Quick Response Advertising Automobile Leases

Truth in Leasing Act (12 C.F.R. §213.1 et. set.)

Consumer Credit Cost Disclosure (15 U.S.C. § 1667c(a), (c))

The Truth in Leasing Act, also known as Regulation M, sets specific guidelines dealing with leases. This act applies to all persons who lease “personal property” (movable property, such as automobiles, televisions, etc.) under consumer leases. The Truth in Leasing Act is designed to ensure that lessees of personal property receive accurate and meaningful disclosures of lease terms that enable them to compare lease terms with other leases, and, where appropriate, with credit transactions.

As with consumer credit advertising, “bait” advertising is prohibited (advertising specifically used to draw in a customer for one item and then trying to sell them a higher priced item) and specified “trigger” terms require disclosures to be stated in the advertisement.

Trigger terms

• the amount of any payment;
• statement of any capitalized cost reduction or other payment required prior to or at consummation; or
• statement that no payment is required.

If any of the above trigger terms are present in the advertisement, a clear and conspicuous disclosure of the following terms is mandatory:

• that the transaction is a lease;
• the total amount due at signing;
• the number, amount, and due dates or periods of scheduled payments;
• for an open-end lease, a short statement that an additional charge may be imposed at the end of the lease; and,
• a statement of whether a security deposit is required.

See 12 C.F.R. §213.7 for a complete list of advertising disclosure requirements.

Total Amount Due: Any reference to a charge that is part of the total amount due at lease signing or delivery may not be more prominent than the disclosure of the total amount due. The reference may not be obscured. There is no minimum type-size, but the reference must be legible. The total amount due at signing and delivery does not have to be itemized.

General Issues:

• All “persons” are covered, not just “lessors,” but the law specifically exempt owners and personnel of the media from civil liability for violations.
• It is allowable to advertise a single item or new leasing program, but ads of the terms that are not and will not be available are prohibited.
• Regarding the location of the lease rate, language or symbols cannot separate the rate and the required notice that the rate may not measure the overall cost of financing the lease. An ad may not use an asterisk when referring to the location of the lease rate.
• Multiple page ads are treated as a single ad that requires only one set of disclosures. If the advertiser is using trigger terms, he or she must specifically refer to the table, chart or schedule.