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FTC sues dealers for fake recall notices

October 19, 2018
A group of car dealerships and their president and vice president have settled Federal Trade Commission allegations that they mailed more than 21,000 fake "urgent recall" notices to consumers in 2015 and 2017, to lure them to visit their dealerships. The FTC also agreed to a settlement with a California-based marketing firm and its owner that, according to the complaint, designed the fake recall notices and worked closely with the dealership defendants to send them.
 
The dealerships operate as Passport Toyota and Passport Nissan of Alexandria, Va., and Passport Nissan of Marlow Heights, Md. The marketing company, Temecula Equity Group, LLC, does business as Overflowworks.com.
 
According to the FTC, the vast majority of the vehicles covered by the notices did not have open recalls, suggesting that some actually did. The court orders settling the FTC’s charges bar all of the defendants from such deceptive conduct in the future.
 
"Many vehicles currently on the road are subject to open safety recalls. Legitimate recall notices sent by manufacturers and auto dealers are essential to getting those vehicles fixed quickly," said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. "However, deceptive fake recall notices may not only trick consumers into visiting a dealership, but also may cause them to ignore legitimate recall notices in the future, risking their safety."
 
According to the FTC’s complaint, the defendants mailed fake recall notice postcards to nearly 7,000 Toyota owners in 2015, and to 14,000 Nissan owners in 2017. The defendants, the FTC said, made no effort to limit the mailing list to consumers whose vehicles were subject to open recalls. The notices warned consumers about supposedly urgent recalls, with prominent language such as "URGENT RECALL NOTICE" in large, bold-faced, uppercase letters.
 
The FTC alleges that, as with the Toyota notices, the defendants failed to take steps to ensure that the consumers who received the Nissan notices had vehicles with open recalls – and the vast majority did not.
 
The FTC filed a federal district court complaint against the defendants alleging that the Toyota and Nissan recall notices were deceptive in violation of Section 5 of the Federal Trade Commission Act. At the same time, the FTC filed proposed orders signed by all of the defendants settling the FTC Act allegations and prohibiting the defendants from deceiving consumers in the future.
 
The complaint alleges that the defendants sent the mailers to increase business at the dealerships’ service departments, not to alert consumers about actual recalls. According to the complaint, after receiving the fake recall notices, hundreds of vehicle owners contacted Passport’s call centers, many of whom were told they had to go to the defendants’ dealerships to learn whether their vehicle was actually subject to a recall.
 
 

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