Think you are an expert on advertising regulations in Alberta? What about when credit is offered? Take this quiz and see if you are in the know or need to refresh.

How well do you know automotive advertising laws?

*Note: Click on the Answer section to reveal the correct answer to the question.*

1. Any ad that offers credit and states the interest rate and/or amount of payment, must also state the:

a)      Term and GST

b)      APR and Term

c)      GST and APR

d)      Term, APR and GST

Answer

Answer: b—APR and Term

Section 6 (2) of the Cost of Credit Disclosure Regulation states that any advertisement that offers credit and states the interest rate or amount of payment must include the APR (interest rate) and the term.

2. In addition to the APR and term, if advertising a credit sale of a specific vehicle the ad must also state:

a)      The all-in price of the vehicle (including GST and financing charges)

b)      The GST

c)      The all-in price of the vehicle (except GST and financing charges) and the total cost of credit

d)      The cost of standard maintenance jobs

Answer

Answer: c– The all-in price of the vehicle (except GST and financing charges) and the total cost of credit

Cost of Credit Disclosure Regulation, section 6:

(2) The information required to be disclosed for the purposes of section 76(1) of the Act is

(a) the APR, and

(b) the term.

(3) In addition to the information required under subsection (2),

(a) an advertisement for a credit sale of a specifically identified product must disclose the cash price, and

(b) an advertisement for a credit sale in connection with which any non-interest finance charge would be payable must disclose

(i) the cash price, and

(ii) the total cost of credit,

except that an advertisement on radio, television or a billboard or other media with similar time or space limitations is not required to disclose the total cost of credit.

3. What is the definition of “total cost of credit”?

a) The total amount it will cost to borrow money for the first 24 months

b) The total amount it will cost to borrow money excluding interest

c) The total amount it will cost to borrow money, including interest, fees and any other costs associated with the loan

d) The total amount it will cost to borrow money, including interest for the first 24 months

Answer

Answer: c– The total amount it will cost to borrow money, including interest, fees and any other costs associated with the loan

Section 59 (2) of the Fair Trading Act states that the total cost of credit is the difference between the value received or to be received by the borrower in connection with a credit agreement and the value given or to be given by the borrower in connection with the credit agreement, disregarding the possibility of prepayment or default.

4. Which one of these scenarios is against the advertising regulations?

a)      Not offering financing options

b)      Advertising multiple vehicles for different interest rates and disclosing the information as a representative transaction

c)      Offering financing for an RV over a 20 year (240 month) amortization but only basing credit-related disclosure on a five year (60 month) term

d)      Using large font for the payment and putting the rest of the information in fine print

Answer

Answer: d– Using large font for the payment and putting the rest of the information in fine print

 

Section 4 of the Cost of Credit Disclosure Regulation states that the APR (interest rate) must be as prominent in font, size and sound as any of the information that required the APR to be disclosed, e.g., amount of payment. Any other information required to be disclosed must be conspicuous.

5. If an ad states an interest-free period then it must:

a)      Disclose whether the transaction is unconditionally interest-free during the period or indicate if interest accrues during the period but will be forgiven under certain conditions

b)      Double the font size to clearly show how long the interest-free period is good for

c)      Disclose that the transaction is unconditionally interest-free if it is a radio ad

d)      Put the total cost of credit in the fine print and only put focus on the interest-free period

Answer

Answer: a– Disclose whether the transaction is unconditionally interest-free during the period or indicate if interest accrues during the period but will be forgiven under certain conditions

 

Section 7 (1) (a) & (b) of the Cost of Credit Disclosure Regulation states that an ad that offers interest-free periods must disclose if the transaction is unconditionally interest-free during the period or if interest accrues during the period but will be forgiven under certain conditions.

Results

How did you do? If you answered any of the questions incorrectly, you should review the advertising regulations. You may also want to consider retaking the Salesperson Fair Trading Act course which includes a module on advertising. The cost is $160. Details on how to register at amvic.org. Click here to view the advertising rules.