Dallas dealership settles FTC charges of deceptive advertising
Cowboy Toyota in Dallas has agreed to a settlement with the Federal Trade Commission over charges that the dealership deceptively advertised loan and leasing terms in a regional Spanish-language newspaper.
The FTC said Cowboy Toyota ran full-page Spanish-language ads saying consumers could buy or lease a vehicle at certain favorable terms. But the limitations to those terms, run in fine print at the bottom of the ads, were only in English, the FTC said Friday.
The complaint also says the dealership violated the FTC Act by misrepresenting many claims, including that no down payment was required, that the advertised low monthly payments were available to consumers who financed their purchases, that the advertised interest rates, monthly payments, and other terms were available to consumers with bad credit and that certain new 2016 models were available for purchase at the time, when in fact they were not.
The FTC also said Cowboy Toyota did not "clearly and conspicuously disclose credit or lease terms they are required to state under the Truth in Lending Act or the Consumer Leasing Act when they touted certain triggering terms of the credit or lease, such as the monthly payment."
The owners of Cowboy Toyota say they are "embarrassed" and "terribly regret" the ad, which ran from late last year through about July. The language mix-up was a mistake due to inadequate review by the dealership staff as well as the media company they hired to create and place a "low budget" ad, Robert Cannon, co-owner of Cowboy Toyota, told Automotive News .
"The FTC brought this one ad to our attention and we immediately addressed it," Cannon said. "We clearly took our eye off the ball because we weren't reviewing what was done."
Cannon said the dealership never intended to "deceive consumers," adding that "all our other ads are compliant."
Cowboy Toyota sells about 2,800 new and used vehicles a year, he said. Since the FTC's complaint, it has implemented procedures to have its ads reviewed more carefully by internal staff as well as reviewed by a specialized advertising firm to assure ads meet all state and federal requirements, Cannon said.
"We did not check the ads as they were being run to see that the disclosures were in English whereas much of the rest of the ad was in Spanish," Cannon said. "It's our fault and we appreciate the FTC bringing it to our attention. We immediately took action and removed the ad."
The proposed order settling the FTC's charges will ensure that Cowboy Toyota stops the deceptive conduct alleged in the FTC's complaint in the future, the FTC said in a statement.
"It also requires that if a representation is made in one language, any material limitations must also be made in the same language," the FTC said in a statement.
The agreement will be subject to public comment through Jan. 2. After that, the FTC will decide whether to make the proposed consent order final, it said.
If Cowboy Toyota continues deceptive advertising and other violations, it could get hit with paying up to $40,000 per day per violation, said Mitch Katz, an FTC spokesman.
The FTC began to more aggressively crack down on alleged false advertising by dealerships in 2014. Early that year, the commission said nine dealerships had agreed to 20-year settlements after being charged with deceptive advertising, adding that more dealerships would face similar charges.
Less than a month ago, Norm Reeves Inc. and other entities managed by Conant Auto Retail Group agreed to pay $1.4 million to settle charges that they violated a 2014 FTC administrative order banning them from misrepresenting the cost to finance or lease a vehicle in their advertising.
The FTC charged the Los Angeles-area group with deceptively advertising that customers could pay nothing upfront to lease a vehicle. But that price did not include large fees and other costs.
Conant Auto Retail Group disputed the charges. The settlement, the group noted in a statement emailed to Automotive News at the time, "affirmatively states CAR Group's position that there is no admission of liability or fault."
Likewise, when Sage Auto Group reached a settlement with the FTC in the spring over charges that the group's stores used deceptive and unfair sales and financing practices, deceptive advertising and deceptive online reviews to draw in customers, its lawyer said the Los Angeles dealership group did so to avoid the cost of extensive litigation.
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