Motor Vehicle Advertising Legislation Consumer Protection Office Manitoba

Motor Vehicle Advertising Legislation . . . . Consumer Protection Office Manitoba Justice October 10, 2017

Defining Advertising • "advertisement" means an advertisement placed by a motor vehicle dealer to induce a trade in a motor vehicle. • Does not currently include manufacturer advertisements • "trade" includes, without limitation, advertising, buying, selling, leasing or exchanging an interest in a motor vehicle or negotiating or inducing or attempting to induce the buying, selling, leasing or exchanging of an interest in a motor vehicle.

Examples of Advertisements • Newspaper, magazine, other publications • Direct mail, flyers • Website ads • Dealer website • Third-party websites (i. e. Kijiji, Autotrader) • • Social media Radio/TV ads Billboards Signs (including those displayed in or on a vehicle)

Advertising Requirements • “Clear, understandable and prominent” • In a print publication, information must be printed in a font face and size no smaller than those used in the publication’s classified advertisements. • Advertising limitations • If there are practical limitations on the amount of information that can be included in an advertisement, then it must state the means by which a consumer may obtain more information about the dealer or vehicle.

Advertising Requirements No false advertisin g No falsifying information No false information, representation or promises • These provisions apply to dealers and employees • Duty of dealer to ensure compliance

Applicable Legislation: Sales Transactions • The Consumer Protection Act (CPA) • Part II - Cost of Credit • Part XXIV – Motor Vehicle Advertising and Information Disclosure • Motor Vehicle Advertising and Information Disclosure Regulation • The Business Practices Act (BPA) • Generally applies in all business to consumer transactions

The Consumer Protection Act • The CPA and BPA apply to most Manitoba businesses • Provide protection for both goods and services • Examples: Vehicle sales, leases, repairs • The protections provided in the CPA only apply to consumers • The protections granted to consumers by the CPA cannot be nullified in a contract

“All-In” Pricing • If an ad displays a price for a vehicle, that price must include all mandatory fees the dealer intends to charge Mandatory fees include: • • Freight, inspection, administration fees Mandatory warranty or protection packages Pre-installed products and services i. e. etching, nitrogen, gas Government levies (air tax, tire stewardship fees, etc. ) • Clearly and prominently indicate if GST/PST are not included

All-In Pricing Exclusions • A dealer may sell additional products and services that have value – These are optional services not mandatory fees • The dealer must fully and truthfully explain each product and service and allow consumers the right to decline additional items

All-In Pricing: Advertised Price • An advertised price must not be calculated based on the inclusion of any deductions such as: • Value of a cash down payment, trade-in vehicle, or after-tax rebate • Consumer’s choice to enter into a credit sale • The price being advertised must be the price available to everyone

Availability of Vehicles at Advertised Price • A vehicle may only be advertised if the vehicle is in the dealer’s inventory while the price is in effect • Does not apply to new vehicles that need to be ordered from the manufacturer • Advertisements must show: • The time period, if the price is available for a limited time • The number available, if a limited number of vehicles are available at a certain price • If an advertised vehicle sells during the advertised period a notice must be posted in the business and on the vehicle (if applicable)

Price Size in Advertisements If the amount and timing of payments for a vehicle are included in an advertisement, they must not be more prominent than the total price. Image used solely to illustrate prominence of total price and payment amount

Photographs • An advertisement can use a photograph of a vehicle that is not the motor vehicle for purchase or lease only if: • It is a reasonable representation of the vehicle available for purchase or lease; and • The advertisement indicates the vehicle in the photograph is not the vehicle for sale • A reasonable representation means the same make, model, year, trim level, condition

Photographs – Vehicle Series or Line If the advertisement includes a photograph from a certain series/line, but it is not the vehicle for purchase or lease, then this must be stated in the advertisement.

Photographs – Different than Base Model If the photograph featured in an advertisement has options that are not available in the base model, then both prices for both models need to be listed in the same size font.

Advertising Statements • No minimum value trade-in allowance guarantee Push, pull, drag for $1, 000 off! • No claims of comparison or superiority unless substantiated Hands down, Manitoba’s best dealer! 2016 Consumer’s Choice Award – Friendliest Dealer • Ads must not imply that a person is encouraged to breach a contract with another dealer in order to purchase/lease a vehicle from the advertising dealer “We’ll beat your best deal!”

