A West Virginia auto dealership group agreed to pay an $80,000 civil penalty to settle a U.S. Federal Trade Commission lawsuit that charged it with showing misleading advertisements, the FTC said.
Ramey Motors Inc., of Princeton, W.Va., with seven dealerships in West Virginia and Virginia, will pay the penalty to settle a 2014 FTC lawsuit that charged it with violating the terms of a 2012 consent agreement, which prohibited it and four other dealers from displaying deceptive advertising.
The FTC charged Ramey with breaking the 2012 agreement by misleading buyers on financing and leasing terms, in addition to failing to disclose consumer credit terms in a “clear and conspicuous manner,” as federal law requires.
“Ramey felt that while the ads were compliant, it was in their best interest to resolve the litigation,” said Johnnie Brown, Ramey’s counsel and an attorney at the Pullin, Fowler, Flanagan, Brown & Poe law firm. Brown cited legal fees and other costs as a reason for settling.
As part of the penalty, Ramey is still prohibited from violating the 2012 agreement. It must also keep various records on its advertising, financing, leasing and sales for 20 years and is subject to compliance monitoring by the FTC, among other terms in the agreement.
The FTC voted 5-0 to authorize the order, it said in a statement. It was entered in U.S. District Court on Sept. 9.
Ramey Motors was one of five dealers nationwide to agree to a settlement order with the FTC in 2012. It required them to stop running ads on television and online that promised to pay off customers’ trade-in vehicles, no matter what’s owed. The order, part of a larger FTC crackdown on deceptive ads, banned the dealerships from showing misleading advertisements in the future.
Ramey was one of two dealer groups charged by the FTC with violating the agreement in December. The FTC cited Ramey advertisements that it said could mislead consumers on payments and financing.
Small, fast print
For instance, the FTC cited in its complaint a 15-second commercial that advertised a new 2013 GMC Sierra for $411 per month. It noted fine print at the bottom of the ad that said buyers must first trade in a 1999 or newer GMC or Chevrolet truck in order to be eligible for the advertised monthly payment, calling the fine print “impossible” to read.
“This text is indistinct and it, along with the monthly payment, flashes on the screen for only two seconds,” the complaint reads.
The FTC also cited a 30-second ad that offered a new 2014 Jeep Cherokee for $32,299 or $459 a month. While the advertisement contained the disclosures required by federal law, including the annual percentage rate and terms of repayment, they were “buried in an eleven-line block of rotating text that appears on the screen for just two seconds and disappears,” the FTC said.
“The disclosure flashes on and off the screen so quickly that consumers can neither read nor comprehend it,” the complaint reads.
The FTC also cited one other TV commercial and two online ads that it said were misleading.
Brown, Ramey’s counsel, said the advertisements were created after the 2012 agreement was signed but before the dealer group was fully able to implement a new compliance program. Brown, who said he is tasked with reviewing new ads, said the program will be reinforced through additional employee training.
The FTC also said in its complaint that Ramey violated the recordkeeping terms of the 2012 agreement. In 2013, the FTC requested advertisements and materials that documented the offers made in them.
“Although [Ramey] submitted the advertisements, it admitted that it failed to keep records documenting its financing and leasing claims,” the complaint reads.
Brown called the failure a “complete misunderstanding” and said Ramey is now keeping the required records.
Ramey dealerships sell Chevrolet, GMC, Buick, Cadillac, Toyota, Scion, Jeep, Dodge, Chrysler and Ram vehicles.