FTC Announces Sweep Against ten Auto Dealers, Federal Trade Commission
FTC Announces Sweep Against ten Auto Dealers
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The Federal Trade Commission announced today that nine auto dealers agreed to lodge deceptive advertising charges, and the agency is taking activity against a 10th dealer, in a nationwide sweep focusing on the sale, financing, and leasing of motor vehicles.
According to the complaints, the dealers made a multiplicity of misrepresentations in print, Internet, and movie advertisements that violated the FTC Act, falsely leading consumers to believe they could purchase vehicles for low prices, finance vehicles with low monthly payments, and/or make no upfront payment to lease vehicles. One dealer even misrepresented that consumers had won prizes they could collect at the dealership.
“Buying or leasing a car is a big deal, and car ads are an significant source of information for serious shoppers,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Dealers’ ads need to spell out costs and other significant terms customers can count on. If they don’t, dealers can count on the FTC to take act.”
‘Operation Steer Clear’ is the latest effort from the FTC to protect consumers in the auto marketplace. The dealerships that lodged are charged as goes after:
Portion of a Casino Auto Sales ad – advertised price was after a $Five,000 down payment, but that detail was only noted in fine print at the bottom of the ad.
Casino Auto Sales of La Puente, Calif., and Rainbow Auto Sales, of South Gate, Calif., allegedly violated the FTC Act by deceptively advertising that consumers could purchase vehicles at specific low prices when, in fact, the price was $Five,000 higher. Both dealers’ ads involved a mix of English and Spanish. Honda of Hollywood, Los Angeles, and Norm Reeves Honda of Cerritos, Calif., violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the Consumer Leasing Act (CLA) and Regulation M, by failing to disclose certain lease related terms. Norm Reeves Honda’s ads also allegedly violated the Truth in Lending Act (TILA) and Regulation Z, by failing to disclose certain credit related terms.
Nissan of South Atlanta of Morrow, Ga., allegedly violated the FTC Act by deceptively advertising that consumers could finance a vehicle purchase with low monthly payments when, in fact, the payments were makeshift “teasers” after which consumers would owe a different amount. The ads also allegedly violated TILA and Regulation Z, by failing to disclose certain credit related terms.
Infiniti of Clarendon Hills of Clarendon Hills, Ill., allegedly violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the CLA and Regulation M, by failing to disclose certain lease related terms.
Paramount Kia of Hickory, N.C., allegedly violated the FTC Act by deceptively advertising that consumers could finance a purchase with low monthly payments when, in fact, the payments were improvised “teasers” after which the consumer would owe a much higher amount, by several hundred dollars. The ads also allegedly violated the TILA and Regulation Z, by failing to clearly and conspicuously disclose certain credit related terms.
Fowlerville Ford of Fowlerville, Mich., allegedly violated the FTC Act by sending mailers that deceptively claimed consumers had won a sweepstakes prize, when, in fact, they had not. Some of their ads also allegedly violated TILA and Regulation Z, by failing to disclose certain credit related terms.
Southwest Kia companies, including Fresh World Auto Imports, Dallas, Texas, Fresh World Auto Imports of Rockwall, Rockwall, Texas, and Hampton Two Auto Corporations, Mesquite, Texas, allegedly violated the FTC Act by deceptively advertising that consumers could purchase a vehicle for specific low monthly payments when, in fact, consumers would owe a final balloon payment of over $Ten,000. The companies also allegedly deceptively advertised that consumers could drive home a vehicle for specific low up-front amounts and low monthly payments when, in fact, the deal was a lease and they would owe substantially more up-front. The ads also allegedly violated the CLA and Regulation M, by failing to disclose certain lease related terms, and the TILA and Regulation Z, by failing to disclose certain credit related terms.
The proposed consent orders lodging the FTC’s charges in the nine cases are designed to prevent the dealerships from engaging in similar deceptive advertising practices in the future. The orders prohibit the dealerships from misrepresenting in any advertisement for the purchase, financing, or leasing of motor vehicles the cost of leasing a vehicle, the cost of purchasing a vehicle with financing, or any other material fact about the price, sale, financing, or leasing of a vehicle. When relevant, the proposed consent orders also address the alleged TILA and CLA violations by requiring the dealerships to clearly and conspicuously disclose terms required by these credit and lease laws. In the case where the dealerships misrepresented that consumers had won a prize, the proposed order also prohibits misrepresenting material terms of any prize, sweepstakes, giveaway, or other incentive.
The FTC would like to thank the Los Angeles Department of Consumer Affairs for its assistance with numerous investigations in California, and the Michigan Department of Attorney General for its assistance with the investigation in Michigan.
The Commission votes to accept the packages containing the nine proposed consent orders and complaints for public comment were 4-0. The agreements will be subject to public comment for thirty days, beginning today and continuing through Feb. Ten, 2014, after which the Commission will determine whether to make the proposed consent orders final. Submit a comment electronically:
Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), six hundred Pennsylvania Avenue, N.W., Washington, DC 20580.
In addition, the FTC issued an administrative complaint against Courtesy Auto Group of Attleboro, Mass. The FTC alleges the dealership violated the FTC Act by deceptively advertising that consumers can lease a vehicle for $0 down and specific monthly payments when, in fact, the advertised amounts exclude substantial fees. The ads also allegedly crack the CLA and Regulation M, by failing to disclose or clearly and conspicuously disclose certain lease related terms.
The Commission vote to issue the administrative complaint was 4-0.
Consumers in the market for a fresh or used vehicle should read the FTC’s Are Car Ads Taking You for a Rail? and Buying and Possessing a Car.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it emerges to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be attempted in a formal hearing before an administrative law judge.
