The Federal Trade Commission is taking action against two auto dealer groups, operating in five states with more than two dozen retail stores, for civil penalties for violating FTC administrative orders prohibiting them from deceptively advertising the cost of buying or leasing a car.
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., agreed to pay $360,000 in civil penalties to settle charges that they violated a
"If auto dealers make advertising claims in headlines, they cant take them away in fine print," said Jessica Rich, director of the FTCs Bureau of Consumer Protection. "These actions show there is a financial cost for violating FTC orders."
The order bans 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 and Regulation M.
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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 charged Ramey Motors Inc. and three affilliated dealerships in several locations in Virginia and West Virginia with violating similar 2012 FTC orders.
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.
The complaint also charges Ramey Motors with failing to make credit disclosures clearly and conspicuously, as required by the TILA.
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.