Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Ohio auto dealers settle FTC charges of deceptive lease ads, (Nov 24, 2015)

By Michael Menzhuber, J.D., LL.M.

Two Ohio auto dealers have agreed to settle charges that they violated the FTC Act, the Consumer Leasing Act, and Regulation M by deceiving consumers with advertisements that touted low monthly car lease payments but failed to disclose key terms of the offers, the agency announced today.

The FTC’s administrative complaint alleged that Progressive Chevrolet Company and Progressive Motors, Inc. of Masillon, Ohio, failed to properly disclose terms such as: (1) the total amount due at signing; (2) whether a security deposit was required; and (3) credit score requirements. According to the agency, typical consumers could not qualify for the advertised terms.

The proposed settlement order provides that the auto dealers are prohibited from advertising misleading lease or financing terms; the auto dealers clearly and conspicuously disclose all qualifications or restrictions on a consumer’s ability to obtain the advertised terms; and if the ad states that consumers must meet a certain credit score in order to qualify for the offer and a majority of consumers are not likely to meet the stated credit score, the ad must clearly and conspicuously disclose that fact.

The auto dealers are also barred from advertising a payment amount, or that any or no initial payment is required, without clearly disclosing that the transaction is a lease; the total amount due at consummation or delivery; the number of payments and their amounts and timing; whether or not a security deposit is required; and that there may be an extra charge at the end of the lease where the consumer’s liability (if any) is based on the difference between the vehicle’s residual value and its value at the end of the lease.

The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment through December 28, after which the Commission will decide whether to issue the order on a final basis. Interested parties can submit written comments electronically.

News: Advertising ConsumerProtection FederalTradeCommissionNews