Understanding Brand Compliance Vs. Legal Compliance

If you’re a dealership owner or manager, there’s a good chance you’re a little familiar with Advertising Compliance, but did you know there is a difference between Brand Compliance and Legal Compliance? At The Automotive Advertising Agency, we deal with compliance guidelines on a daily basis and have put together this guide to help illuminate the differences between the two.

What is Brand Compliance?

Franchise dealerships should be at least somewhat familiar with brand compliance, as it is a major component of receiving COOP funds. Put simply, Brand Compliance is a set of rules set by OEMs regarding how their brand should be represented. This can cover a wide range of topics, such as store structure and signage, but it mostly pertains to advertising guidelines.

Common Brand Compliance Requirements

Some compliance requirements are pretty obvious, such as including the proper brand logos, but there are plenty that you would never think of without reading the rules. Those are what can really trip up dealerships. For example:

• Ford, Nissan, and Honda require that rebates be sourced correctly (e.g., "$2,000 Nissan Cash Back" instead of "$2,000 Cash Back").

• General Motors has expanded pre-approvals for digital ads but still limits them to select formats.

• Toyota and Hyundai require clearer APR disclosures for digital and video ads.

Why Brand Compliance Matters

Most OEMs offer some level of pre-approval for advertising, making it easier to ensure compliance. However, understanding these guidelines can save time and prevent costly mistakes. When it takes up to three days just to hear back on the first submission, getting something right the first time can mean making or missing a deadline.

Having a knowledgeable team can help navigate these rules. At The Auto Ad Agency, we have decades of experience in brand compliance and can ensure you receive the highest possible reimbursement on your media spend.

What is Legal Compliance?

A common misconception is that OEM-approved advertisements automatically comply with legal standards. This is not the case. Brand Compliance protects the OEM’s reputation, while Legal Compliance safeguards consumers and dealerships from misleading advertising.

Key Differences Between Brand and Legal Compliance

• Brand Compliance: Ensures dealership ads meet OEM brand guidelines.

• Legal Compliance: Ensures dealership ads adhere to state and federal laws.

Legal Compliance Updates for 2025

• State-Specific Regulations: Consumer protection laws vary significantly by state. For example, California and New York have enacted stricter guidelines on lease disclosures and promotional APR claims.

• Federal Trade Commission (FTC) Crackdown: The FTC has increased enforcement against misleading "bait-and-switch" advertising tactics. Violations can now result in fines exceeding $15,000 per incident.

• Digital Advertising Scrutiny: With more dealerships utilizing digital and social media ads, regulators now require clearer disclaimers for financing offers, lease terms, and pricing transparency.

Risks of Non-Compliance

Now you may be thinking, “This isn’t strictly allowed under my state rules, but we run ads like this all the time. My competitors do it, so what’s the big deal?” Every time you run an ad that comes in conflict with state advertising rules, you are taking a big risk of incurring fines and opening yourself up to litigation by litigious consumers. The FTC has increased enforcement, and violations can result in hefty fines.

It can be especially ill-advised to run ads with code violations if there is any bad will between your store and rival dealerships. Competitors often monitor each other’s advertisements, looking for any error they can report to the state.

Best Practices for Staying Compliant

To ensure your dealership's advertising remains compliant in 2025:

1. Stay Updated on OEM Guidelines: Check for annual updates on COOP and branding requirements to avoid surprises.

2. Understand State & Federal Laws: Laws vary from state to state, so make sure you adhere to the specific regulations in your area.

3. Leverage Pre-Approval Processes: When available, utilize OEM and legal review systems to get ads approved before running them.

4. Work with Compliance Experts: Partnering with professionals like The Auto Ad Agency can help ensure your dealership’s creative campaigns remain compliant while driving results in an increasingly regulated industry.

If you have any questions about Brand or Legal Compliance, please contact us at The Automotive Advertising Agency. We have decades of combined experience helping dealerships produce hard-hitting creative that adheres to all compliance rules, protecting their investment and their business.