Federal Trade Commission Announces Settlement with Auto Group for $3.6 Million

On March 14, 2017, the Federal Trade Commission (FTC) announced that it would settle its charges against a Los Angeles-based automotive group for deceptive and unfair sales and financing practices, with the auto group agreeing to pay more than $3.6 million for return to customers.

The FTC charged the auto group in September 2016 with enticing consumers, particularly non-English speakers and individuals with poor credit, into its dealerships with misleading advertisements in violation of Section 5(a) of the FTC Act.  The FTC alleged that defendant’s advertisements claimed, among other things, that consumers could finance or lease vehicles for low prices, or that the defendants would pay off consumers’ trade-in vehicles even if the consumer owed money on the trade-in loan or lease, when in fact those representations were false.  The FTC further alleged that the auto group presented lease offers as credit offers, and that it charged some consumers for add-on products without their consent or by falsely representing that the products were required.  The FTC’s complaint also charged the defendants with violating Section 144 of the Truth In Lending Act and Section 226.24(d) of Regulation Z, for failing to clearly and conspicuously disclose required credit information, and Section 184 of the Consumer Leasing Act and Section 213.7 of Regulation M, for failing to clearly and conspicuously disclose required lease information.

The proposed settlement order will be filed in the United States District Court for the Central District of California, and will prohibit the defendants from making misrepresentations relating to their advertising, add-on products, and financing, and from violating the Truth In Lending Act and Regulation Z, and the Consumer Leasing Act and Regulation M.