02-0640

Advertisement Violations

Signed 11/27/02

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

PETITIONER, )

) ORDER

Petitioner, )

) Appeal No. 02-0640

v. )

)

MOTOR VEHICLE ENFORCEMENT ) Tax Type: Advertisement Violations

DIVISION, UTAH STATE TAX )

COMMISSION, ) Judge: Phan

)

Respondent. )

_____________________________________

Presiding:

Jane Phan, Administrative Law Judge

Appearances:

For Petitioner: PETITIONER REP

For Respondent: Laron Lind, Assistant Attorney General

Julie Thomas, Agent, 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 September 17, 2002.

Petitioner is appealing a $100 fine assessed for publishing an advertisement in violation of Utah Code Ann. Section 41-3-210 and Utah Admin. Rule. R877-23V-7(7). The advertisement, published on March 15, 2002, was Petitioner's first violation.

The advertisement listed a number of 2002 and 2003 vehicles and stated in large print they were "$90*/Down $90*/Mo." At the bottom of the advertisement in very small print the add stated, "*With approved credit. Example: VEHICLE, 3 payments of $90.00. 57 payments of $275 @ 7.5% with $90 down. . ."

Respondent assessed the fine as the advertisement was both misleading in violation of Utah Code Ann. Sec. 41-3-210 and expressly violated provisions of Utah Administrative Rule R877-23V-7. These cars were not being sold for $90 down with monthly payments of $90 as is indicated from the large print of the add. Only the first three monthly payments were $90. The remaining 57 monthly payments were much higher.

Petitioner argued that his advertisement was very similar to an advertisement from a competitor and questioned whether the rule was enforced uniformly. He also pointed out that many adds have disclaimer language in small print and felt that the use of small print was common industry wide. He acknowledged that he knew the rule prohibited the use of small print when disclosing material facts as he had been involved in the rule making process, but it was his opinion that the portion of the rule concerning the small print was not being enforced. He stated that it was too difficult for dealers to keep up with which portions of the rule were being enforced and which were not.

Respondent's representatives stated that Respondent does attempt to enforce the rule uniformly and it does assess fines for violations of the rule. They acknowledged, however, that they do not catch every advertisement that violates the rule.

Utah Code Ann. Sec. 41-3-210 (1) prohibits the publication of advertising that is misleading. Utah Amin. Rule R877-23V-7 was enacted with substantial input from the motor vehicle dealers associations to further define and clarify the statute. The rule expressly prohibits use of fine print as a method of disclosing material facts and also prohibits the use of asterisks as a means of contradicting or substantially changing the meaning of any advertisement statements. The Commission agrees with Respondent that this add is misleading in violation of the statute and it also expressly violates provisions of the rule in that material facts were disclosed only in the fine print and asterisks were used to substantially change the meaning of advertised statements.

Unless the rule is modified, the Tax Commission expects Respondent to enforce every provision and prohibition in the rule in its entirety. Although Petitioner feels that certain provisions of the rule were ignored in the past, the Commission finds this to be incorrect. The Commission is aware, through numerous appeals of advertising violations, that fines are in fact being assessed for violations of rule R877-23V-19. When these appeals come before it, the Commission has sustained the fines in the appeals where it determined that the rule had, in fact, been violated. Uniform application of the entire rule is necessary for uniform compliance and so that all the dealers are on notice of what is prohibited in an advertisement. There should never be a question among dealers as to "which provisions of the rule are going to be enforced."

However, if Petitioner and the automobile dealers associations, or Respondent for that matter, feel like the rule is outdated, or too strict or otherwise unworkable, he may request a proposed revision to the rule. Unless the rule is revised, it stands as law and the Commission expects full compliance and enforcement.

APPLICABLE LAW

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, furnished by a licensee; . . . (c) violate this chapter or the rules made by the administration; . . . (Utah Code Ann. Sec. 41-3-210 (1).)

(19) Disclosure of Material Facts. Disclosures of material facts that are contained in advertisements and that involve types of vehicles and transactions shall be made in a clear and conspicuous manner. (a) Factors to be taken into consideration include advertisement layout, headlines, illustrations, type size, contrast, crawl speed and editing. (b) Fine print, and mouse print are not acceptable methods of disclosing material facts. (c) The disclosure must be made in a typeface and point size comparable to the typeface and point size of the text used throughout the body of the advertisement. (d) An asterisk may be used to give additional information about a word or term, however, asterisks or other reference symbols may not be used as a means of contradicting or substantially changing the meaning of any advertising statements. (Utah Admin. Rule R877-23V-7(19).)

DECISION AND ORDER

The advertisement at issue is in violation of Utah Admin. Rule R877-23V-7 and Utah Code Ann. Sec. 41-3-210. Based on the foregoing, the $100 penalty is sustained. 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

Appeals Division

210 North 1950 West

Salt Lake City, Utah 84134

Failure to request a Formal Hearing will preclude any further appeal rights in this matter.

DATED this 27^th day of November , 2002.

____________________________________

Jane Phan

Administrative Law Judge

BY ORDER OF THE UTAH STATE TAX COMMISSION.

The Commission has reviewed this case and the undersigned concur in this decision.

DATED this 27^th day of November , 2002.

Pam Hendrickson R. Bruce Johnson

Commission Chair Commissioner

Palmer DePaulis Marc B. Johnson

Commissioner Commissioner