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FTC Moves to Block Deceptive Car Dealer Ads

If it’s too good to believe…

by on Mar.16, 2012

Frank Myers AutoMaxx was one of five dealers cited for misleading ads.

By most measures, auto dealers are doing a lot better job than in decades past when plaid-suited salesmen would promise anything to close a deal.  But abuses still occur, prompting the Federal Trade Commission to step in.

Government regulators have reached a settlement with five dealers from around the country in which they promise to stop running deceptive advertising – specifically, ads that promised to pay off whatever a consumer owed on a vehicle being traded in.

Such claims proved particularly appealing to buyers who were “upside down,” in trade lingo, owing more on a vehicle than it was actually worth. Having negative equity is normal during the period after a person buys a vehicle on credit, and the lengthier the loan terms the longer the period the buyer is upside down.

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“Buying a new car or truck is a major financial commitment, and the last thing consumers need is to be tricked into thinking that a dealer will ‘pay off’ what they owe on their current vehicle, when they really won’t,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “The Federal Trade Commission is constantly on the lookout for potentially deceptive ads, and brings actions to stop them when appropriate.”

The settlement bars the five dealers from making similar claims in the future and the FTC clearly hopes the crackdown will send a message to other automotive retailers that such practices are no longer tolerated.

Among the five dealers cited was Billion Auto, Inc., of Sioux Falls, South Dakota.  A news release from the FTC cited one of the dealerships ads, which declared, “Credit upside down? Need a new car? Go to We want to pay off your car.” According to the FTC, Billion Auto’s TV ad depicts a car moving, inverts the video to show it upside down, and then turns it right-side up again.

An ad from Frank Myers AutoMaxx, in Winston-Salem North Carolina, says, “Uncle Frank wants to pay (your trade) off in full, no matter how much you owe.”

The owner of Key Hyundai and Hyundai Milford, both in Connecticut, used a pitch promising, “I want your trade no matter how much you owe or what you’re driving. In fact I’ll pay off your trade when you upgrade to a nicer, newer vehicle.”

The agency also struck a settlement barring similar practices by Ramey Motors, of Princeton, W. Virginia, which advertised it “will pay off your trade no matter what you owe . . . even if you’re upside down, Ramey will pay off your trade.”

The dealers must avoid using similar tactics, maintain copies of their advertisements for review and submit to future FTC review.  Any future fraction could result in a penalty of up to $16,000.

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