FTC Tries to Put Brakes On Deceptive Auto AdsTakes Action Against 10 Dealerships 1/09/2014 1:52 PM Eastern
The Federal Trade Commission Thursday announced settlements with nine new car dealerships and ongoing litigation with a 10th over deceptive advertisements and advised media outlets to look for red flags in those ads, like confusing or inconsistent fine print.
The settlements included pledges by the dealers to swear off the allegedly deceptive and confusing price ads, with a penalty of $16,000 per incident--which can be per day, says the FTC--if they violate that pledge. The FTC said the action was meant to be a shot across the bow to other dealerships that the FTC said are doing similar things.
Those things included "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."
The FTC action was targeted at the dealers, but an FTC official said that media outlets, including TV stations, should be on the lookout for red flags of fine print that is inconsistent with the banner headline offer. The official said that media outlets should look at the fine print in dealer adds and if it is unreadable to them, it will be unreadable to consumers, particularly in the case of TV ads.
The dealer action came only days after the FTC cracked down on bogus diet claims, but as with that effort, the FTC said its shot across the bow to dealers was not meant to be a shot aimed at the media, calling it instead an "invitation for teamwork."
Unlike the diet claim settlements, no money was extracted from the dealers, in part because of the difficulty in calculating the harm. Instead, the FTC said, it focused on tough injunctive relief.