Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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2007 Consumer Protection Rulemaking

OAR 137-020-0015
OAR 137-020-0020
OAR 137-020-0040
OAR 137-020-0050

OAR 137-020-0015

Misleading Use of "Free" Offers

(1) Definitions: As used in this rule:

(a) The definitions of terms set forth in ORS 646.605 are applicable;

(b) "Free" means without charge or cost, monetary or otherwise, to the recipient, and includes terms of essentially identical import, such as "1¢ sale," "2 for the price of 1" and "give away" and, in the case of real estate, goods or services described in subsection (2)(a) of this rule, an offer of any combination of real estate, goods or services at a single price. A free offer in conjunction with the sale or lease of real estate, goods or services is one that conveys to customers the message that real estate, goods or services are offered at no cost in conjunction with the purchase of other real estate, goods or services for no more than their regular price;

(c) "Verifiable retail value" means:

(A) A price at which an offer or can demonstrate that a substantial number of free items have been sold at retail in Oregon by a person other than the offeror; or

(B) If substantiation described in this section is not available to an offeror, no more than one and one-half times the amount an offeror paid for a free item.

EXAMPLE: If substantiation, as described in this section, is not available, and the offeror pays $10 for a free item, the verifiable retail value of that free item would be $15.

(2) Unfair or Deceptive Use of "FREE" Offers: A person engages in conduct which is unfair or deceptive in trade or commerce:

(a) When it makes a free offer in conjunction with the purchase or lease of real estate, goods or services, the price, size, quantity, or quality of which is normally determined by that seller by bargaining with potential purchasers. For purposes of this section, an offer of any combination of real estate, goods and services for a single price is not a free offer if:

(A) The "free" item is offered by a manufacturer or another party, separate from the seller, and there is no direct cost to the seller; or

(B) The offer includes no terms, other than the offer of the combination itself, indicative of a free offer as defined in subsection (1)(b) of this rule and the offer includes one of the following disclaimers, communicated in a clear and conspicuous manner, as defined in OAR 137-020-0050:

(i) "Cost of promotion may increase price of ________." (The phrase shall be completed with a description of the basic real estate, goods or services offered for sale.); or

(ii) "This is a combination offer. Make your best deal on a package price."

(b) When it makes a free offer combined with the offer of real estate, goods or services, the price of which is not normally determined by bargaining and in order to receive the "free" real estate, goods or services the recipient must at any time purchase or lease other real estate, goods or services at a price which is higher than that at which the person offered for sale or sold such real estate, goods or services in the ordinary course of business during the 30 days preceding the "free" offer (unless such higher price is the regular price at which such real estate, goods or services are thereafter sold in the regular course of business);

(c) When it makes a free offer and in order to qualify for the offer, the recipient will be given a presentation intended to result in the promotion of a business or sale or lease of real estate, goods or services unless the offer contains a clear and conspicuous disclosure:

(A) Identifying the business promoted or the goods or services offered for sale or lease;

(B) That the recipient must listen to a sales or promotional presentation in order to receive the free offer or that the recipient is entitled to receive the free offer after refusing to listen to the presentation, whichever is the case. If the free item described is not immediately available for delivery to the recipient after the recipient has listened to a sales or promotional presentation, the recipient shall be given the verifiable retail value of the free item in cash or by a valid check;

(C) Including a description of each potentially free item and its verifiable retail value in the trade area in which the offer is made;

(D) If the free item is one or more of a larger group, if received on a random basis, (in addition to compliance with subsection (e) of this section) a description of the actual odds of receiving each item based on the initial odds and revised to reflect actual current odds at the beginning of each month of use of the free promotion; if not on a random basis, a description of the method of selection used. The description of the initial odds and the current odds shall include a statement of the total number of each free item to be given away by the offeror and the total number of chances to obtain the free item being distributed by the offeror. If the promotion utilizing the free item involves distribution by more than one offeror or sponsor, the description of the initial odds and the actual current odds also include a statement of the total number of each free item to be given away by all offerors or sponsors and the total number of chances to obtain the free item being distributed by all offerors or sponsors. The odds and verifiable retail value shall be printed in the same size type as the principal description of each free item and shall appear immediately adjacent to said description;

(E) In a telephone or door-to-door solicitation, inclusion of the information required by ORS 646.608(1)(n) within 30 seconds after beginning the conversation.

