FTC Fines Two Dealer Groups Over Deceptive Advertising

The Federal Trade Commission has taken action against two dealers who they say provided deceptive advertising. Billion Auto and Ramey Motors Inc dealer groups were the targets of this recent FTC probe. The FTC is launching civil penalties against the dealers for violating the FTC’s administrative orders against deceptively representing the cost of buying or leasing a vehicle. In an FTC press release, Jessica Rich, Director of the FTC’s Bureau of Consumer Protection said, “If auto dealers make advertising claims in headlines, they can’t take them away in fine print. These actions show there is a financial cost for violating FTC orders.”

Billion Auto, a family-owned dealer group with 20 stores in South Dakota, Iowa and Montana along with Nichols Media reportedly violated a 2012 FTC Administrative order. That order barred Billion and its ad agency 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 (CLA) and Regulation M.” The dealer has agreed to pay $360,000 to settle this dispute with the FTC. Essentially, the FTC alleges that Billion only advertised the attractive part of purchase or lease deals while not indicating other terms associated with the deal.

Ramey Motors Inc., the group out of West Virginia, also received an administrative order from the FTC fro which the government agency felt that the dealer didn’t comply. Specifically, the FTC claimed in their press release that this dealer didn’t specify that they customers would need a sizable down payment to qualify for certain offers. Ramey motors will have to pay $16,000 in civil penalties for each alleged violation of the FTC order.

The FTC has brought at least 20 enforcement actions against automotive companies during recent years. The question is, do you agree with the actions? Between the FTC and the CFPB, is the government overregulating retail automotive or simply policing the law? Where is the line between attractive and deceptive advertising?