FTC launches second crackdown on auto dealer advertising

The Federal Trade Commission today charged two auto dealership groups with violating earlier orders from the FTC to avoid misleading advertising regarding payments and financing, such as improper use of fine print and failure to adequately disclose significant costs.

Billion Auto, which has a total of 20 retail locations in Iowa, Montana and South Dakota, was charged along with its advertising company, Nichols Media Inc. The FTC also charged Ramey Motors Inc. of Princeton, W.Va., which has three affiliated dealerships in Virginia and West Virginia.

The actions are part of an ongoing crackdown on auto dealership advertising, which the FTC kicked off in 2012.

“If auto dealers make advertising claims in headlines, they can’t take them away in fine print,” said Jessica Rich, director of the FTC Bureau of Consumer Protection.

“These actions show there is a financial cost for violating FTC orders,” she said today in a written statement.

Prior history 

Both dealership groups agreed to settlements with the FTC in 2012, in which they accepted administrative orders from the FTC to refrain from future violations. However, similar violations continued, according to the FTC.

In a new settlement, Billion Auto agreed to pay $360,000 in civil penalties, the FTC said.

“Defendants have offered to finance or lease motor vehicles in hundreds of television, radio, and print advertisements and at billionauto.com,” the FTC complaint said. “However, Defendants frequently misrepresent the transaction by focusing only on a few attractive terms, such as a low monthly payment or annual percentage rate, while concealing other material terms, for example, that limit who can qualify or that add significant extra costs.”

The complaint against Ramey Motors contained a similar allegation and called for an unspecified total amount of fines, but the FTC said individual violations could cost up to $16,000 each.

In the Ramey complaint, the FTC cited a television advertisement offering a 2012 Toyota Tundra for $27,989 or $389 a month -- noting a blurry disclosure in fine print at the bottom of the ad.

“It is impossible to read and comprehend the smaller text referring to the $2,000 down payment,” the complaint said. “This text is indistinct and it, along with the prominent retail price and monthly payment claims, flashes on the screen for only three seconds.”

Neither the Billion nor Ramey dealership groups could be reached for comment.