Antitrust Law Daily Wrap Up, ADVERTISING NEWS: FTC’s “Operation Ruse Control” targets auto sale deception, fraud, (Mar 26, 2015)

By Greg Hammond, J.D.

The FTC has secured more than $2.6 million in monetary judgments in its latest sweep against deceptive conduct and false advertising in the automotive sales market, pursuant to “Operation Ruse Control.” Since the agency’s last sweep, the Commission and 32 law enforcement partners have filed 252 enforcement actions in the United States and Canada, involving civil and criminal charges of automotive loan application fraud; deceptive add-on fees, advertising, and marketing of car title loans; and odometer fraud. The Commission has filed six new cases.

Vehicle purchase add-ons. For the first time, the Commission has filed two auto enforcement actions involving add-ons—the practice of a dealer or other third party adding other charges or services to a vehicle sales, lease, or other finance agreement. The first action, In the Matter of National Payment Network, Inc. (File No. 132 3285), accused National Payment Network of violating the FTC Act by deceptively pitching an auto payment program to consumers that would supposedly save consumers money. The company failed to disclose the significant fees it charged for the service, however, which cancelled any actual savings, the Commission alleged.

A related action, In the Matter of Matt Blatt Inc. (File No. 132 3285), asserted Matt Blatt dealerships failed to adequately disclose fees associated with National Payment Network’s add-on service and that consumers would not ultimately save money, due to the significant fees. Both National Payment Network and Matt Blatt Inc. have entered into proposed consent orders with the FTC, prohibiting the companies from misrepresenting that payment programs will save consumers money or that payment programs will improve, repair, or affect a consumer’s credit record. Cumulatively, the companies will pay over $1.6 million to the FTC, which could be used to refund consumers.

Deceptive advertising. The Commission also filed three deceptive advertising complaints—In the Matter of TT of Longwood, Inc. (File No. 152 3047); In the Matter of Jim Burke Automotive, Inc. (File No. 152 3036); and In the Matter of City Nissan Inc. (File No. 132 3114). The companies allegedly advertised sales, lease, or financing options that “seemed attractive,” but were nullified by fine-print disclaimers. TT of Longwood, Jim Burke Automotive, and City Nissan each settled the FTC charges. They all will be banned from misrepresenting the purchase cost or any other material fact concerning price, sale, financing, or leasing of a vehicle.

Loan modification. Lastly, in FTC v. Regency Financial Services, LLC (File No. 142 3059, Case No. 1:15-cv-20270-DPG), Regency Financial Services allegedly violated the FTC Act and Telemarketing Sales Rule by misrepresenting that it would obtain auto loan modifications for consumers and provide full refunds in the event they failed. The company purportedly charged upfront fees, but provided nothing in return. The case is ongoing, but a stipulated preliminary injunction order was entered, prohibiting the company from misrepresenting that it will obtain a loan modification for consumers, refund policies, or any other material fact in connection with vehicle loan assistance relief services.

“For most people, buying a car is one of the largest purchases they’ll make,” stated FTC Bureau of Consumer Protection, Jessica Rich. “Car ads must be truthful, loan terms must be clear, and dealer practices must be honest. That’s why our partners are working together to crack down on deceptive marketing about car sales, leasing and financing.”

Companies: National Payment Network, Inc.; Matt Blatt Inc.; TT of Longwood, Inc.; Jim Burke Automotive, Inc.; City Nissan Inc.; Regency Financial Services, LLC

News: Advertising ConsumerProtection FederalTradeCommissionNews