Fowlerville Ford settled FTC complaint rather than pay 'prohibitive' court fees
DETROIT -- Fowlerville Ford today said it agreed to a settlement with the Federal Trade Commission over allegedly deceptive ads because "the cost of appealing" the FTC's conclusions "would have been prohibitive."
The dealership also gave details on two marketing actions that drew FTC scrutiny, saying "no regulations had been published" regarding the point of contention in one, and that it cooperated with the FTC fully on the other.
"Fowlerville Ford has prided itself on maintaining the highest possible standards in treating its customers and in complying with all laws and regulations in conducting its business," the dealership said in a statement e-mailed to Automotive News.
The Fowlerville, Mich., dealership, between Detroit and Lansing, was one of nine dealerships nationwide that settled with the FTC in a probe of allegedly deceptive advertising related to the sale, financing and leasing of vehicles.
Most of the dealerships that settled with the FTC had made, the agency said, several "misrepresentations" in print, Internet and video advertisements that violated the FTC Act, falsely leading consumers to believe they could buy cars for low prices, get low monthly payments through financing or make no upfront payment to lease vehicles.
According to the FTC, Fowlerville Ford violated the FTC Act by sending mailers that deceptively claimed consumers had won a sweepstakes prize when in fact they had not.
Some of the Michigan dealership's ads also allegedly violated the Truth in Lending Act and Regulation Z by failing to disclose certain credit-related terms, the FTC said.
The FTC said one dealership sent out 30,000 mailers to consumers, saying they had won prizes they could collect at the dealership. But "not a single consumer, not one," won any prize, said Jessica Rich, director of the FTC's Bureau of Consumer Protection.
Fowlerville Ford was the only dealership cited for advertising prizes.
Here's Fowlerville Ford's version.
Approximately three years ago, Fowlerville Ford said in its statement, the dealership hired an outside marketing firm to run a sales promotion program. The promotion included an opportunity for customers to win a prize, if a ticket matched a certain number. The odds of winning were stated in the program, the dealership statement said.
"The FTC concluded that the disclosure was not specific enough in its opinion even though no regulations had been published defining what kind of disclosure was needed," Fowlerville Ford said.
In addition, Fowlerville Ford said, about two years ago, the dealership was approached by a local TV station soliciting advertising. The station promised to film an ad at the dealership and to write the contents of the ad.
Fowlerville Ford agreed and the ad was filmed and run by the station one or two times.
About six months ago, a year and a half after the ad had run, the FTC sent the dealership a letter stating the ad was not in technical compliance with one of the many regulations published by the FTC because the ad did not specifically mention the term "annual percentage rate." It had instead used the term "percentage rate."
The FTC requested that Fowlerville Ford not run the ad again and that it use the specific term "annual percentage rate" when referring to a financing rate.
"Fowlerville Ford cooperated fully with the FTC and agreed to use the term 'annual percentage rate' in all of its advertising that mentioned a financing rate," the dealership said.
The dealership added: "To the best of Fowlerville Ford's knowledge, of the hundreds of advertisements it has run during its twelve years of operation, the one the FTC complained about was the only one that was not in technical compliance."
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