FTC Announces Deceptive Advertising Enforcement Action Against Auto Dealers
Bill Fox – NADA
Earlier today, the Federal Trade Commission announced that nine auto dealers, including four from California, and one each from Georgia, Illinois, North Carolina, Michigan, and Texas, have agreed to enter into consent orders to settle deceptive advertising charges, and the agency is pursuing litigation against a tenth dealer.
The complaints allege violations of the FTC Act, the Consumer Leasing Act (CLA) and the Truth in Lending Act (TILA). The dealers are alleged to have made a variety of misrepresentations in print, internet, and video advertisements that falsely lead 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 is alleged to have misrepresented that consumers had won prizes in a sweepstakes that they could collect at the dealership.
The proposed consent 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, and in several cases 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 dealership allegedly misrepresented that consumers had won a prize, the proposed order also prohibits misrepresenting material terms of any prize, sweepstakes, giveaway, or other incentive.
NADA urges dealers to review all of their advertising, whether online, in print, or over the air to ensure that it is not misleading, that it includes the required disclosures if applicable, and that those disclosures are clear and conspicuous. Dealers should not rely on advertising agencies or similar third parties to ensure compliance, but should consult with legal counsel to ensure compliance with local, state, and federal law.
Chairman, Regulatory Affairs Committee