FTC Announces Sweep Against ten Auto Dealers, Federal Trade Commission
FTC Announces Sweep Against ten Auto Dealers
Share This Page
The Federal Trade Commission announced today that nine auto dealers agreed to lodge deceptive advertising charges, and the agency is taking activity against a 10th dealer, in a nationwide sweep focusing on the sale, financing, and leasing of motor vehicles.
According to the complaints, the dealers made a multiplicity of misrepresentations in print, Internet, and movie advertisements that violated the FTC Act, falsely leading consumers to believe they could purchase vehicles for low prices, finance vehicles with low monthly payments, and/or make no upfront payment to lease vehicles. One dealer even misrepresented that consumers had won prizes they could collect at the dealership.
“Buying or leasing a car is a big deal, and car ads are an significant source of information for serious shoppers,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Dealers’ ads need to spell out costs and other significant terms customers can count on. If they don’t, dealers can count on the FTC to take act.”
‘Operation Steer Clear’ is the latest effort from the FTC to protect consumers in the auto marketplace. The dealerships that lodged are charged as goes after:
Portion of a Casino Auto Sales ad – advertised price was after a $Five,000 down payment, but that detail was only noted in fine print at the bottom of the ad.
Casino Auto Sales of La Puente, Calif., and Rainbow Auto Sales, of South Gate, Calif., allegedly violated the FTC Act by deceptively advertising that consumers could purchase vehicles at specific low prices when, in fact, the price was $Five,000 higher. Both dealers’ ads involved a mix of English and Spanish. Honda of Hollywood, Los Angeles, and Norm Reeves Honda of Cerritos, Calif., violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the Consumer Leasing Act (CLA) and Regulation M, by failing to disclose certain lease related terms. Norm Reeves Honda’s ads also allegedly violated the Truth in Lending Act (TILA) and Regulation Z, by failing to disclose certain credit related terms.
Nissan of South Atlanta of Morrow, Ga., allegedly violated the FTC Act by deceptively advertising that consumers could finance a vehicle purchase with low monthly payments when, in fact, the payments were makeshift “teasers” after which consumers would owe a different amount. The ads also allegedly violated TILA and Regulation Z, by failing to disclose certain credit related terms.
Infiniti of Clarendon Hills of Clarendon Hills, Ill., allegedly violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the CLA and Regulation M, by failing to disclose certain lease related terms.
Paramount Kia of Hickory, N.C., allegedly violated the FTC Act by deceptively advertising that consumers could finance a purchase with low monthly payments when, in fact, the payments were makeshift “teasers” after which the consumer would owe a much higher amount, by several hundred dollars. The ads also allegedly violated the TILA and Regulation Z, by failing to clearly and conspicuously disclose certain credit related terms.
Fowlerville Ford of Fowlerville, Mich., allegedly violated the FTC Act by sending mailers that deceptively claimed consumers had won a sweepstakes prize, when, in fact, they had not. Some of their ads also allegedly violated TILA and Regulation Z, by failing to disclose certain credit related terms.
Southwest Kia companies, including Fresh World Auto Imports, Dallas, Texas, Fresh World Auto Imports of Rockwall, Rockwall, Texas, and Hampton Two Auto Corporations, Mesquite, Texas, allegedly violated the FTC Act by deceptively advertising that consumers could purchase a vehicle for specific low monthly payments when, in fact, consumers would owe a final balloon payment of over $Ten,000. The companies also allegedly deceptively advertised that consumers could drive home a vehicle for specific low up-front amounts and low monthly payments when, in fact, the deal was a lease and they would owe substantially more up-front. The ads also allegedly violated the CLA and Regulation M, by failing to disclose certain lease related terms, and the TILA and Regulation Z, by failing to disclose certain credit related terms.
The proposed consent orders lodging the FTC’s charges in the nine cases are designed to prevent the dealerships from engaging in similar deceptive advertising practices in the future. The orders prohibit the dealerships from misrepresenting in any advertisement for the purchase, financing, or leasing of motor vehicles the cost of leasing a vehicle, the cost of purchasing a vehicle with financing, or any other material fact about the price, sale, financing, or leasing of a vehicle. When relevant, the proposed consent orders also address the alleged TILA and CLA violations by requiring the dealerships to clearly and conspicuously disclose terms required by these credit and lease laws. In the case where the dealerships misrepresented that consumers had won a prize, the proposed order also prohibits misrepresenting material terms of any prize, sweepstakes, giveaway, or other incentive.
The FTC would like to thank the Los Angeles Department of Consumer Affairs for its assistance with numerous investigations in California, and the Michigan Department of Attorney General for its assistance with the investigation in Michigan.
The Commission votes to accept the packages containing the nine proposed consent orders and complaints for public comment were 4-0. The agreements will be subject to public comment for thirty days, beginning today and continuing through Feb. Ten, 2014, after which the Commission will determine whether to make the proposed consent orders final. Submit a comment electronically:
Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), six hundred Pennsylvania Avenue, N.W., Washington, DC 20580.
In addition, the FTC issued an administrative complaint against Courtesy Auto Group of Attleboro, Mass. The FTC alleges the dealership violated the FTC Act by deceptively advertising that consumers can lease a vehicle for $0 down and specific monthly payments when, in fact, the advertised amounts exclude substantial fees. The ads also allegedly crack the CLA and Regulation M, by failing to disclose or clearly and conspicuously disclose certain lease related terms.
The Commission vote to issue the administrative complaint was 4-0.
Consumers in the market for a fresh or used vehicle should read the FTC’s Are Car Ads Taking You for a Rail? and Buying and Wielding a Car.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it shows up to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be attempted in a formal hearing before an administrative law judge.