A cautionary tale of 2 dealership groups and compliance

Here’s a cautionary tale.

Just two years after the Federal Trade Commission charged them with deceptive advertising, two dealership groups caught fire again. And it’s costing them.

The groups are Billion Auto, which has 20 family-owned dealerships in Iowa, Montana and South Dakota, and Ramey Motors Inc., which operates seven dealerships in West Virginia and Virginia.

The FTC sued the groups in December, charging them with violating orders issued in 2012 that prohibited them from deceptively advertising the cost of buying or leasing a car. Under the 2012 orders, the dealerships knew they were under scrutiny for 20 years and that they would be fined heavily if their ads were found to be in violation.

Last week, the FTC announced that Ramey Motors agreed to pay an $80,000 civil penalty for TV and online ads with term disclosures the FTC said were “impossible” to read because the text was indistinct and appeared on the screen only for a few seconds.

Billion Auto, and its family-controlled advertising company, Nichols Media Inc., had already settled with the FTC, agreeing in December to pay a hefty $360,000 in civil penalties.

The FTC said the Billion Auto and its advertising company violated the 2012 agreement by focusing on only a few attractive terms in their ads while disclosing other terms “in fine print, through distracting visuals, or with rapid-fire audio delivery,” according to the FTC .

If dealerships think their ads will fly under regulators’ radar, they’re kidding themselves. By revisiting those two dealerships, the FTC is demonstrating how serious it considers misleading ads to be.

As legal experts and F&I trainers have said, it pays to be careful with ads. To show up clean under regulators’ microscopes, compliance is the key. Know the rules, adjust the message and get legal approval.

You can reach Hannah Lutz at hlutz@crain.com