(d) When it makes a free offer as described in subsection (b) or (c) of this section and, in order to receive the free real estate, goods or services, the recipient is required to pay money to the offeror, promoter or any other person for any fee, including but not limited to a fee for postage, shipping, storage, handling, processing, registration or verification, which terms are used herein for purposes of illustration and not by means of limitation;

(e) In the case of all free goods or services offered on a random basis as described in paragraph (2)(c)(D) of this rule, unless it retains for at least one year a list of the names and addresses of all persons receiving free goods or services with a verifiable retail value of $10 or more.

Stat. Auth.: ORS 646.608(4)
Stats. Implemented: ORS 646.608(1)(u)
Hist.: 1AG 16, f. 7-21-76, ef. 9-1-76; 1AG 2-1979, f. 6-22-79, ef. 8-1-79; JD 1-1987, f. 2-5-87, ef. 2-15-87; JD 5-1990, f. 7-5-90, cert. ef. 9-1-90

OAR 137-020-0020

Motor Vehicle Price Disclosure

(1) Purpose: The purpose of this rule is to declare as unfair or deceptive in trade or commerce certain motor vehicle pricing practices.

(2) For purposes of this rule, the following definitions shall apply:

(a) "Title and Registration Processing fee" means any monies or other thing of value, in an amount which is authorized by the Oregon Driver and Motor Vehicle Services Division (DMV), which a dealer charges for preparing or processing title and registration documents and collecting required fees for submission to DMV on behalf of a buyer or lessee;

OFFICIAL COMMENTARY: Oregon law and administrative rules permit dealers to act as a DMV agent and to complete and process the ownership and registration forms required by DMV. For providing this service, dealers are permitted to negotiate the Title and Registration Processing Fee not to exceed the amount established by DMV. This service is optional, however, and dealers are not required to charge this fee. It can not be represented as a government fee or a fee required by law. When consumers are involved in a motor vehicle transaction where there is no lien to perfect or release the dealer must disclose that the consumers have the right to complete and process their own title and registration and not pay this fee.

(b) "Advertisement" means any oral, written or graphic notice given in a manner designed to attract public attention and includes, without limitation, public broadcasts, mailings and published notices;

(c) An "average" person, viewer or listener means a person other than one allied with the vehicle industry;

(d) "Buy-down rate" means a financing rate which, due to a dealer's payment of finance charges to a third party, is below the prevailing market financing rate;

(e) "Clear and conspicuous" means that a message is conveyed in a manner that is readily noticeable, will be easily understood by the audience to whom it is directed, and is in a meaningful sequence. In order for a message to be considered "clear and conspicuous," it shall, at a minimum:

(A) Not contradict or substantially alter any terms it purports to clarify, explain or otherwise relate to;

(B) Use abbreviations or terms only if they are commonly understood by the average person or approved by federal or state law;

(C) In the case of radio advertising:

(i) The information required to be disclosed by law shall be spoken with sufficient deliberateness, clarity, and volume so as to be understood by the average radio listener;

(ii) The information shall not be obscured by sounds which interfere with or distract from the disclosure; and

(iii) Any information required in radio advertising shall be deemed to be clear and conspicuous if the ad complies with 15 USC § 1667c(b) and any disclosure required by 15 USC § 1667c(b)(C) also includes all disclosures required by Oregon law.

(D) In the case of television advertising:

(i) The information required to be disclosed by law shall be completely disclosed audibly, visually, or using a combination thereof;

(ii) Any visual message shall be presented unobscured by other images and in a size and time sufficient to allow an average viewer to read with reasonable ease; and

(iii) Any audible message shall be presented with sufficient deliberateness, clarity, and volume so as to be understood by the average television listener unobscured by other sounds which interfere with or distract from the disclosure.

