Ad company banned from selling to Iowa car dealers
DES MOINES, Iowa (Legal Newsline) - Iowa Attorney General Tom Miller announced on Monday that he has obtained a judgment against a Louisiana-based advertising company and its president for allegedly violating Iowa's Consumer Fraud Act.
The judgment settles a consumer fraud lawsuit the Consumer Protection Division filed earlier this year against Smart Automotive Group and its president, Bernard Burst III.
The suit alleged that Burst and his company used deceptive, "false premise" advertising to help certain Iowa automobile dealers sell used vehicles.
Miller alleged that the mailer and newsprint ads they sent were designed to trick consumers into believing that these used vehicles were arriving from outside sources at cut-rate prices. Phrases such as "Seized and Repossessed Vehicle Event," "Statewide Used Vehicle Liquidation" and "Emergency Disposal Event" were often used.
"The truth is that the vehicles were the dealers' regular used vehicle inventories; they were not 'specially delivered' to the dealers by anyone," Miller said.
The suit further alleged that the defendants used misleading tactics, such as scratch-off prize cards, which showed every recipient was a winner. Miller called these "a subterfuge designed to trick consumers into visiting the dealership."
The consumers, when visiting the dealership, were then allegedly approached with undesired sales pitches. Miller alleged that Smart Automotive sometimes sent in sales teams that used high-pressure sales tactics to sell consumers vehicles under false pretenses.
The judgment bars the company from selling advertising packages to Iowa car dealers in the future. Smart Automotive Group and Burst were also fined $20,000 each, with the payment suspended for the company and $5,000 suspended for Burst. The defendants are also required to pay all costs associated with the litigation.