FTC Busts Two Dealers Over Ad Tactics

federal-trade-commision-e1418768089555The Federal Trade Commission has vowed to crack down on alleged deceptive advertising in the automotive sales business, taking action against two large dealership chains.

Billion Auto, a chain of 20 family-owned showrooms in Iowa, Montana and South Dakota, along with a family-controlled advertising company, Nichols Media, have agreed to settle charges that they violated a 2012 FTC administrative order. The agency accuses the companies of misrepresenting the costs and terms of finance and lease offers.

“The dealerships and advertising company violated the 2012 FTC administrative order by frequently focusing on only a few attractive terms in their ads while hiding others in fine print, through distracting visuals, or with rapid-fire audio delivery,” the agency claims.

Specifically, the dealers and advertisers are accused of promoting low monthly payments and low annual percentage rates for vehicles, without proper acknowledgement that the terms were for leases — not sales — and with significant limits on who would qualify. Some offers are also said to have included “significant added costs” not identified in advertisements.

A separate action against Ramey Motors, which operates dealership affiliates in Virginia and West Virginia, claims the company advertised attractive deals without disclosing the requirement for substantial down payments.

Billion Auto agreed to pay $360,000 in civil penalties, while Ramey Motors is subject to $16,000 in fines. The FTC claims to have brought more than 20 enforcement actions in the auto marketplace in recent years.

“If auto dealers make advertising claims in headlines, they can’t take them away in fine print,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These actions show there is a financial cost for violating FTC orders.”

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