Over the last year, the FTC has begun a renewed focus on the retail automotive industry. On March 26, the FTC announced another major sweep against auto dealers and unfair and deceptive practices in Operation Ruse Control. The sweep announces 262 enforcement actions by 32 law enforcement agencies across the US and Canada. The announcement focused on deceptive advertising, loan application fraud, odometer fraud, deceptive add-on fees, and deceptive marketing of car title loans, allegations commonly seen by a dealership lawyer. The FTC brought six of its own lawsuits against the auto industry.
- National Payment Network, Inc. (CA) and Matt Blatt Inc. (NJ): The FTC alleges that NPN deceptively pitched loan payment terms. NPN claimed it would save consumers money by accepting bi-weekly payments from customers and NPN would make the monthly payments to the company actually financing the vehicle. In offering this service to consumers, NPN failed to disclose the significant fees associated with its service and the fact that those fees added up to, on average, an additional $775 of the course of the loan.
- Cory Fairbanks Mazda (FL), Jim Burke Nissan (AL), and Ross Nissan (CA): The FTC alleged the dealerships violated the FTC Act, Truth in Lending Act, and/or the Consumer Leasing Act. Each of the dealerships offered sales or lease options at extremely low monthly payment offers, but the offer was cancelled out by all of the terms and conditions in the disclosures. In some instances the body of the advertisement would state $0 down, but the fine print would disclose the fact that a substantial down payment (i.e. $3,000) was required. In other instances, limited rebates were included in the advertised price but were not clearly disclosed; the FTC settlement has prevented two of the dealers from including limited discounts or rebates in the advertised price unless it is available to all consumers or its limitations are clearly disclosed. The dealers were also charged with technical violations of TILA/CLA for failing to disclose down payments or other required terms.
- Regency Financial Services of Lake Worth (FL): Regency allegedly offered to renegotiate consumers auto loans for a substantial fee, however, Regency frequently failed deliver any benefit to the consumer in exchange for the expensive up front fee. The FTC is still in litigation with Regency and its CEO Ivan Levy, but has received an injunction order to prevent any further loan modification by Regency.
Whether you are a car dealership owner, or a consumer, you want to stay up to date on compliance information. The easiest way to do this is through a car dealership lawyer. If you have questions regarding deceptive advertising or auto loans, please contact Attorney Harrison at 614.440.1395 or via e-mail at aharrison@alharrisonlaw.com.
