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FTC Takes Action Against Two Auto Dealer Chains for Repeated Advertising Violations


The Federal Trade Commission (FTC) announced on December 12 that it is taking action against two auto dealer chains for deceptively advertising the cost of buying or leasing a car.  These actions follow consent orders the FTC entered into with the same dealer chains in 2012 to resolve allegations that they engaged in deceptive advertising related to negative equity and failed to satisfy the disclosure requirements that apply to credit and/or lease ads containing “trigger terms.”  Because the dealer chains agreed in those orders “not to misrepresent any material fact regarding the cost and terms of financing or leasing any newly purchased vehicle,” the FTC is now seeking civil penalties in addition to other forms of relief such as the imposition of extensive compliance monitoring, compliance reporting, and recordkeeping requirements.
According to the FTC press release, one of the dealer chains has agreed to settle the charges and, as part of the agreement, pay a civil penalty in the amount of $360,000.  The other dealer chain has not entered into a consent agreement, and the Department of Justice has sought remedies in that case by filing a complaint in federal district court.
With regard to the dealer chain that settled the charges, the FTC states: “the dealerships and advertising company violated the 2012 FTC administrative order by frequently focusing on only a few attractive terms in their ads while hiding others in fine print, through distracting visuals, or with rapid-fire audio delivery. For example, some dealership ads promoted low monthly payments or attractive annual percentage rates and finance periods, while concealing other material items, such as low payments were for leases, not sales; major limits existed on who could qualify for discounts; and offers often included significant added costs.”  With regard to the other dealer chain, the FTC states, in part, that it “allegedly misrepresented the costs of financing or leasing a vehicle by concealing important terms of the offer, such as a requirement to make a substantial down payment… [and] failing to make credit disclosures clearly and conspicuously, as required by the TILA.”
These cases represent the fourth set of advertising enforcement actions brought by the FTC against auto dealers since 2012.
We would like to Thank; NADA Regulatory Affairs for this article…

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