(E) In the case of printed advertising:

(i) The information shall be in close proximity to the terms it purports to clarify, explain or otherwise relate to; and

(ii) The information shall be of sufficient prominence in terms of print style, size and contrast as compared with the remainder of the advertisement so as to be readily noticeable to an average person in the audience to whom it is directed. Print size which is 8 point type or larger in display advertisements which are less than 200 square inches in size or print size which is 10 point type or larger in display advertisements which are 200 square inches or larger in size shall be rebuttably presumed to be of sufficient size to be readily noticeable.

(f) "Dealer" means a person who sells, trades, leases, displays or offers for sale, trade or exchange motor vehicles or offers to negotiate or purchase motor vehicles on behalf of third parties. "Dealer" does not include a security interest holder as shown by the vehicle title issued by any jurisdiction or any person excluded by ORS 822.015(1) to (4) or 822.015(6) to (9);

(g) "Extension sticker" means a label (other than a Monroney sticker or other label bearing the manufacturer's suggested retail price), affixed to a new motor vehicle, displaying the offering price of the motor vehicle;

(h) "Manufacturer's Suggested Retail Price" or "MSRP" means the Monroney price, or if there is no Monroney sticker, then the total price of the vehicle after all factory installed options and factory costs have been added together, less any option package savings offered by the manufacturer;

(i) "Monroney sticker" means the label required by Section 3 of the Automobile Information Disclosure Act, 15 USC Section 1232;

(j) "Motor Vehicle" means any self-propelled vehicle normally obtained for personal, family, or household purposes, including all terrain vehicles, snowmobiles and personal watercraft other than boats. Motor vehicle does not include aircraft;

(k) "Offering price" means the full cash price for which a dealer will sell or lease a motor vehicle to every purchaser or member of the general public without exception, excluding only taxes, license and registration costs, and a Title and Registration Processing fee;

OFFICIAL COMMENTARY:Examples of correctly calculated offering prices would be as follows:

(i) A car's MSRP is $10,000, license and registration are $100, undercoat is $100, dealer added options are $2,000 and the Title and Registration Processing fee is $50. The offering price of the vehicle is $12,100.00.

(ii) A motorcycle's MSRP is $5,000, license and registration are $50, delivery and setup costs the dealer $250, custom accessories are $500 and the Title and Registration Processing fee is $50. The offering price of the vehicle is $5,750.00.

The costs of delivery and setup, all accessories or any other fees and costs must be included in any advertisement or quoted price given for the sale of any vehicle by the dealership and cannot be added in as fees or extras later. Nothing in this or any other rule requires a dealer to charge any Title and Registration Processing fee.

(l) "Pattern" means repeated acts that are the same or similar in nature and appear to have some overall connection;

(m) "Practice" means, for purposes of OAR 137-020-0050(2)(k), often, repeated, or customary action;

(n) "Personal Watercraft" means a jet ski or other aquatic device of similar design;

(o) "Rebate" means the payment of money to a consumer or payment to a dealer or third party on behalf of a consumer on the condition that the consumer purchase or lease a motor vehicle;

(p) "Taxes, license and registration costs" means those usual taxes, charges and fees payable to or collected on behalf of governmental agencies and necessary for the transfer of any interest in a motor vehicle or for the use of a motor vehicle; and

(q) "Used vehicle" means any vehicle which has been previously delivered to any person for his or her discretionary use for personal or business purposes and for more than a try-out before a contemplated purchase or preparation for sale.

OFFICIAL COMMENTARY: Vehicles that would be considered "used" include, but are not limited to:

(i) Dealer demonstrators that are delivered to a consumer on a purchase order or retail installment contract, then subsequently returned to the dealer due to an inability to obtain financing; and

(ii) Demonstrators and company cars that have never been sold to a retail customer, but have been driven for purposes other than test drives or moving, including use by the dealer, the dealer's employees, the dealer's corporate officers or anyone else; and

(iii) All vehicles that have been driven more than the limited use necessary in moving or road testing a new vehicle prior to purchase or delivery to a consumer.

The intention of this definition is to conform the applicability of the rule to the maximum extent permitted by ORS 646.608 and Weigel v. Ron Tonkin Chevrolet Co., 298 OR 127, 690 P2d 488 (1984).

(3) Failure by a dealer to comply with this rule constitutes unfair or deceptive conduct in trade or commerce.

