Antitrust Law Daily Wrap Up, ADVERTISING NEWS: New York AG settles deceptive advertising claims against car dealerships, (Jul 16, 2015)

On July 14, New York Attorney General Eric T. Schneiderman announced two separate settlement agreements with 23 auto dealerships to resolve claims that the dealerships falsely advertised available prizes, discounts, and rebates.

In a case against 22 dealerships, all affiliated with Atlantic Automotive Group based in West Islip, the AG received more than 250 complaints regarding the dealerships and their advertising and sales practices. Thousands of Nassau and Suffolk County consumers received approximately 500,000 promotional items by direct mail containing a scratch off game card, a pull tab game card, or a “Triple Diamond” game card where consumers could win a cash prize, a free vehicle, a flat-screen television or an Apple iPad. A winning ticket contained three like symbols but it did not explain what, if anything, the consumer won. Instead, consumers were instructed to bring the game card to the dealership during event times in order to claim their prize. Virtually all of the consumers did not win a prize at all. However, the dealerships obtained signatures on contracts of sale and financing agreements from consumers who mistakenly believed that they were filling out paperwork for vehicles they had won as part of the “Triple Diamond”, “scratch-off game card”, or “pull tab game card” promotions.

The Atlantic Automotive Group also allegedly offered false monetary discounts off the sales price of a vehicle, by selling the vehicle at a high retail sales price; charged consumers for extended warranties, vehicle maintenance contracts, and administrative fees related to the purchase of vehicles that consumers did not want, had no knowledge of, or were told there was no charge for these products; provided consumers with blank documents or partially blank documents for their signatures and later filling out the documents with figures and terms other than what was agreed upon by the consumers; encouraged consumers to apply for loans that they could not afford; and refused to refund deposits that had been made by consumers.

In a separate investigation into Hyundai of White Plains LLC, d/b/a Hyundai of White Plains, the AG’s Office found that the dealership widely promoted sale and lease prices that were illusory because they included discounts or rebates that were not available to most consumers, and thus, did not represent the actual sale or lease prices.

The Atlantic Automotive Group dealerships agreed to pay $310,000 in restitution and penalties, while Hyundai of White Plains agreed to reform its advertising practices and pay $32,500 in costs and penalties.

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