FTC reaches $1.4 Million settlement with Southern California auto dealerships

By Marian Johns | Jan 9, 2018

WASHINGTON, D.C. — The Federal Trade Commission (FTC) has reached a $1.4 million settlement agreement with a Southern California auto dealership group for allegedly misrepresenting consumer’s costs to finance or lease a vehicle. 

Twelve businesses operating as the Norm Reeves dealerships are barred from similar advertising misrepresentations and must adhere to strict compliance reporting terms, according to the proposed court order to resolve the FTC complaint. 

The FTC’s complaint states the dealerships were in violation of the FTC Act and falsely led consumers to believe they could purchase vehicles for specific low prices, finance vehicles for specific low payments and have no upfront payment when leasing. 

The FTC charged the dealerships with deceptive advertising, allegedly telling consumers they could lease a vehicle with zero money upfront. However, the FTC said, the advertised price excluded substantial fees and other costs.  The FTC also alleged the dealership’s ads violated the Consumer Leasing Act (CLA) by not disclosing certain lease related terms.  Another dealership ad also allegedly violated the Truth in Lending Act (TILA) and Regulation Z because the ads did not disclose certain credit related items. 

The court order to settle the FTC’s civil penalty complaint also provides for a $1.4 million civil penalty and strong reporting and compliance requirements for the defendants. 

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