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HOT TOPICS
2015 GNYADA Membership Directory
99
FTC COMPLETES NEW SWEEP OF AUTO DEALER
PRACTICES RESULTS IN 187 ENFORCEMENT ACTIONS -
$2.6 MILLION IN JUDGMENTS
The Federal Trade Commission (FTC) released the results of Operation Ruse Control an enforcement sweep
of car dealers’ practices. The FTC partnered with criminal and civil enforcement agencies in the latest
investigation. This is the second sweep related to automobile dealers within a two year time period.
The FTC targeted these specific practices it found to be deceptive:
•
Purchase Add-ons
– products or services sold by a dealer or third party and added to finance
contract or lease. For example, the FTC found a dealership that misrepresented a payment program
that claimed it would save consumers money however it failed to disclose that the significant fees it
charged for the service often cancelled out any actual savings.
•
Deceptive Advertising
– Bait and Switch advertisements. For example the FTC found ads offering
promotional prices and rebates, but disclaimers in very small print eliminated customers from
qualifying for advertised promotional rates.
•
Loan Application Fraud
– dealers used straw purchasers or changed customer information on credit
applications to ensure loan qualification for vehicles customers may not have been able to afford.
The FTC expressed particular concern over purchase add-ons sold by dealers. The agency settled with a New
Jersey dealer and a company offering bi-weekly payment plan to customers. The FTC claims that these bi-
weekly pay plans include service fees that exceed any potential savings gained from the bi-weekly payments.
Fines & Liability
The NJ dealer will pay $184,000 to the FTC while the company offering the automatic bi-weekly payment
plan will pay $1.5 million to consumers and $949,000 directly to the FTC.
The Agency indicated that criminal prosecutions
could be forthcoming seeking sanctions, including
jail time, for individuals (i.e.: sales people, sales
managers and F&I) found to have committed bank
or wire fraud or other wrongdoing.
The FTC indicated that their fraud investigators,
previously assigned to the mortgage industry
have now been assigned to focus their
attention on auto dealers. Enforcement
action against auto dealers is ongoing.