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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.”