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FTC settles with Ohio dealerships over federal advertising regulations Reg. M infractions

December 4, 2015
Two Ohio auto dealers in November agreed to settle a Federal Trade Commission complaint alleging that they engaged in lease advertising that was deceptive and violated the disclosure requirements set forth in the Consumer Leasing Act and its implementing rule, Regulation M. 
According to the FTC, the dealers advertised a zero-down, sign-and-drive lease that failed to adequately disclose material conditions to obtaining the lease. Specifically, the FTC stated that "Only at the bottom of the advertisement, in fine print and not in close proximity to the advertised vehicles, does the advertisement disclose the term of the lease, that the payment does not include tax, title, and fees, and that the offer is '[s]ubject to 800 beacon score or higher with approved credit.'" 
The FTC noted that the "typical consumer" neither has a 800 beacon score or higher nor understands what a beacon score is or how it may differ from a generic credit score. Consequently, the FTC cited the dealers for (i) engaging in deceptive advertising for failing to adequately disclose that typical consumers cannot qualify for the advertised terms and (ii) violating Regulation M by using a trigger term (a monthly payment amount) without clearly and conspicuously including additional disclosures that Regulation M requires. 
The terms of the proposed consent agreement are available here. Dealers are reminded to seek legal review of their advertisements before they are presented to the public.