(a) Any motor vehicle offered for sale or lease in an advertisement stating an offering price or capitalized cost for the motor vehicle shall have affixed to it a clear and conspicuous label or extension sticker stating the offering price of the motor vehicle listed in the advertisement. If a motor vehicle bears a label which states a MSRP and the MSRP is the offering price or capitalized cost for the vehicle, no additional label or extension sticker is required;

(b) Any motor vehicle offered for sale bearing a Monroney sticker or a label stating a MSRP shall have an extension sticker affixed stating the offering price of the vehicle if the offering price is greater than the Monroney sticker price or the stated MSRP;

(c) Any price stated in an advertisement or in a written or oral price quotation given to a prospective buyer shall be the offering price, excluding only taxes, license, registration costs and a Title and Registration Processing fee. Any written or oral price quotation given in good faith to a prospective buyer, which is less than or on different terms than the offering price on the motor vehicle, may be given by an agent subject to approval by the dealer;

OFFICIAL COMMENTARY: The purpose of this rule to ensure that dealers are not able to add in hidden or undisclosed costs after the price for a vehicle has been advertised or negotiated with a consumer. Examples of potential violations would be as follows:

(i) A dealer advertises or offers for sale at the dealership a vehicle for $10,000.00. After the consumer accepts the dealer's offer and agrees to purchase the vehicle the dealer learns that the consumer has a poor credit history. The lending company charges the dealer a premium of $500 to accept the retail installment contract. The dealer then tries to add this $500 to the contract with the consumer as a "loan fee." This practice is unlawful. In order to cover this cost of doing business the dealer must include that $500 in the offering price of any advertisement or posted or negotiated price at the dealership.

(ii) A dealer advertises a vehicle for $20,000 in the local newspaper. The vehicle has $1,500 worth of after market accessories on the vehicle. When the consumer arrives at the dealership and wants to purchase the vehicle the salesperson tells the consumer that the price is $21,500 with the added accessories. This practice is unlawful. If the dealer wants reimbursement for these options the dealer must include that amount in any advertised price.

(d) An extension sticker shall accurately itemize and describe the charge(s) added to or subtracted from the MSRP to reach the offering price. No charge may be added for goods or services not actually provided. No charge may be added for services required by the manufacturer or distributor which are performed by a dealer prior to delivery of a motor vehicle to a retail buyer. No charge may be added for any overhead expense such as warehousing, flooring, advertising, and clerical costs; or for transportation costs charged by the manufacturer or distributor to the dealer and included in the MSRP. In the case of inland freight, setup and dealer preparation, the charge listed must be the dealer's actual cost for freight from the port of entry to the dealership, and the actual cost of setup and dealer preparation and not included in the MSRP;

(e) If the offering price is greater than the MSRP, the portion of the difference shown on the extension sticker between the offering price and the MSRP not representing additional goods or services shall be described as "additional dealer profit," "additional mark-up" or by a term of similar import;

(f) A dealer may not make false or misleading representations concerning the nature or amounts of charges listed on a label or the extension sticker by listing charges for additional goods or services provided which are substantially higher than the charges used by the dealer for the sale of the same or substantially similar goods or services to other buyers;

(g) The Title and Registration Processing fee may be separately stated in all advertisements and sales documents. If separately stated the disclosure shall be clear and conspicuous; and

(h) A dealer shall not represent a Title and Registration Processing fee as a governmental fee or one required by government.

Stat. Auth.: ORS 646.608(1)(u) & ORS 646.608(4)
Stats. Implemented: ORS 646.608(1)(u)
Hist.: 1AG 6-1979, f. & ef. 12-19-79; JD 4-1993, f. 8-6-93, cert. ef. 8-16-93; JD 3-1996, f. 10-18-96, cert. ef. 10-23-96; DOJ 10-2001(Temp), f. & cert. ef. 10-17-01 thru 4-14-02; DOJ 3-2002, f. & cert. ef. 4-22-02

OAR 137-020-0040

Adoption of Federal Credit and Leasing Law

(1) For purposes of this rule, the following definitions shall apply:

