Is the FTC Getting More Involved with Auto Lending?

The Consumer Financial Protection Bureau, Department of Justice and Federal Trade Commission all showed up in news reports in 2014 related somehow to the automotive sector. It was reported on Friday that the FTC is now investigating auto title loan companies over allegations they misled consumers in their advertising. This investigation is the second time in as many months that the government organization went after companies with ties to retail automotive for what they deemed to be fraudulent advertising practices

On December 12, 2014, the FTC announced actions against two dealership groups, Ramney and Billion Auto. The commission claims the two groups misled consumers with misleading advertising practices. The complaint centered around ads focused on only the attractive part of vehicle financing instead of giving what was determined to be other necessary information about terms and conditions. In the end, Billion Auto was ordered to pay a $360,000 civil penalty and Ramney was ordered to pay $16,000 for each alleged violation of an FTC order.

That was the action the government agency felt necessary to take back in 2014, now, the commission is taking aim at certain lenders.

Both First American Title Lenders LLC., of Georgia and Finance Select, Inc., have agreed to settle the charges that the FTC has made against them. The FTC alleges that the two car title loan organizations misled consumers. Sandy Brown, Assistant Director of the FTC’s bureau of Consumer Protection, told ABC News that without the whole story consumers can face a mountain of debt. In an interview, Brown said, “They lure consumers in by claiming that consumers can get a zero percent loan based on a car title. The problem here is there are some very important elements of those loans that the consumers are unaware of before they walk in the door.” Much like the actions of the FTC against the dealer groups, these two companies will likely be paying out monetary penalties for their advertising practices.

From a dealer perspective, what do you make of this story? Do you think the FTC is properly regulating or over regulating businesses? How much should advertising be regulated?