Advertising Compliance – Dodging Bullets

I remember the good old days when I was blissfully ignorant about everything except making the next car deal.
Back in the days when I was a dealership general manager, I couldn’t wait for the next big sale, promotion, mailer, etc, whatever it took to make things happen. I gladly signed up for whatever “Next Big Thing” my boss was willing to pay for. After all, we had to keep the staff pumped up and the customers coming in, right?

Well, since then I’ve learned a thing or two about compliance and now realize that many of the programs we participated in were questionable at best or downright misleading (and thus, illegal) at worst. I never gave those advertisements a second thought because I figured we paid the program vendors a lot of money so they must be legal and proper, right? And even if the ads were improper, the vendor would be responsible, not us, right? Ah, wrong and wrong.

There was one program that we did that still gives me night terrors when I think about it. I was GM at a dealership that was part of a group in California and I got the word from the corporate office that we signed up for a promotion with a company from another state. It went something like this: the company sent out mailers which were simulated newspaper ads with my picture and all kinds of exciting quotes from me about this amazing sale we were putting on. Now the really exciting part was that these ads were mailed to people in hand-addressed envelopes, so they were more likely to open it. When the addressee opened the envelope, he or she found the “newspaper ad” with a Post-it note stuck to it signed by “J”, an apparent friend of theirs who saw the ad and thought they would be interested.

I loved it! I thought this was a great marketing concept. Everyone knows someone with the first initial J, so it had a certain degree of credibility. Of course, a few customers were a bit savvier and called the dealership to express their disgust with our “sleazy tactics”, but I digress.

At any rate, I was excited, the staff was excited, and, not surprisingly, the promotion did quite well. So, what’s the problem?

Well, the ad was “questionable” in all kinds of ways, such as:

• Proclaimed that the dealer “used $23 million from 18 banks to revive the local credit market during this sale” and that we had a “partnership local banks for a special credit and pricing event” – sorry, but we didn’t have any deals with any banks for any amount of money.
• Stated that these “banks” were offering us “preferred terms that our competitors couldn’t match in this market” – yeah, sure…
• 3.9% APR available on certified pre-owned vehicles – too bad we didn’t have any CPO cars…
• Vehicle payments advertised that virtually no one would qualify for: 60 month financing on an 8 year-old car with $29 down and an amount financed of less than $5,000… Good luck with that. (I don’t know, maybe one of those 23 phantom banks that I allegedly hooked up with would have done that kind of a deal?)

As far as I’m concerned, I – and the dealer – dodged a bullet with that ad. The worst part, of course, being the “I” part. My name, my picture and my “quotes” were all over the ad. Was I potentially liable for any violations? Heck yeah!

Advertising is considered deceptive if “members of the public are likely to be deceived” or the advertisement has a “tendency or capacity to mislead the public”. If an ad is deceptive, an advertiser has liability regardless of whether there was intent to deceive. A dealer has the duty to investigate the accuracy of any statements made in advertising. You should never assume that advertising agencies or representatives know all the laws and regulations governing advertising compliance. This is particularly true of companies based in other states, such as internet and direct mail providers. State advertising laws are very stringent and the responsibility for compliance lies with the dealership, not the advertising agency.

Bottom line: Be careful when advertising. If you’re not sure about an advertisement or promotion, it’s a good idea to have an attorney look it over. It’s probably better than trying to dodge those bullets.

Legal Considerations Regarding the Regulation of Signs

A sign is defined by the International Code Council as any device visible from a public place that displays either commercial or noncommercial messages by means of graphic presentation of alphabetic or pictorial symbols or representations. There are significant legal considerations that affect governmental agencies’ ability to enforce sign regulations without having the proper sign codes and ordinances capable of passing constitutional tests and judicial scrutiny. There is a strong need for local lawmakers to be cognizant of the challenges that can be presented when the enforcement of sign codes and zoning ordinances cause citizen discontent and possibly lead to claims of unfair treatment under the law. Many business owners may attempt to litigate increased signage regulation by claiming unconstitutionality. It is imperative to ensure that the service that is provided, and the codes that are enforced, are beneficial and lawful.

There are many reasons why a wide variety of signs are regulated. They may range from purely aesthetical concerns to the desire to promote cohesive business advertising and even for purposes of safety. Unregulated signage often leads to visual blight, cluttered storefronts, which also assist in limiting visibility to interior of stores from the exterior, a concern for law enforcement. Uncontrolled signage may become inefficient, as well as, unpermitted signs may become dangerous if improperly installed.

Since Zoning and Code Enforcement Agencies are part of governmental bodies, the administrative actions that are taken are subject to basic constitutional checks. The First, Fifth and Fourteenth Amendments to the United States Constitution all have some relevance to signage regulation and personal rights. The most critical issue that is usually raised when applying constitutionality is whether or not a sign code attempts to regulate sign content. The First Amendment to the US Constitution states that “Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof; or abridging the freedom of speech.” In order for a sign code or zoning regulation to pass strict scrutiny under the First Amendment, it needs to be content-neutral. Sign codes that are content-based may be problematic to enforce lawfully. In the case North Olmstead Chamber of Commerce, et al v. City of North Olmstead, State of Ohio, 2000, the Federal Court struck ruled a sign code unconstitutional when a directional sign in front of a business could contain the words such as “Enter Here” but could not display the McDonald’s “Golden Arches” logo or the words “Honda Service.” The court also cited the fact that the local government had interpreted another content-based provision of the code by prohibiting a Dodge dealership from displaying on its sign a corporate logo.

