BEFORE THE UTAH STATE TAX COMMISSION
) Appeal No. 00-1167
v. ) Account No. #####
MOTOR VEHICLE ENFORCEMENT ) Tax Type: Advertisement Violation
DIVISION OFTHE UTAH STATE )
TAX COMMISSION, ) Presiding: Davis
G. Blaine Davis, Administrative Law Judge
For Petitioner: PETITIONER REP
For Respondent: Mr. Gale Francis, Assistant Attorney General
Ms. Julie Thomas, from the Motor Vehicle Enforcement Division
Mr. Tom Bohling, from the Motor Vehicle Enforcement Division
STATEMENT OF THE CASE
This matter came before the Utah State Tax Commission for an Initial Hearing pursuant to the provisions of Utah Code Ann. '59-1-502.5, on February 5, 2001.
In August, 2000, Petitioner sent out a direct-mail advertisement that contains a "seal" which says "APPROVAL" and shows an approval number and authorization by XXXXX. The mailed advertisement also contains a sentence which says, "special leasing and financing will be available for everyone."
Respondent has charged Petitioner with advertising violations because it maintains that the advertisement mailed by Petitioner is misleading or inaccurate under Utah Code Ann. '41-3-210, by allegedly violating Rule R877-23V-7(7), which provides that: "Statements representing or implying that no prospective credit purchaser will be rejected because of inability to qualify for credit may not be used."
Petitioner introduced a list of 27 financing agencies with whom it periodically finances vehicles for various purchasers, and represented that they each have different standards and requirements for financing vehicles. Petitioner further represented that it can in fact finance a vehicle for everyone. They may not be able to finance every vehicle for everyone, but they can finance some vehicle for everyone. Although some conditions may be imposed by the financing agency, those conditions may not relate to credit history, but may relate to such things as the amount of the down payment.
Utah Code Ann. '41-3-210 provides, in relevant part:
(1) The holder of any license issued under this chapter may not:
(a) intentionally publish, display, or circulate any advertising that is misleading or inaccurate in any material fact or that misrepresents any of the products sold, manufactured, remanufactured, handled, or furnished by a licensee.
Rule R877-23V-7(7), provides:
7. Finance. The phrases, "no finance charge", "no carrying charge", or similar expressions may not be used when there is a charge for placing the transaction on a time payment basis. Statements representing or implying that no prospective credit purchaser will be rejected because of inability to qualify for credit may not be used.
In this matter, the Respondent maintains that the advertisement which was mailed to individuals, represents or implies that no prospective credit purchaser will be rejected because of inability to qualify for credit. Petitioner maintains that the advertisement is not a violation, and the statement "special leasing and financing will be available for everyone" is not a violation of that provision for two reasons: First, Petitioner says it is a true statement, and that special leasing and financing is available for everyone, and that everyone can be financed. There may be some conditions which are required by the financing agency, such as the amount of the down payment, but nevertheless, financing is available for everyone, and the advertisement, therefore it is not misleading or inaccurate. Second, Petitioner maintains that even if there is anyone that cannot qualify for the special financing, the advertisement is clear that it is subject to credit approval by several times stating O.A.C. (on approved credit) and stating credit terms.
In the opinion of the Commission, the "APPROVAL" seal, together with the statement, "special leasing and financing will be available for everyone" do constitute a violation of the rule because they represent or imply "that no prospective credit purchaser will be rejected because of inability to qualify for credit."
The defense of Petitioner is that the statements in the advertisement are true, and therefore they cannot be a violation.
The defense argued by Petitioner fails for two reasons; first, the purpose of the rule is to protect consumers from misleading advertising; and second, there is a substantial difference between false and misleading. The advertising at issue may not be false, but it does attempt to imply "that no prospective credit purchaser will be rejected because of inability to qualify for credit." In fact, customers with an insufficient job history or down payment may be rejected. It is therefore misleading and violates the rule.
DECISION AND ORDER
Based upon the foregoing, the Commission finds that the mailed advertisement at issue violated Utah Code Ann. '41-3-210 and Rule R877-23V-7(7). Accordingly, the notice of violation issued to Petitioner by Respondent is hereby sustained, and the Petition for Redetermination is denied. It is so ordered.
This decision does not limit a party's right to a Formal Hearing. However, this Decision and Order will become the Final Decision and Order of the Commission unless any party to this case files a written request within thirty (30) days of the date of this decision to proceed to a Formal Hearing. Such a request shall be mailed to the address listed below and must include the Petitioner's name, address, and appeal number:
Utah State Tax Commission
210 North 1950 West
Salt Lake City, Utah 84134
Failure to request a Formal Hearing will preclude any further appeal rights in this matter.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
DATED this 19th day of April, 2001.
Pam Hendrickson R. Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc B. Johnson