(a) "Truth-in-Lending" means the Federal Truth-in-Lending Act, as amended prior to January 1, 1987, (including 15 U.S.C. 1601-1665(a), and any regulations which have been adopted thereto prior to January 1, 1987, including Regulation Z (12 CFR 226);

(b) "Federal Consumer Leasing Law" means the consumer leasing portions of the Truth-in-Lending Act, 15 USC §1667 as amended by the Community Development Act of September 23, 1994, Public Law No. 103-325, § 336, 108 Stat 2160, 2234 and all regulations which implement this section including Regulation M (12 CFR 213);

(c) "Person" refers to those individuals and entities as defined in ORS 646.605(4);

(d) "Real Estate, Goods or services" refers to those items defined in ORS 646.605(7).

(2) It is unfair or deceptive conduct in trade or commerce for a person to advertise, offer credit or extend credit related to the purchase of real estate, goods or services in violation of Truth-in-Lending or the Federal Consumer Leasing Law.

[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]

Stat. Auth.: ORS 646
Stats. Implemented: ORS 646.608(1)(u)
Hist.: JD 1-1987, f. 2-5-87, ef. 2-15-87; JD 9-1994(Temp), f. & cert. ef. 11-23-94; JD 5-1995, f. & cert. ef. 4-7-95

OAR 137-020-0050

Motor Vehicle Advertising

(1) For purposes of this rule, the definitions specified in OAR 137-020-0020 shall apply.

(2) It is unfair or deceptive in trade or commerce for a dealer to advertise motor vehicles if:

(a) The dealer represents that motor vehicles or other property to be received in trade in conjunction with the purchase of a motor vehicle will be valued at a specific amount, range of amounts or guaranteed minimum amount;

(b) The dealer represents that purchasers of vehicles will receive a cash rebate, discount certificate, coupon or other similar promotion unless it is offered by a manufacturer or another party, independent of the dealer and without dealer participation;

OFFICIAL COMMENTARY: Rebates controlled by the dealer may be illusory because the dealer may simply increase the offering price or limit the dealer's negotiated price by the same amount as the ostensible value of the rebate. The rule eliminates this possibility by prohibiting such rebates. Rebates which do not expose consumers to those risks are not intended to be prohibited by this rule.

(c) The dealer includes lease and sale offers in the same advertisement without making a clear and conspicuous distinction as to which terms shall apply to each respective offer;

(d) The dealer represents that motor vehicles are offered for sale at a price that is compared in any manner to the dealer's "cost" or terms of essentially identical import unless the advertisement:

(A) Exclusively uses the term "invoice" or "invoice price"; and

(B) Complies with the following:

(i) The invoice price shall be the final price listed on the manufacturer's invoice after subtracting any amount identified on the invoice as being held back for the dealer's account, and after subtracting any advertising fees or manufacturer to dealer rebates or incentives;

(ii) Purchasers shall be able to purchase any vehicle described by the advertisement at the offering price; and

(iii) The invoice shall be readily available for inspection by prospective customers.

(e) The dealer represents that financing is available for the purchase of motor vehicles at a buy-down rate unless the advertisement includes a clear and conspicuous disclosure that the interest rate is not sponsored by the manufacturer, if such is the case, and the amount of the buy-down is reflected in the Federal Truth in Lending Statement, unless the dealer can clearly substantiate that the cost of the buy-down is spread throughout all of the dealer's transactions. For purposes of this subsection, "manufacturer" includes any subsidiaries of the manufacturer which offer motor vehicle financing;

(f) The dealer fails to incorporate a material statement in motor vehicle advertising:

(A) Which is required by law or by these rules, or without which the advertisement would be false or misleading; and

(B) Which is not presented in a clear and conspicuous manner.

(g) The offering price or an offer to lease applies to a specific vehicle, or to a specific or limited number of vehicles of a specific model or type, unless:

(A) The number of vehicles available is disclosed; and

(B) Each vehicle is clearly and conspicuously identified in the advertisement by stock number, vehicle identification number or license plate number.