Advertising: Cost of Credit Requirements • Advertising and disclosure requirements for credit agreements and leases fall under the CPA: • Part II Division 2 – Fixed Credit • Part II Division 4 – Leases Both parts contain rules for representative transactions

Cost of Credit – Credit Sales Fixed Credit: if you are advertising an interest rate or payment amount, you must indicate: For example. . . . • Cash price. . . . $30, 000 • Term of the loan. . 48 months • Annual percentage rate (APR). . 5. 99% • Cost of credit*. . . $7600 *Only if it involves a non-interest finance charge . .

Example: Credit Sale Advertisement Payments based on 4. 9%, 0 down Price $14, 995, 60 month term, 0% APR, cost of credit $3, 024. 11

Examples of Non-Compliant Advertisements

Cost of Credit – Leases • Fixed credit: if you are advertising an interest rate or payment amount, you must indicate: • That the agreement is a lease • The term of the lease • Any amount and timing of any payment that would be required at or before the beginning the term • The timing and amount of the periodic payments • Any other amount that the lessee would be required to pay in the ordinary course of events; • The APR (annual percentage rate) • The KM allowance and the charge for exceeding that

Example: Lease Advertisement Lease payments assuming $1, 000 down, terms and interest rates TBD Lease price ($25, 000) @60 month term. 6% APR, Cost of borrowing $4525. $250 bi-weekly payments. KM allowance 30, 000 km. Mileage charge of $0. 15/km over.

Cost of Credit – Representative Transaction • Use when credit prices are advertised for multiple vehicles in the same advertisement • Indicate in the fine print as a ‘Representative Transaction’ or ‘Representative Example’ • Indicate in each individual item advertised For all vehicles, price or payment reflect $1000 finance credit. See dealers for terms and rates. Representative transaction: $15, 000, 60 months, 7. 25% APR, $0 down, GST/PST extra

Vehicle Information Disclosure • Dealers must disclose specific information on the bill of sale and orally • Information must be to the best of the dealer’s knowledge and belief – based on information the dealer knew or ought to have known using reasonable care and due diligence

Vehicle Information Disclosure • Provisions can be found in CPA (moved from BPA in 2015) • All staff should be familiar with the official Manitoba regulation • Clause 16(1)(b) was amended for clarity: Motor vehicle information disclosure 16(1) For the purpose of section 234 of the Act, a motor vehicle dealer must ensure that the following information is disclosed in any contract that it enters into to sell or lease a new or used motor vehicle to a consumer: (a) the vehicle identification number; (b) a statement as to whether or not (i) the motor vehicle is new or used

BPA: Unfair Business Practices “False, misleading or deceptive practices” • Doing or saying anything, or failing to do or say anything, that could reasonably mislead or deceive a consumer, for example: • Misrepresenting the purpose of an additional charge • Telling the consumer that the vehicle cannot be purchased without accepting an additional charge • Failing to disclose a “material fact” (e. g. not informing a consumer of structural damage to the vehicle) • Deceiving a consumer by distorting a “material fact”

BPA and Negotiations • Negotiating an all in price • Consumer can assume they are negotiating an all-in price • Counter offer must include fees • Disclosing fees in negotiations • If a lower price is negotiated, dealer may request additional fees • Fees cannot simply “appear” on purchase agreement clarit y no decei t successful negotiation s s

Questions? Consumer Protection Office Province of Manitoba 302 -258 Portage Ave. Winnipeg, MB R 3 C 0 B 6 Email: consumers@gov. mb. ca Telephone: 204 -945 -3800 Toll-free in Manitoba: 1 -800 -782 -0067 Manitoba. ca/consumer. Info

Jacques Lafournaise Manager – Enforcement and Dispute Resolution (204)945 -3659 jacques. lafournaise@gov. mb. ca Silvana Buccini Consumer Services Officer (204)945 -4421 silvana. buccini@gov. mb. ca Paul St. Amant Consumer Services Officer (204)945 -4311 paul. st. amant@gov. mb. ca