When it comes to cars, sometimes good things come in pairs: double wishbone suspension, dual overhead camshafts, dual torsion bars and the classic 2+2 muscle car. What’s not on that list? Two lawsuits accuse two auto dealers of engaging in deceptive advertising in violation of two Federal Trade Commission orders.
In 2012, the FTC settled separate administrative cases against Billion Auto and Ramey Motors, accusing the companies of misrepresenting key financing terms in vehicle sales. The FTC just announced enforcement actions—Billion, a settlement with a civil penalty of $360,000, and Ramey, a complaint—alleging that dealers violated the terms of these orders.
this billion case
The defendants in the new case against Billion are 20 dealers in Iowa, Montana and South Dakota, as well as Nichols Media, a family-controlled advertising company. The FTC’s action focuses on advertisements that use a combination of fine print and brief dialogue to mislead consumers about the main terms of a transaction. For example, one TV ad prominently advertises “Lease for $179 per month,” but only flashes small font for three seconds:
What’s buried in the fine print? The only consumers eligible for the $179 lease are repeat customers who are also military members or veterans. What’s more, they have to come to the table with $2,000 and the first month’s payment. Given the deafening music, pop-up graphics, whistling sounds and multiple screen wipes, the FTC says consumers are unlikely to understand these key terms.
The complaint against Billion also cited a 30-second radio ad. “Drive a 2013 Nissan Altima now for just $99 a month, or a 2013 Nissan Sentra for just $79 a month,” the announcer says in a normal cadence. But buckle up, because in the final few moments of the ad Seconds later, the announcer stepped on the accelerator with a voice-over from the motor mouth: “Thirty-six months, thirty-six thousand miles lease, plus down payment tax and license. 5,000 down payment qualifying credit. See dealer for details.” Only Only during this quick delivery did Billion say that this was actually a 3-year lease, not a sale, and the consumer had to bring $5,000 plus the first month’s payment.
The complaint alleges that the Billion defendants violated the FTC order by often focusing on just a few attractive terms in their ads while hiding key messages in fine print or brief conversation. The settlement includes a permanent injunction and a $360,000 civil penalty.
this Remy case
Defendants in the pending lawsuit are four dealers in Virginia and West Virginia. The complaint cites an ad with large text visuals and a voiceover that reads: “Buy a new 2012 Toyota Tundra for $27,989 or $389 per month.” But the fine print at the bottom of the screen reads What?
STK#2k1277. Price includes all manufacturer rebates and incentives. Pay with $2,000 down and approved credit. Excludes tax, title and $175 processing fee. 75 months @ 3.99% APR. Ends July 31st.
By emphasizing the purchase price and monthly payments, the defendants represented that those amounts included all material costs and terms of the transaction, according to the FTC. The lawsuit alleges that the defendants failed to clearly disclose the large down payment.
Another Ramey’s ad highlights the new 2013 GMC Sierra X Cab 4 x 4, priced at $411 per month. According to the complaint, the company simply “disclosed” in the fine print that in order to make the deal, the buyer had to trade in a 1999 or newer Chevrolet or GMC truck.
The indictment also cites numerous television and online consumer credit ads that the FTC said failed to make clear and conspicuous disclosures required by law. The FTC alleges that one folly hid key credit terms in an eleven-line block of rotating text that flashed on the screen for just two seconds.
The lawsuit against the Ramey defendants alleges that they misrepresented the cost of financing or leasing a vehicle by concealing material terms of the offer and failed to make clear and conspicuous credit disclosures as required by the 2012 Executive Order and the Truth in Lending Act. Additionally, the FTC alleges that the auto dealer group failed to maintain and provide appropriate records to substantiate its offers. The FTC is asking a West Virginia federal court to impose civil penalties.
