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11.12.01.14

.14 Dealers' Advertising and Trade Practices.

A. Definitions.

(1) "Advertising" means any oral, written, or graphic statement which offers vehicles for sale or which indicates the availability of vehicles, including any statements or representation made in a newspaper, pamphlet, circular, other publication, or on radio or television, contained in any notice, handbill, sign, billboard, poster, bill catalog, letter, or business card.

(2) "Clear and conspicuous" means a statement, representation, or term differing from other statements, representations, or terms being made so as to be readily noticeable to the person to whom it is being disclosed either by its size, sound, length of time, color, placement in the advertisement, or the like.

(3) "Consumer goods" means, as referred to in these regulations, a vehicle offered for retail sale for use by individuals primarily for personal, family, or household purposes.

(4) "Dealer cost" means the total amount the dealer is invoiced by the manufacturer for a vehicle.

(5) "Demonstrator" means a vehicle:

(a) Of the current or preceding model year for which a title has not been issued;

(b) Which has been:

(i) Used solely by the employees, officers, or principals of the dealer, manufacturer, or distributor, or

(ii) Driven for purposes of customer road testing;

(c) Which has been driven more than 500 miles, excluding dealer exchange mileage; and

(d) Subject to §L of this regulation, which has never been sold to a retail customer.

(6) "Rebate, cash rebate, or other similar phrases" means a deduction granted by a dealer or manufacturer from an amount a purchaser pays to a dealer, or a return by a dealer or manufacturer of part of an amount given in payment by a purchaser to a dealer after a sale of a vehicle has been consummated.

B. Presentation Requirements.

(1) A dealer may not advertise in any manner that is false, deceptive, or misleading or that misrepresents any vehicle offered for sale.

(2) Advertisements for the sale of new and used vehicles shall clearly and conspicuously identify the dealership by the corporate name or trade name as it appears on the application for dealer's license unless, in the context of the advertisement, the use of that name is misleading under Regulation .02D of this chapter, in which case the use is prohibited.

(3) Advertising statements shall clearly identify the vehicle by manufacturer-designated year, make and model, type, equipment, price, trade-in allowance, terms or other claims. All terms or claims shall be factual and presented clearly and conspicuously.

(4) The use of layout, headlines, illustrations, style, sound, length of time, lighting, color, or type of size of an advertisement, or all of the above, may not obscure or make misleading any material fact in advertisement or sales presentation.

C. Price and Vehicle Identification.

(1) When the price of a vehicle is quoted, the advertisement shall clearly identify the vehicle as to make, year, model, special equipment, etc. A price may not be quoted unless the vehicle or vehicles identified in the advertisement are currently available for sale to the public at the quoted price.

(2) The advertised price shall:

(a) Be the full delivered cash price, which the customer shall pay, except for taxes and title fees; and

(b) In the case of new vehicles, include any dealer processing charge and freight charge, unless the dealer clearly and conspicuously discloses the amount of these charges in the advertisement as required by Transportation Article, §15-311.1, Annotated Code of Maryland.

(3) In advertisements when vehicles are specifically priced, the space in the purchase price column shall indicate a purchase price for each vehicle listed.

(4) Freight and dealer preparation charges may be excluded from manufacturer's national advertising campaigns. However, the advertisement shall fully and prominently disclose this fact.

D. Comparative Price and Savings Claims.

(1) Unless the claims made are true, retail advertising may not state or imply that the dealer is selling vehicles in a manner other than through normal retail channels and may not imply that the dealer has a special relationship or connection to the manufacturer that other dealers do not have. Terms such as "wholesale", "factory sale", "factory discount", "factory outlet", "factory branch", and similar terms used in connection with the manufacturer's name (such as "manufacturer's outlet") are examples of terms that imply that a dealer has a special relationship or connection to a manufacturer that other dealers do not have.

(2) Statements such as "as low as", "from", or "priced from" may not be used in connection with the purchase price unless at least one vehicle is specifically identified and the requirements of §C are complied with.

(3) Advertised sales prices for vehicles may not claim or imply a savings or discount over other dealers.

(4) Unsupported selling claims may not be used. Unless true, statements such as "Our prices are guaranteed lower than everywhere", "Money refunded if you can duplicate our values", "We guarantee to sell for less", "Highest trade-in allowance", "We give $300 more in trade than any other dealer", are examples of unsupported selling claims which may not be used.

(5) Statements that falsely imply that a buyer may determine the purchase price such as "Make your own deal", "Name your own price", "Name your monthly payments", "Appraise your own car" are examples of misleading phrases which may not be used in advertisements.

(6) A statement or statements using or referring to "dealer cost" may not be used in advertising unless the claims made with respect to the dealer's cost are true, and unless the advertising bears the following clear and conspicuous legend in a box: "Notice to Buyer. The invoice may be higher than the true, final cost to the dealer."

E. Bait Advertising and Selling Practices.

(1) A vehicle advertised at a specific price shall be in the possession of the advertiser in the case of a used vehicle, or be available in the case of a new vehicle. The vehicle shall be willingly shown, demonstrated, and sold, or if a new vehicle, orders shall be taken for future delivery of the identical model at the advertised price and terms. If the vehicle is a used vehicle, and it has been sold, the advertiser shall substantiate, upon request, sales records of the previously advertised vehicle.