(h) The vehicle is not available for immediate delivery, unless the advertisement clearly and conspicuously states the vehicle is in transit, on order, or obtainable only by special order or dealer trade, and that it is not in stock;

(i) The dealer advertises a used vehicle, which was manufactured less than five years prior to the date of the advertisement, without designating the vehicle as "used." Other descriptive terms may be substituted for the term used, but not so as to create ambiguity as to whether the vehicle is new or used;

OFFICIAL COMMENTARY: Examples of alternative terms include "executive return," "lease return," "dealer demonstrator," or "rental return."

(j) The dealer uses the word "program" unless the advertisement clearly and conspicuously discloses the nature of the "program" or "certification" that is offered with the motor vehicle, and the origin and prior use of the vehicle;

(k) The dealer advertises or posts on a vehicle any words which imply that the offering price of the vehicle is non-negotiable when in fact the dealer has a pattern or practice of negotiating the offering price of the advertised vehicles;

(l) The dealer advertises any vehicle without disclosing material limitations of the terms listed in the offer, including, but not limited to, the length of time that the offering price is in effect. Advertisements which do not list any effective dates will be presumed to offer advertised vehicles at the "advertised price" until such time as the vehicles are subsequently advertised at different terms or for a period of 30 days, whichever comes sooner;

(m) The dealer advertises any vehicle for sale and does not identify the dealer by the complete business name which indicates that it is a dealer of vehicles, or by the word "dealer" or abbreviation "DLR;"

(n) The dealer advertises a vehicle is reduced in price from the dealer's former price, or that the price is a percentage or dollar amount of savings from the dealer's former price, or words to that effect, unless:

(A) The dealer actually advertised or has records showing that the vehicle has been offered for sale at the former price for no less than 10 days in the prior 30 days; and

(B) For new vehicles only, the dealer lists the MSRP in the advertisement.

(o) The dealer uses images, words, phrases, initials, abbreviations or any other items which are not clear and conspicuous;

(p) The dealer explicitly or implicitly claims that the dealer's offering price is lower than another dealer or dealers', unless the dealer can clearly show, through statistical analysis of other prices in the target market and records of the dealership, that such is the case;

(q) The dealer advertises an interest rate that is adjustable without clearly and conspicuously disclosing that the interest rate is adjustable;

(r) The dealer advertises the offering price of a vehicle as discounted or in any way reduced by a specified amount below the MSRP or the dealer's sale price unless the MSRP, the amount of any discount, rebate, or other price reduction and the final offering price are clearly and conspicuously displayed in figures. Each figure shall be labeled with a clear and conspicuous description;

(s) The dealer advertises that more than one vehicle of a given model is available and identifies the offering price of a vehicle using the words "as low as" or "starting at" or words to that effect, unless the advertisement clearly and conspicuously states the number of vehicles available at the offering price; or

(t) The advertisement includes any rebates or reductions, unless the offering price, including such rebates and reductions, is available to every purchaser or member of the general public without exception. Rebates or reductions which are not available to every purchaser or member of the general public, such as "commercial rebate," "college graduate rebate," or "first time buyers' rebate" may be listed in the advertisement, but may not be subtracted from the price so as to reduce the final price.

(3) It is unfair or deceptive in trade or commerce for a dealer to advertise the lease of any vehicles unless the following information is clearly and conspicuously stated:

(a) That the vehicle price stated is for a "lease";

(b) The MSRP and the capitalized cost if different than the MSRP;

(c) The capitalized cost reduction, initial payment, security deposit, administrative fees and any other additional costs due at the time of delivery, and the total of those amounts;

(d) The total lease charge, which includes:

(A) The total of the monthly payments;

(B) Any lease acquisition fees;

(C) The total of the amounts listed in 3(C); and

(D) Any required lease disposition or termination fee.

(e) The monthly lease payment and term of the lease;

(f) The residual value of the vehicle at the end of the lease term; and

(g) Any lease return fee which a consumer must pay if the consumer chooses not to purchase the vehicle at the end of the lease.

Stat. Auth.: ORS 646.608(1)(u) & ORS 646.608(4)
Stats. Implemented: ORS 646.608(1)(u)
Hist.: JD 1-1987, f. 2-5-87, ef. 2-15-87; JD 3-1996, f. 10-18-96, cert. ef. 10-23-96

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