Massachusetts dealership settles with the FTC over deceptive ads

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Add a 12th dealership to those that have settled deceptive advertising charges with the Federal Trade Commission since last fall.

Courtesy Auto Group of Attleboro, Mass., agreed to resolve FTC charges that the dealership violated the FTC Act by deceptively advertising that consumers could lease a vehicle for $0 down and specific monthly payments. But, the FTC said on Friday, the advertised amounts failed to include “substantial fees.”

The case is part of Operation Steer Clear, a nationwide sweep the FTC announced in January targeting deceptive advertising by car dealerships. The FTC has settled deceptive advertising charges with 10 dealerships as part of the sweep and finalized settlements with two stores separately last month.

The FTC said Courtesy Auto’s ads also violated the Consumer Leasing Act and Regulation M because it did not disclose or “clearly and conspicuously disclose” certain leasing terms.

The proposed consent order the dealership agreed to prohibits Courtesy Auto from running similar deceptive advertising in the future.

The FTC said it also forbids the dealership from misrepresenting in any advertisement anything about the price, sale, financing or leasing of a vehicle.

Also, Courtesy Auto cannot state the amount of any payment, or that any or no payment is required at lease inception, “without clearly and conspicuously” naming the terms required by the Consumer Leasing Act, the FTC said.

“We got flagged on an issue which was in the disclaimer which our video company, who did the video specials, had tagged a disclaimer right from the manufacturer themselves,” said Steve Silva, general manager of Courtesy Auto, in a voice-mail message.

“What it said was zero down, but in the disclaimer it said there was an acquisition fee. That was basically what we were flagged on. The disclaimer actually was put on by UnityWorks, the company that does the video specials for our Web site and they pulled that disclaimer right from the manufacturer’s Web site.”

The FTC settled charges of deceptive advertising stemming from Operation Steer Clear with nine dealerships in January. The commission filed a complaint against Courtesy Auto at that time, but it did not reach a settlement until now.

The FTC announced final consents with two more dealerships last month. Don White's Timonium Chrysler-Dodge-Jeep-Ram near Baltimore and Ganley Ford West in Cleveland concluded settlements they reached last year with the FTC stemming from allegations that they falsely advertised prices or discounts.

Under the settlements, if the dealers fail to comply at any point over the next 20 years, they could face a fine of as much as $16,000 each day a deceptive ad runs.

The settlements are part of an FTC crackdown on dealer advertising that began nearly two years ago and has broadened since late last year.

In March 2012, the agency settled with five dealers that it had accused of running deceptive ads. Late last year the FTC settled with Timonium and Ganley Ford West.

In January, when Operation Steer Clear was announced, the agency warned at that time that it wouldn't let up.

"We have many other investigations in the pipeline," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said. "This is a priority for the FTC."

You can reach Jamie LaReau at jlareau@crain.com. -- Follow Jamie on Twitter


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