Auto Dealers Settle FTC Deceptive Ad Claims

The Federal Trade Commission (FTC) has reached a settlement with five car dealerships in four states that will require them to stop running deceptive ads promising to pay off their trade-in, regardless of what they owed on the vehicle.

The FTC charged the dealerships with consumer fraud, claiming they deceived consumers into thinking they would no longer be responsible for paying off the loan balance on their trade-in, even if it exceeding the trade-in’s value. The balance, the FTC said, was usually rolled into a new car loan or, in the case of one dealer, later required by the customers to pay out of pocket.

“Buying a new car or truck is a major financial commitment, and the last thing consumers need is to be tricked into thinking that a dealer will pay off what they owe on their current vehicle, when they really won’t,” said David Vladeck, head of the FTC’s consumer protection bureau.

The dealers named in the FTC’s complaints are: Billion Auto, Inc., in Sioux Falls, S. D.; Frank Myers AutoMaxx, LLC, in Winston-Salem, N.C.; Key Hyundai of Manchester, LLC, in Vernon, Conn., and Hyundai of Milford LLC, in Milford, Conn., – which advertised jointly; and Ramey Motors, Inc., in Princeton, W.Va.

This is the first time the FTC has sued an auto dealer for deceptive advertising. The complaints charge that the dealers’ representations that they will “pay off” what the consumers owe are false and misleading, and violate the FTC Act and Truth in Lending Act (TILA). Examples of the allegedly deceptive advertisements include:

— “Credit upside down? Need a new car? Go to Billionpayoff.com. We want to pay off your car.” The advertisement depicts a car moving, inverts the video to depict it upside down, and then turns it right-side up again.
— “Uncle Frank wants to pay [your trade] off in full, no matter how much you owe.”
— “I want your trade no matter how much you owe or what you’re driving. In fact I’ll pay off your trade when you upgrade to a nicer, newer vehicle.”
— “Ramey will pay off your trade no matter what you owe . . . even if you’re upside down, Ramey will pay off your trade.”

 

The proposed settlements will bar the dealers from future deceptive ads and prohibit them from misrepresenting any other facts in the leasing and financing of a car.