FTC remains vigilant on deceptive car dealership ads

By Jamie LaReau, Crain News Service

LAS VEGAS (July 6, 2015) — After two Las Vegas auto dealerships agreed last week  to settle charges that they used deceptive advertising, the Federal Trade Commission (FTC) said car dealers can expect vigilant enforcement of dealers' practices to continue.

“Protecting consumers in the auto marketplace remains a top priority for the FTC,” spokeswoman Cheryl Warner said in an email to Automotive News.

Ms. Warner said that since 2012, the FTC has brought more than 20 cases against auto dealerships nationwide involving deceptive auto advertising. While this latest case was not part of a big sweep, it is part of the FTC's continuing scrutiny, she said.

“The FTC and our law enforcement partners nationwide continue to monitor this space closely, and are committed to actively combating a broad spectrum of unlawful auto practices,” Ms. Warner said.

The car dealerships in the latest bust are Planet Hyundai and Planet Nissan. They are charged with running ads that misrepresented the purchase price or leasing offers of their vehicles and the amount due at signing, the FTC said.

The ads also violated the Consumer Leasing Act and the Truth in Lending Act by failing to disclose required lease terms and other credit information, the FTC said.

Planet Nissan is owned by JS Autoworld Inc., whose principal is John Staluppi Jr. “We weren't as clear as we could have been about the terms of some of our offers,” Mr. Staluppi said in a statement. He added that there were no consumer complaints.

Mr. Staluppi said the dealership agreed to the consent order without admitting any violation of the law. There were no fines or penalties, he said.

He has “numerous attorneys, ad agencies and corporate personnel looking at each and every ad very carefully,” he said. “We have modified our marketing practices so as to comply with FTC regulations.”

In early 2014, the FTC cracked down on deceptive advertising at car dealerships in a sweeping effort dubbed Operation Steer Clear. Twelve dealerships agreed to 20-year settlements after being charged with deceptive advertising.

In March 2015, the FTC announced Operation Ruse Control to target auto-loan application fraud, deceptive practices related to add-on products and services, and deceptive advertising. The FTC teamed with 32 enforcement agencies to conduct a nationwide and cross-border crackdown that included 252 actions by law enforcement.

Auto dealerships can comply with the law by posting accurate prices available to all consumers and avoiding fine print in ads, said Jessica Rich, director of the FTC's Bureau of Consumer Protection, at a press briefing last year.

“Dealers think that if they put the real price of something in really fine print, that's not deceptive,” Ms. Rich said at that time. “That is deceptive, and it violates the law.”

And the practices can carry hefty fines.

Once the FTC makes a proposed consent order final, the dealership concerned will be under scrutiny for 20 years to make sure it does not engage in deceptive advertising practices. Any violation could bring a fine of up to $16,000 per day.

This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.