BBB Bans Certain Trade-In Value Advertisements

The Better Business Bureau in Western Michigan is cracking down on car dealership advertising. Specifically, they are banning ads that specify an exact trade-in dollar value or provide a range. That BBB is also reportedly asking dealers to stop using the term, “minimum trade-in allowance,” in their advertisements.

Other specifically banned advertisement examples include the following:

-“Clunker Cash” or “Cash For Clunkers”

– Minimum Guaranteed ($ Dollar Amount) for your trade-in” or “($ Dollar Amount) Minimum Trade Value”

-“At Least ($ Dollar Amount) For Your Trade-in”

-“Push, Pull or Tow, We’ll give you ($ Dollar Amount)

-“We’ll Give You ($ Dollar Amount) For Your Trade-In Regardless Of Condition”

The BBB also gave consumers advice about how to deal with car dealerships. They counseled consumers to take their vehicle to 3 to 4 different lots looking for the best price and to research their vehicle value using numerous online resources. What impact will this type of action have on dealerships? Is the Better Business Bureau going too far?

Could this be another example of the government reaching into private business unnecessarily? We reported last month that some pundits believe that the Consumer Financial Protection Bureau should have more direct monitoring power over car dealerships. This is the same organization that is not accountable for congress for its budget. In 2013, The CPBP fined Ally Bank $98 million dollars for vastly unproven allegations of “discriminatory lending.” If given more sweeping authority over car dealerships, the CFPB would take over that power from the FTC. The CFPB isn’t able to directly supervise car dealers since they received an exemption from the 2010 Dodd-Frank Wall Street Reform Act that created the government financial organization.

What can dealerships do about this type of Better Business Bureau Regulation? Won’t this rule change take away business opportunities? One commenter on this story on mlive.com sure feels that way. Username GreenWpride wrote, “I guess I don’t see the harm of advertising a minimum trade value, if the dealer honors that. I recently traded in a car that was not worth what I got in trade for it. The dealer gave me what they advertised they would. Nothing deceptive there. The article claims it draws buyers to the dealership. Isn’t that what all advertising is supposed to do? What am I missing?”

The author responded by saying she was glad that it worked out, however if the post was true this consumer was helped by the advertised trade-in value, not hurt.

If the advertised trade-in value worked well for one consumer, it’s possible that a similar type of advertisement and program has been of benefit to other drivers who wanted to trade-in their old vehicle. What do you think of this situation? Should dealers be able to advertise a specific trade-in price or range? Or, is doing so going to lead to negative interaction with consumers? The answer as always, is up to you.