Two Las Vegas dealerships settle deceptive advertising charges

Two Las Vegas car dealerships have agreed to settle Federal Trade Commission charges that they used deceptive advertising.

The dealerships, Planet Hyundai and Planet Nissan, ran ads that misrepresented the purchase price or leasing offers of their vehicles and the amount due at signing, the FTC said in a statement today.

The ads also violated the Consumer Leasing Act and the Truth in Lending Act by failing to disclose required lease terms and other credit information, the FTC said.

Since early 2014, the FTC has been cracking down on deceptive advertising at car dealerships in a sweeping effort dubbed Operation Steer Clear. At that time, nine dealerships agreed to 20-year settlements after being charged with deceptive advertising.

An FTC spokesman said the latest cases were not part of Operation Steer Clear. 

Planet Hyundai is owned by TC Dealership, whose principal is Don Tamburro.

Planet Nissan is owned by JS Autoworld Inc., which shows its principal as John Staluppi Jr. Tamburro and a partner named Ron Coury bought Planet Hyundai from Staluppi in 2010, according to a story published in the Las Vegas Review-Journal.

Deceptive ads

The FTC said Planet Hyundai prominently advertised a vehicle price for “$0 DOWN AVAILABLE.” But, in fine print, the ad noted that consumers must turn in a vehicle with a trade-in value of at least $2,500, the FTC said.

The dealership also failed to disclose other information in its ads such as if a security deposit was required, said the FTC.

Among the deceptive ads by Planet Nissan, the FTC said, were prominent offers for “PURCHASE! NOT A LEASE!” when in fact, many of the offers were for leases. The dealership ads also did not disclose the amount of a down payment required and the terms of repayment, the FTC said.

"We weren't as clear as we could have been about the terms of some of our offers," Staluppi said in a statement, noting there were no consumer complaints. "It has always been our intent to provide consumers with accurate and complete information in an attempt to help every consumer obtain favorable terms for financing."

Staluppi said the dealership agreed to the consent order without admitting any violation of the law -- and there were no fines or penalties.

"We now have numerous attorneys, ad agencies and corporate personnel looking at each and every ad very carefully to make sure our advertisements are compliant and informative," the statement said. "As a result, we have modified our marketing practices so as to comply with FTC regulations and protect the interests of all of our customers and future customers at Planet Nissan."

Dealerships can avoid violating the law by simply posting accurate prices available to all consumers and avoiding fine print, Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said at a press briefing last year.

“Dealers think that if they put the real price of something in really fine print, that’s not deceptive,” Rich said at that time. “That is deceptive, and it violates the law.”

Heavy fines

These latest settlement agreements are subject to public comment for 30 days, beginning today and continuing through July 29, the FTC said.

After that, the FTC will decide whether to make the proposed consent orders final. Once final, the dealerships concerned will be under scrutiny for 20 years to make sure they don’t engage in deceptive advertising practices. Any violation of that agreement could bring a fine of up to $16,000 per day. So if a dealership runs a deceptive ad for 10 days anytime during that period, the potential fine is $160,000.

Planet Hyundai officials could not be reached for comment.

Planet Hyundai, under Staluppi's ownership, was the automaker’s largest dealership in the world in 2009 as measured by unit sales. At the time, it had annual sales of 5,000 new vehicles. The store ranks No. 8 in new light-vehicle sales out of 833 U.S. Hyundai dealers for the first 5 months of 2015, the company said.

The National Automobile Dealers Association said it recently issued A Dealer Guide to Federal Advertising Requirements, which is supposed to help new-car dealers comply with federal advertising requirements.

"The guide provides examples of 'bad' and 'good' ads and includes chapters on 41 different federal advertising topics, including 'sweepstakes/lotteries,' as well others such as the use of discount claims, e-mail advertising, green marketing claims, Internet advertising, satisfaction guarantees and trigger terms," the NADA said in a statement.