FTC Takes Action Against Auto Dealers For Violating Order Prohibiting Deceptive Advertising

(frankieleon)

Here’s the thing, if the Federal Trade Commission tells you not to deceive consumers with your ads or you’ll have to pay a hefty fine, they mean it. That’s the case for two auto dealerships that allegedly violated FTC orders put in place in 2012.

The FTC announced today that it seeks civil penalties from two auto dealer groups violating orders banning the companies from deceptively advertising the cost of buying or leasing a car.

In the first action, Billion Auto, a chain of 20 family-owned automobile dealerships in Iowa, Montana, and South Dakota, and family-controlled advertising company, Nichols Media, Inc., have agreed to settle charges they violated a 2012 FTC administrative order.

That order prohibited Billion Auto, and any company in active participation with it, from misrepresenting material costs and terms of vehicle finance and lease offers and requires specific disclosures mandated by federal law.

According to the complaint against Billion and Nichols, 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.

In some instances, 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.

Billion Auto defendants agreed to pay $360,000 in civil penalties to settle the new charges.

In a separate action, the FTC charges that Ramey Motors, Inc., and three affiliated dealerships with locations in Virginia and West Virginia violated a similar 2012 order prohibiting deceptive advertising.

The FTC charges that Ramey Motors’ ads 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.

According to the FTC complaint, Ramey Motors failed to make credit disclosures clearly and conspicuously, as required by the previous order. The FTC also alleges that the auto dealer group failed to retain and produce appropriate records to the Commission to substantiate its offers.

Ramey Motors and its affiliates are subject to $16,000 in civil penalties for each alleged violation of the FTC administrative order.

FTC Takes Action Against Two Auto Dealership Chains For Violating 2012 Orders Prohibiting Deceptive Advertising of Vehicle Costs [FTC]

by Ashlee Kieler via Consumerist