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Area dealership among 9 across country caught in FTC sweep

January 17, 2014
The Federal Trade Commission announced Jan. 9 that it had settled deceptive advertising charges against nine dealerships, including one in Clarendon Hills, in a nationwide sweep focusing on the sale, financing, and leasing of motor vehicles.
The sweep, dubbed Operation Steer Clear, identified practices that included sweepstakes in which no prizes were awarded, "no down payment" lease deals, and loans with payments that start low and then grow.
"Buying or leasing a car is a big deal, and car ads are an important source of information for serious shoppers," said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. "Dealers’ ads need to spell out costs and other important terms customers can count on. If they don’t, dealers can count on the FTC to take action."
In the consent orders to settle their cases, the nine dealerships in six states are barred for 20 years from violating the consumer protection laws they were accused of breaking, as well as misrepresenting information on the sale, financing or lease of motor vehicles. Future violations could result in fines of $16,000 per violation per day.
Rich said the FTC is taking similar action against a 10th dealership. "We have many other investigations in the pipeline," she said. "This is a priority for the FTC and you will see many other cases in the auto-related area going forward.
"There are many dealers who are honorable and want to treat their customers well, but we believe there are many more dealers out there who are involved in these deceptive practices."
Infiniti of Clarendon Hills allegedly violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the Consumer Lending Act and Regulation M, by failing to disclose certain lease-related terms.
A lawyer who said he represents hundreds of auto dealers, though none of those named in the FTC case, said he thinks dealers could have steered clear of trouble if they had made sure that the fine print at the bottom of their ads fully disclosed what was being advertised.
Since at least one of the dealers had a state action pending against it, attorney Alex Kurkin said it makes him wonder if the FTC is going to get more deeply involved with auto dealer practices.
"It suggests to me that federal government feels an obligation to dive into this industry," Kurkin said.