Housing and Community Development (HCD) Practice Exam

Which of the following is true regarding false statements in advertising?

1. False statements are permissible as long as they do not involve price

2. It can lead to license action for the dealer

3. Only written advertisements are subject to this rule

4. Only verbal statements are subject to scrutiny

The correct answer is: It can lead to license action for the dealer

The assertion that false statements in advertising can lead to license action for the dealer is correct because regulatory agencies often take violations of advertising laws seriously. In the context of housing and community development, false advertising can mislead potential buyers or renters, affecting their decisions and potentially leading to financial loss or legal disputes. Dealers or agents found to make false statements can face disciplinary measures, including the revocation or suspension of their licenses, which serves as a deterrent against such practices. The impact of false advertising extends beyond the immediate stakeholders involved; it can tarnish the reputation of the entire industry and result in decreased consumer trust. Laws designed to protect consumers require honesty and transparency in advertising, creating a legal framework for holding dealers accountable for any misrepresentations they make. This protective approach underscores the importance of ethical marketing practices within the housing and community development sector.