Iowa AG: Auto dealer misled its customers

Nick Rees May 17, 2010, 2:59pm


DES MOINES, Iowa (Legal Newsline) - Iowa Attorney General Tom Miller filed a lawsuit on Friday against a Louisiana company that allegedly used deceptive "false-premise" ads for used car sales events held in Iowa.

The lawsuit against Smart Automotive Group alleges that the company's ads falsely used the terms "Seized and Repossessed Vehicle Event," "Statewide Used Vehicle Liquidation" and "Emergency Disposal Event," as well as other deceptive and misleading terms that were not true.

"The problem is that such ads mislead customers into thinking vehicles must be sold quickly and at bargain prices, when that is not the case," Miller said.

"Consumers are misled, and sometimes they end up paying prices that are even higher than normal."

Promotional advertising and sales packages were sold to Iowa auto dealers by Smart Automotive Group to increase the sales of the dealers' used vehicles, the suit alleges.

The packages, the suit says, "are designed to trick consumers into believing the vehicles come from a source other than the dealer's usual used vehicle inventory and are available at lower than usual retail prices."

"We alleged they used deceptive ads to trick consumers into thinking used cars and trucks were being sold at bargain prices at special sales events when in fact vehicles were from dealers' regular used-vehicle inventories," Miller said.

Smart Automotive Group is also alleged to have sent in sales teams that employed "high-pressure sales tactics to sell consumers vehicles under false pretenses."

Miller's suit, filed in Polk County District Court in Des Moines, seeks civil penalties of up to $40,000 per violation of the Consumer Fraud Act as well as restitution for consumers and a prohibition against future violations.

A similar "false-pretense" auto sales suit was settled with G&A Marketing of Milford, Ohio, on Sept. 12, 2006. That formal agreement barred G&A Marketing from making or implying false claims about the sources of used vehicles.

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