Based upon the ruling in this case if a sign code contains regulations or ordinances that define sings by their use, such as identification sign, information sign, etc., the only way to actually classify a sign may be by the content of the message on the sign and such codes are therefore content-based. Basically, a sign regulation may be considered to be unconstitutional when regulation of a sing requires the reading of the message. In order for a sign code to be considered constitutional it has to avoid regulating a particular viewpoint or amount to censorship. Most signs codes should therefore have certain signs as being classified as exempt or not requiring a permit, but requiring limits on number and size.

The application of the Fifth Constitutional Amendment that guarantees that “no person shall be…deprived or life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation” towards the regulation of signage deals with actual government takings of sign through physical removal or prohibition. This provision may apply to signs that were once lawful, but have been taken or made to be removed by codes that severely limit the ability for a business to communicate to customers. Additionally, on-premises signs may be treated differently than off-premises ones involved in required removal or condemnation and may be suitable for Fifth Amendment compensation. If a code is being changed to prevent once authorized signs, careful consideration should be given towards the grandfathering-in of previously existing signs or an amortization period for the removal of those signs. The jurisdiction may also opt to provide for the removal of such signs at no cost to the sign owner.

The Failure to provide certain requirements such as reasonable permit fees or clear permit standards and codes may constitute a violation of the Fourteenth Amendment. In addition, due process irregularities may also violation the First Amendment and render a code unenforceable. Problems such as lack of due process, unconstitutionality and restrictions on personal rights, may lead to the filing of lawsuits and result in unnecessary litigation with sign owners, business owners and sign companies.

In 2003 the City of Sunrise, Florida was sued for unconstitutional inconsistencies discovered in their sign code which ultimately allowed Coral Springs Street Systems, Inc. to construct a billboard within the cities’ jurisdiction. The attorney for the plaintiff pointed out that permits were not needed to display temporary political signs, but required for other similar signs and this sign company had also won similar lawsuits against three other South Florida municipalities.

In the 1994 case of Ladue v. Gilleo, 512 US 43, the court found that a city ordinance was not constitutional when it aimed at prohibiting the posting of political signs in residential neighborhoods. The issue of this particular case was that the code restricted speck without an adequate alternative for people of modest means to express themselves. Such is the case where prohibiting the display of a “For Sale” sign at a residence could be viewed as unconstitutional because all other options for expressing the same message would be inadequate because of cost and lower likelihood of reaching persons who were deliberately seeking the information. Sign codes will typically allow for these types of signs only restriction areas such as size and number while still allowing for the accomplishment of the goal of the sign owner.

Before the mid 1970’s very little constitutional protection was afforded to advertising classified as “commercial speech.” However, in 1980, the Central Hudson Gas and Electric v. Public Service Commission, 447 US 557, case defined the test for constitutionality of restrictions on commercial speech which became known as the “Central Hudson” test. This test asks four distinct questions that determine allowable restriction that may be placed on commercial speech:

1) Is the speech protected by the First Amendment

2) Is a substantial governmental interest being served

3) Will there be a direct benefit to a legitimate governmental interest

4) Is the regulation more restrictive than necessary

Of course prohibited language that relates to items such as obscenity and illegal activity, for example, would not be protected speech.


While sign codes may lawfully regulate the height, size, location and other characteristics of business signs, regulations that define signs based on their content or the message that they display may infringe on constitutional rights. In order to regulate signs that are placed in residential areas, the codes or ordinances need to focus on the areas that may be regulated, such as limiting the size and height of signs that may be placed at a residence. When regulating business signs, zoning laws which may be constitutional do not allow for a governmental entity to fully remove all economical use of property through the exercise of police powers via zoning regulations and sign ordinances. Since the business community does heavily influence local politics, it is important to strike a balance between needs of regulation and advertising.

This article was designed to provide accurate and authoritative information in regard to the subject matter covered. It was written with the understanding that the author is not engaged in rendering legal or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.

Adult Bullying, Tips For Legal Loitering & Other Interesting Book Titles

It all started when my wife was pregnant and we were at Border’s. We were walking by the help desk and I stopped and asked the employee to look up a book title for me. “Excuse me, but I’m looking for a book entitled, “How to NOT be a Dead Beat Dad.” This obviously embarrassed my wife, but I got great enjoyment out of watching the employee type in the ridiculous title in the computer.

I was referred to visit their Family section. I got such a kick out of it, that I make it a habit to ask for interesting sounding titles whenever we head over to the book store. If your like me and find the book store a little stuffy and boring, this may be a good way to add a little excitement to your next visit.

Excuse me, but what section can I find…

“Adult Bullying-Tips for Successful Bullying Late in Life”

“How to Pressure Your Kids into Excellence”

“Puppy Mills-How to dodge regulations and the ASPCA”

“Road Rage Techniques and Success Stories”

“Why it’s not OK to cry” A Children’s Book

“The Benefits of Smoking Cigarettes”

“I have my Art History Degree, now what the heck do I do?”

“Legal Loitering”

“How to approach your wife when you just got fired for obsessively looking at internet porn on company time”

“Organ Harvesting For Beginners”

“6 ways to sneak book store books into the restroom”

“Oops I slipped. Who can I sue and for how much money?”