklist should boost those claims. Dealers who lease, should also advertise it prominently, Levine said, but make sure they are upfront and honest about what that entails. Leasing is not common everywhere and it’s even more uncommon on the used car side.  Hudson added dealers also have to be careful to explain what leasing is and why it might be right for customers. Having an FAQ about leasing prominently on the website helps.

Avoid deceptive advertising on leasing because federal and even state regulators are looking at dealers who call something leasing which is actually a retail installment contract. Finally, testimonials are another area dealers should be careful about when using. “The FTC is very clear about what its expectations are for reviews and testimonials,” Levine said. “They have to be transparent. You can’t just use the five star ones.”

For example, Levine saw a dealer whose most recent testimonial was from 2021, which looks like a dealer is cherry-picking them. Also, dealers who offer any compensation for providing a review must disclose that. Hudson said this is a very active area in the law, as the FTC hand other regulators have been adding guidance on this issue over the past couple of years. 

It’s also important to make sure consumers understand when they click on a tab to fill out a credit application that they understand they are filling out a credit application. Sometimes it’s not clear and that could be a problem.

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Last modified on Friday, 20 October 2023 16:31