(2) The practice of increasing the selling price of a vehicle above that originally quoted to a purchaser, after the purchaser has made an initial deposit or payment, either with money or with a trade-in, or signed contract is prohibited, unless the price is increased by the manufacturer. In this case, the dealer shall substantiate, upon request, evidence of the increase, and the customer shall have the right to cancel the contract.

(3) Advertising a vehicle at a price which does not include equipment with which it is fitted or is ordinarily fitted or eliminating any equipment for the purpose of advertising a low price and baiting the customer into charges above the advertised price is prohibited.

(4) Advertising the immediate availability of a new vehicle with the intent not to supply reasonable expectable public demand is prohibited unless the advertisement discloses a specific limitation of quantity.

(5) Advertising a sale or promotion in connection with the sale of a vehicle shall clearly and conspicuously disclose the expiration date, if any, and any other conditions of the sale or promotion, including but not limited to whether the supply is limited and, if so, in what manner.

(6) The advertising of a specific vehicle offered for sale when the advertised vehicle is not in stock on the date of the advertisement is prohibited unless the advertisement states "Not in Stock" or "Order Yours Now" or other phrases of similar import which clearly indicate that the vehicle is not available for immediate delivery and a reasonable estimate of the period of time in which delivery will be made.

F. Down Payments, Credit Terms.

(1) The amount of the down payment, or the balance after the down payment, may not be stated in such a manner as to permit the impression that it is the selling price of the vehicle.

(2) The statement "no money down", or other similar phrases, means that the advertiser will deliver the vehicle, so described, to the purchaser without any initial payment or other initial obligation in any manner other than negotiating a lien contract for the advertised purchase price.

(3) The phrases "no finance charge", "no carrying charge", or expressions of similar phrases, may not be used when there is any type of a charge for financed transactions.

(4) All advertising shall comply with Regulation Z of the Federal Truth in Lending Act and Federal Trade Commission Act.

(5) Advertisements which offer special annual percentage rate financing shall disclose any special conditions or terms which shall be met before the annual percentage rate applies to preclude deception.

G. Discounts, Savings, Rebates, Trade-In Allowances.

(1) Advertisement statements which offer discounts, savings, rebates, and guaranteed trades shall:

(a) Include the original price as well as the full delivered cash price, which the customer shall pay, except for taxes and title fees; and

(b) In the case of new vehicles, the full delivered cash price shall include any dealer processing charge and freight charge, unless the dealer clearly and conspicuously discloses the amount of these charges in the advertisement as required by Transportation Article, §15-311.1, Annotated Code of Maryland.

(2) The dealer may give representative examples in ads when various savings, discounts, rebates, and similar offers are made.

(3) A specific price may not be stated in an advertisement as an offer for a trade-in, if the price so stated is contingent upon the condition, model, or age of the prospective buyer vehicles, without so stating in the advertisement. The use of phrases such as "up to" and "as much as" may not be considered as adequate explanation.

(4) When a purchase order or agreement includes the amount of trade-in allowance, subject to official acceptance and appraisal, that condition shall be clearly and conspicuously stated on the order or agreement. If the order, including the trade-in allowance, has been officially accepted, the trade-in allowance may not be decreased upon re-appraisal unless the condition of the vehicle has been changed due to accident, failure of or damage to major components, or removal or substitution of equipment or accessories.

H. Repossessions. The term "repossessed" shall be used only to describe those vehicles legally repossessed as a result of failure of an owner to fulfill the conditions of a lien contract. Advertisers offering repossessed vehicles for sale, upon request, shall offer proof of the repossessions. The amount quoted as an unpaid balance shall be the full selling price unless otherwise stated.

I. Demonstrator Vehicle.

(1) Demonstrator vehicles are considered used vehicles if they have been driven for more than 7,500 miles.

(2) The term "new" may not be used as an adjective in the direct description of a demonstrator or used vehicle.

(3) Except as otherwise provided in §I(5) of this regulation, a dealer shall use the term "demonstrator" when advertising vehicles which meet the definition of that term as found in §A(5) of this regulation.

(4) Before the sale of a demonstrator vehicle, the dealer shall provide to the retail customer a written disclosure in 10-point type, and separate from the purchase contract document, which states: "THIS VEHICLE IS A DEMONSTRATOR VEHICLE. IT IS A VEHICLE WHICH HAS BEEN USED BY THE EMPLOYEES, OFFICERS OR PRINCIPALS OF THE DEALER, MANUFACTURER OR DISTRIBUTOR, OR FOR CUSTOMER ROAD TESTING. FEDERAL LAW REQUIRES A BUYER'S GUIDE TO BE ATTACHED TO THE SIDE WINDOW OF THIS VEHICLE. YOU ARE WELCOME TO INQUIRE AS TO THE SPECIFIC USAGE OF THE VEHICLE FROM THE DATE OF ITS DELIVERY TO THE DEALER. YOU ARE ALSO WELCOME TO CONDUCT WHATEVER INSPECTION YOU DEEM APPROPRIATE PRIOR TO ENTERING INTO AN AGREEMENT TO PURCHASE THE VEHICLE."

