FTC AMENDS ADVERTISING RULES FOR LEASING

SIZE PRINT

On November 21, 1996, the FTC issued new rules concerning lease advertising. In addition to issuing new rules, the FTC was successful in getting GM, Honda, Isuzu, Mazda and Mitsubishi, along with two automobile dealerships to stop certain lease advertising that the FTC found to be deceptive and misleading.

The FTC is taking the position that manufacturers and dealerships may no longer disclose the requirements of Regulation Z of the Truth In Lending Act and Regulation M of the Truth In Leasing Act in small or fine print at the bottom of the ad. This type of small print has become known in the industry as mice print. Unfortunately however, the FTC is not willing to state what size print is acceptable.

The test they are going to apply to all ads is whether the require disclosures are readable and understandable. In other words, everyone will have a different definition of what is readable and understandable.

LEASE DOWN PAYMENTS

Even though the FTC is unwilling to state what size print is always going to be considered to small to use, they have issued some new rules that mandate certain information be of a size print that is comparable to other statements in the ad. Federal law now requires that whenever a lease ad refers to the amount of the down payment, the total amount due at lease signing must be disclosed in at least the same size print as the down payment amount. Therefore, if your ad states:

in the above size print, then you must also disclose in the same size print:

The total amount due at lease signing would be the amount the consumer must pay in order to leave the lot with the vehicle. This would include down payment, acquisition fees, security deposit, first month's payment, and any other charges assess to the consumer at or before they pick up the vehicle.

NEW TRIGGER TERMS

As you should know, "trigger terms" are words that if use in an ad, require certain other information to be disclosed. For purposes of leases, the three trigger terms are:

• the amount of any down payment
• the number of required payments, and
• the mention of any or no down payment.

Current federal law ( Regulation M) requires disclosure of the following terms in lease ads if any trigger term is used:

• the transaction is a lease
• the total due at lease consummation
• the number, amount, and due dates of scheduled payments
• the total of scheduled payments due under the lease
• the option, if any to purchase the vehicle
• the lease end charges, excess wear and tear, mileage and excess mileage charge.

• the transaction is a lease
• the total amount due at lease inception
• whether a security deposit is needed
• the number, amount and due dates of scheduled payments.