Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Texas auto dealer settles FTC charges of deceptive ads, (Dec 23, 2014)

By Linda O’Brien, J.D., LL.M.

An auto dealer in Dallas, Texas has agreed to settle FTC charges that it used deceptive ads to promote the sale and lease of its vehicles, including an ad that claimed consumers could get out of their current loan or lease for one dollar, the agency announced today.

According to the complaint (In the Matter of TXVT Limited Partnership, File No. 142-3117), false or deceptive advertising by TXVT Limited Partnership, doing business as Trophy Nissan, violated the FTC Act, the Consumer Leasing Act (CLA), Regulation M, the Truth in Lending Act (TILA), and Regulation Z.

The FTC charged that Trophy advertised enticing prices, lease or finance terms, and promotions and then attempted to disclaim its attractive offers using small text in print and video ads. In addition to print and TV advertisements, Trophy ran ads on its website, Facebook, and Twitter. The dealership also ran print ads in a local Spanish-language newspaper.

Among the deceptive ads run by Trophy was one that misled consumers into thinking they could get out of their current loan or lease for only one dollar. The FTC’s complaint alleged the advertisement was deceptive, since consumers could not get out of their loan or lease for that amount. In fact, Trophy would add the balance of any loan or lease obligation to the balance of a new loan.

In another promotion, “Max Your Tax,” Trophy claimed it would match tax refunds to use for a down payment, but the small print at the bottom of the ad disclosed it limited match refunds to no more than $1,000. The FTC alleges that Trophy failed to disclose adequately the additional terms.

As part of the proposed consent order, Trophy is prohibited from: (1) misrepresenting it will pay off a consumer’s trade-in; (2) misrepresenting material terms of any promotion or other incentive; (3) misrepresenting the cost of leasing or purchasing a vehicle; and (4) failing to clearly and conspicuously disclose material terms of a promotion or other incentive.

The proposed consent order also requires Trophy to comply with CLA and Regulation M and TILA and Regulation Z.

The Commission vote to issue the administrative complaint and accept the proposed consent order was 5-0.

Companies: TXVT Limited Partnership.

News: Advertising ConsumerProtection FederalTradeCommissionNews