(5) A vehicle which has been a demonstrator shall be advertised as a used vehicle once it has accumulated mileage in excess of 7,500 miles, and the term "demonstrator" may not be used as an adjective in the direct description of the vehicle. However, these vehicles are not required to be registered or titled before transfer to a retail customer.

J. Disclosure of Vehicle Condition.

(1) A dealer shall notify the manufacturer of the existence of a nonconformity, defect, or condition as required by Commercial Law Article, §14-1502(f)(1)(i), Annotated Code of Maryland, and shall send a copy of the notification to the Administration as required by Commercial Law Article, §14-1502(f)(1)(i), Annotated Code of Maryland.

(2) If a motor vehicle is returned to a manufacturer or factory branch under Commercial Law Article, Title 14, Subtitle 15, Automotive Warranty Enforcement Act, the manufacturer or factory branch shall, upon transfer to a dealer, disclose this information to the dealer. The disclosure shall:

(a) Be in writing on a separate piece of paper in 10-point, all capital type; and

(b) State in a clear and conspicuous manner:

(i) That the vehicle was returned to the manufacturer or factory branch,

(ii) The nature of the defect, if any, and

(iii) The condition of the vehicle at the time it was transferred to the dealer.

(3) If a vehicle which has been returned to a manufacturer or factory branch is made available for resale by a dealer, the dealer shall provide a copy of the disclosure described in §J(2) of this regulation to the potential purchaser before the sale.

(4) After the vehicle is sold, the dealer shall send a copy of the disclosure described in §J(2) of this regulation, signed by the vehicle's purchaser, to the Administration with the application of title.

(5) Vehicles formerly wrecked or water-damaged shall be clearly and conspicuously identified as to their former condition.

K. Vehicle Damage Disclosure.

(1) If, before consummating the sale of a vehicle which has never been titled, the vehicle has sustained either body damage or mechanical damage resulting in the replacement of a major part or parts, and the damage is not subject to disclosure under §J of this regulation, the dealer shall fully disclose this information in writing to the prospective purchaser. The following apply:

(a) In the case of body-related damage involving vehicle repainting, frame or suspension repairs, the dealer shall disclose the area repainted and any parts replaced (hood, fender, truck lid, quarter panel, etc.). Minor paint touch up need not be disclosed (scratch, etc.). This disclosure shall specify who is providing warranty coverage on the replacement parts.

(b) In the case of mechanically related damage involving a major component or components (engine, transmission rear end, etc.), the dealer shall disclose any parts replaced. This disclosure shall specify who is providing warranty coverage on the replacement parts.

(c) The dealer shall also disclose any damage which may affect the:

(i) Manufacturer's warranty;

(ii) Life expectancy of the vehicle; or

(iii) Safety of the vehicle.

(2) Upon request of the prospective purchaser or purchasers, the dealer shall provide a copy of the repair order illustrating the extent of repairs conducted to repair the damage.

(3) If a manufacturer or distributor transfers a vehicle which has never been titled to a dealership, the manufacturer or distributor shall disclose the information contained in §K(1) of this regulation to the dealership, if applicable.

L. A vehicle which has never been titled, but which has been previously delivered to a customer, may be subsequently sold as a new vehicle if the:

(1) Vehicle has not been used in a manner so as to destroy its newness; and

(2) Buyer is advised, in writing, of:

(a) The number of persons to whom the vehicle was previously delivered,

(b) The mileage accumulated on the vehicle while it was in the possession of each prior customer,

(c) The reason the prior customers returned the vehicle to the dealer,

(d) Any other information required by §K(1) of this regulation or any other State or federal law, and

(e) A written disclosure in 10-point type and separate from the purchase contract document which states: "PART OR ALL OF THE MILEAGE ON THE ODOMETER OF THIS VEHICLE RESULTED FROM PREVIOUS DELIVERY TO A RETAIL PURCHASER WHO NEVER TOOK TITLE TO THE VEHICLE. FEDERAL LAW REQUIRES A BUYER'S GUIDE TO BE ATTACHED TO THE SIDE WINDOW OF THIS VEHICLE. YOU ARE WELCOME TO INQUIRE AS TO THE SPECIFIC USAGE OF THE VEHICLE FROM THE DATE OF ITS DELIVERY TO THE DEALER. YOU ARE ALSO WELCOME TO CONDUCT WHATEVER INSPECTION YOU DEEM APPROPRIATE PRIOR TO ENTERING INTO AN AGREEMENT TO PURCHASE THE VEHICLE."

M. Disclosure of Former Vehicle Use.

(1) Vehicles formerly used for a purpose other than a consumer good shall be clearly and conspicuously identified as to their former use. This includes, but is not limited to, vehicles formerly used:

(a) For public or governmental purposes and normally driven by multiple drivers;

(b) As executive driven vehicles;

(c) As demonstrators;

(d) For driver training;

(e) As taxicabs; or

(f) As short-term rental vehicles.

(2) The word "commercial", or similar ambiguous terms, may not be used to describe these vehicles.

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