Unless you live under a rock somewhere, you’ve been exposed to endless local TV commercials and print ads boasting of great lease and loan deals on cars and trucks.
And often key terms of the deal are hidden in very fine print, or not visible at all. That’s when the Federal Trad Commission may step in and take action.
The most recent example came with the FTC’s action against two auto dealer groups, operating in five states with more than two dozen retail stores. The FTC said these groups where in violations of FTC administrative orders which prohibit them from deceptively advertising the cost of buying or leasing a car.
“If auto dealers make advertising claims in headlines, they can’t take them away in fine print,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These actions show there is a financial cost for violating FTC orders.”
Billion Auto, a chain of 20 family-owned automobile dealerships in Iowa, Montana, and South Dakota, and a family-controlled advertising company, Nichols Media, Inc., have agreed to settle charges that they violated a 2012 FTC administrative order. That order prohibits Billion Auto, and any companies in active participation with it, from misrepresenting material costs and terms of vehicle finance and lease offers and requires specific disclosures, mandated by the Truth in Lending Act (TILA) and Regulation Z, and the Consumer Leasing Act (CLA) and Regulation M.
Billion Auto efendants has agreed to pay $360,000 in civil penalties to settle the FTC’s charges.
According to the complaint against Billion and Nichols, the dealerships and advertising company frequently focused only on a few attractive terms in their ads, “while hiding others in fine print, through distracting visuals, or with rapid-fire audio delivery,” the FTC said..
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.
In a separate action seeking civil penalties, the FTC has charged Ramey Motors, Inc., and three affiliated dealerships, in several locations in Virginia and West Virginia, with violating a similar 2012 FTC administrative order. Among other things, 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.