The automobile shopping process has experienced a great deal of change over the last several years. Dealerships are making use of new forms of digital advertising and online shopping experiences designed to induce consumers into purchasing a vehicle. Consumers have access to more digital tools and resources, as well as greater transparency and more flexibility when shopping for a vehicle. Unfortunately, the auto industry is also experiencing a high level of deceptive and misleading advertising practices that may be harmful to consumers.
In June 2019, the ACC began researching the use of high-risk advertising and shopping practices by the automotive industry, including: deceptive advertising that fails to disclose the true costs and fees associated with purchasing a vehicle; non-compliance with all-in price advertising legislation; and, possibly the option of online vehicle purchasing. The ACC also researched the present extend of legislation and the enforcement of the legislation designed to protect consumers from these practices. The ultimate task was to draft a set of recommendations that consumers, dealerships, manufacturers, and government bodies could use to help protect consumers from potential financial harm.
Many important discoveries were revealed about automotive advertising after a review of the previously published literature and interviews with various stakeholders. Many dealerships have been found to be non-compliant with advertising legislation and charge consumer’s unnecessary fees or extras which should not be added to the advertised vehicle price. Other problematic advertising practices include deceptive pricing or instalment-type payments which are often not honoured by the dealership. Bait-and-switch is another occurring tactic which can result in a different vehicle with a higher price than what was advertised.
The ACC commissioned Decision Point Research to conduct two separate Canada-wide surveys. The first survey targeted consumers to learn about their vehicle-buying experiences and encounters with automotive advertising. The second survey queried dealerships to learn about their thoughts on advertising trends and legislation.
The consumer survey data revealed that: 1) 40 percent of consumers claim the vehicle was advertised with an all-in price. 2) 24 percent of consumers purchased a vehicle in breach of the all-in price advertising rules. 3) Dealerships that did not match the advertised vehicle price added an average of $2,040 in additional charges to the advertised price. 4) Of those consumers who purchased a vehicle for the advertised price, 38 percent claim it was very challenging to get the dealership to honour the advertised priced.
Although many provinces have a comprehensive set of rules and legislation which dealerships must follow with regards to advertising practices, the ACC found that level of enforcement by provincial regulatory authorities can be limited and varies widely from province to province. Moreover, automobile manufacturers do not need to comply with the same advertising rules as dealerships, which adds a level of confusion for consumers.
Based on the findings of the report, the ACC is making recommendations in a number of areas: Regulators should expand the use of consumer education campaigns, expand mandatory professional development opportunities for dealerships, and expand the use of substantial penalties and disciplinary action for non-compliant dealerships. All-in price advertising should be expanded to all provinces and modified to include automobile manufacturers. Regulatory authorities should also consider streamlining and standardizing the enforcement process, the penalties, and the costs across all provinces. For more information on the ACC’s recommendations, see page 26 of the report.
Please see the following document to read the full research report: