News Column

FTC Takes Action To Stop Deceptive Car Dealership Ads

March 14, 2012
Federal Trade Commission seal

Five car dealers around the country have agreed to Federal Trade Commission settlement orders that require them to stop running ads in which they promise to pay off a consumer's trade-in no matter what the consumer owes on the vehicle.

The FTC charged that the ads, which ran on the dealers' websites and on sites such as YouTube.com, deceived consumers into thinking they would no longer be responsible for paying off the loan balance on their trade-in, even if it exceeded the trade-in's value (i.e., the trade-in had "negative equity"). Instead, the dealers rolled the negative equity into the consumer's new vehicle loan or, in the case of one dealer, required consumers to pay it out of pocket.

The proposed settlements, reached as part of the FTC's ongoing efforts to protect consumers in financial distress, bar all of the dealers from making similar deceptive representations in the future. The cases are the first of their kind brought by the FTC. The Commission also issued a new consumer education publication titled "Negative Equity Ads and Auto-Trade-ins" to help consumers understand these types of ads.

"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, director of the FTC's consumer protection bureau. "The Federal Trade Commission is constantly on the lookout for potentially deceptive ads, and brings actions to stop them when appropriate."

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.; 3) Key Hyundai of Manchester LLC and Hyundai of Milford LLC, in Vernon and Milford, Conn., respectively, and which advertise jointly; and Ramey Motors Inc. in Princeton, W.Va.

The FTC's complaints allege that despite the dealers' claims, consumers still end up being responsible for paying the difference between the trade-in loan balance and the vehicle's value. 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.

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. (Billion Auto)

-- "Uncle Frank wants to pay [your trade] off in full, no matter how much you owe." (Frank Myers AutoMaxx)

-- "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." (Key Hyundai and Hyundai of Milford)

-- "Ramey will pay off your trade no matter what you owe ... even if you're upside down, Ramey will pay off your trade." (Ramey Motors)



Source: Copyright PRNewswire-USNewswire 2012


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