The FTC cited this promotion that included a 'Match & Win' invitation page, which resembles a sweepstakes entry ticket, but no consumer was able to collect any of the prizes advertised in the promotion. )
Washington — The Federal Trade Commission said Thursday that nine auto dealers — including a Michigan Ford dealer — agreed to settle deceptive advertising charges, in a nationwide sweep focusing on the sale, financing, and leasing of cars and trucks.
The FTC said the dealers made a variety of misrepresentations in advertisements, “falsely leading 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 even misrepresented that consumers had won prizes they could collect at the dealership.”
“Buying or leasing a car is a big deal, and car ads are an important source of information for serious shoppers,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Dealers’ ads need to spell out costs and other important terms customers can count on. If they don’t, dealers can count on the FTC to take action.”
The FTC said its “Operation Steer Clear” uncovered deceptive practices including Fowlerville Ford, which allegedly sent “mailers that deceptively claimed consumers had won a sweepstakes prize, when, in fact, they had not.”
The FTC said the proposed consent orders settling the charges in the nine cases are designed to prevent the dealerships from engaging in similar deceptive advertising practices in the future. The 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.
In the case where the dealership misrepresented that consumers had won a prize, the “proposed order also prohibits misrepresenting material terms of any prize, sweepstakes, giveaway, or other incentive.”
The FTC voted 4-0 to accept the packages containing the nine proposed consent orders and complaints for public comment. The agreements will be subject to public comment for 30 days after which the commission will decide whether to make the proposed consent orders final.
Ford spokeswoman Elizabeth Weigandt said the automaker wasn’t responsible for how its dealers operated. “While we do provide Ford dealers with general creative resources for their own advertising, dealers are independent businesses who are responsible for their own FTC compliance,” she said in a written statement.
The dealership didn’t immediately return a call seeking comment.
The FTC said since May 2011, Fowlerville Ford sent promotions titled “Match & Win” that said customers could win $25,000 in cash — or $1,000 or $5,000. “In numerous instances, consumers have attempted to collect a prize by presenting a card with winning numbers at the Fowlerville Ford dealership. However, no consumer has received any of the prizes advertised in the promotion,” the FTC said.
The FTC complaint also said the Ford dealership failed to clearly disclose the repayment terms of several used car offers.
In addition to the nine dealers settling the complaints, the FTC said a 10th dealership hasn’t agreed to settle. The FTC filed an administrative complaint against Courtesy Auto Group of Attleboro, Mass., saying it deceptively advertised that consumers could lease a vehicle for $0 down and specific monthly payments when, in fact, the advertised amounts exclude substantial fees. Courtesy has Hyundai, Kia, Mitsubishi and Ford franchises and didn’t immediately return a call seeking comment.
Several dealers in California were also named, including Norm Reeves Honda of Cerritos, Calif., which allegedly advertised that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. Infiniti of Clarendon Hills, Ill., also advertised zero up-front to lease a vehicle and didn’t disclose substantial fees, the FTC said.
Nissan of South Atlanta of Morrow, Ga., and Paramount Kia of Hickory, N.C., deceptively advertised consumers could finance a vehicle purchase with low monthly payments when, the FTC said, the payments were temporary “teasers” after which consumers would owe a different amount.
Southwest Kia in Texas deceptively advertised consumers could purchase a vehicle for specific low monthly payments when, in fact, consumers would owe a final balloon payment of more than $10,000.
Bailey Wood, a spokesman for the 16,000-member National Automobile Dealers Association, said auto dealers work to comply with FTC rules.
"Dealers, like any business persons, want to avoid facing this kind of action and negative publicity and generally they seek to be compliant with the law," Wood said. "If true, the FTC actions are a good learning opportunity for all auto retailers."