U.S. targets 'deceptive' car dealer ads

by Reuters
Thursday, 9 January 2014 19:17 GMT

WASHINGTON, Jan 9 (Reuters) - Nine auto dealerships in six states have agreed to stop what the U.S. government called deceptive advertising, and the Federal Trade Commission said on Thursday it would litigate against another as part of an effort to convince dealers to make sure their advertising is accurate.

The dealers who settled with the commission were accused of behaviors that included advertising car prices that were $5,000 higher than real prices, advertising zero-dollar-down leases when there were actually substantial upfront fees, and advertising low interest rates when in fact rates went up shortly after a loan agreement was signed.

In one case, a dealership in Michigan sent mailers that claimed consumers had won sweepstakes prizes when, in fact, they had not.

"We hope that these actions not only stop the specific conduct that we have challenged in this instance but also put all dealers on notice," said Jessica Rich, director of the FTC's Bureau of Consumer Protection. "We have many other investigations ongoing. This is a priority area for the FTC."

About 75,000 people complained to the commission about poor treatment by automotive dealers in the last year for which figures are available, Rich said in a press conference in Los Angeles.

Rich said that the FTC, which worked with the Los Angeles Department of Consumer Affairs on "Operation Steer Clear," could not fine dealers for breaking deceptive advertising rules - but it could fine them $16,000 per infraction if they fail to live up to agreements to advertise accurately.

"We believe there is a lot of deception out there. That's not to say all auto dealers are deceptive," she said, adding, "We can't sue everybody, and we do have limited resources."

The commission reached agreements with dealers in California (Casino Auto Sales, Rainbow Auto Sales, Honda of Hollywood and Norm Reeves Honda); Georgia (Nissan of South Atlanta); Illinois (Infiniti of Clarendon Hills); North Carolina (Paramount Kia); Michigan (Fowlerville Ford); and Texas (Southwest Kia).

The FTC has also filed an administrative complaint against Courtesy Auto Group in Massachusetts.

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