That’s what my mother would tell me when I’d slip up and use a four-letter word in her presence. She’d scold me, telling me that those four-letter words were the sign of a weak vocabulary.

I was thinking of that admonition the other day when I was contemplating some of the words and phrases that dealers and finance companies use in their ads and websites—words they ought to strike from their vocabularies. Let’s start with some of the four-letter variety.

First on my list are “loan” and “note.” If you are a dealer selling cars to consumers on credit by having your buyers sign a retail installment contract, then your business has nothing to do with loans and notes. Those words are common, sloppy industry shorthand for the instruments that dealers create when they sell cars on credit, but they are not accurate, and the misuse of them can have dire consequences for your business.

The same goes for the somewhat longer word “lender.” The bank that makes your dealership a working capital loan is a “lender.” A bank or other company that provides your dealership with inventory financing, or floor planning, is a “lender.” A bank, credit union or sales finance company that buys your retail installment contracts is not a “lender.” If you need a generic phrase that accurately describes these folks, maybe you could use “financing source,” but don’t use “lender.”

“Free” is another very dangerous four-letter word that dealers would do well to forget. Pick up a weekend paper and turn to the car section or take a look at that mailer you just got from the dealer down the street, and you’re likely to see that if you buy a car from the dealer, you’ll get something (a gas card, tires for life, a date with Lady Gaga) for free. The Federal Trade Commission and a lot of state attorneys general will land on you like a ton of bricks if they see the word “free” employed improperly.

OK, it isn’t a word, and it’s only three letters, not four, but my next candidate is “WAC.” That term, which stands for “with approved credit,” appears in dealer ads all the time. Presumably the dealer placing the ad understands what it means, and industry lawyers like me know what it means, but (news flash—hold the presses!) ordinary people don’t have a glimmer of a clue what “WAC” stands for. And you see it used in ads that have plenty of white space, where spelling out “with approved credit” would not be a problem. It wouldn’t surprise me to see a state regulator challenge a dealer’s use of the term.

“Warranty” makes my list, as well, at least when used incorrectly, as it frequently is. Under federal law, a warranty can be offered only by a manufacturer or a seller, and does not involve a separate charge. You hear dealers talking about “extended warranties” all the time. The problem is that the products they describe are not warranties at all, but are service contracts or mechanical breakdown protection contracts. State laws work this way, as well. Warranties are part of the “basis of the bargain” for the goods purchased. Translation: there is no separate charge.

And one of the worst offenders is the phrase “all applications considered.” That’s a dealer’s cute attempt to imply that all credit applications are “accepted,” when that is not the case. That attempt is one that Attorneys General don’t like and have frequently challenged.

Do any of these words or phrases pop up in your advertising or on your website? If so, it’s time to reach for that bar of soap.

Tom Hudson is the author of CARLAW® II, Street Legal, and CARLAW®, and is the editor/author of the CARLAW® F&I Legal Desk Book, the publisher of Spot Delivery®, a monthly legal newsletter for auto dealers, and the editor in chief of CARLAW®, a monthly report of legal developments in all states for the auto finance and leasing industry. In addition, he is a partner in the law firm of Hudson Cook, LLP. For information, call 410-865-5411, email This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit www.counselorlibrary.com. Based on an article appearing in Spot Delivery, single print publication rights only to Dealer Marketing Magazine. HC# 4834-6460-0334 (12/11)

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