FTC Approves Final Order in Texas Auto Dealer’s Deceptive Ad Case
February 17, 2015
WASHINGTON, D.C. — The Federal Trade Commission unanimously approved a final order settling its deceptive advertising charges against Dallas-based TXVT Limited Partnership, which does business as Trophy Nissan. The auto dealer was charged on Dec. 23 with violating the FTC Act, the Consumer Leasing Act’s Regulation M, and the Truth in Lending Act (TILA)’s Regulation Z.
Trophy was the third dealership operation to be charged in December with deceptive advertising. Under the settlement, Trophy is prohibited from misrepresenting in any advertisement the material terms of any promotion or other incentive, including offers that it will pay off a consumers’ trade-in or the cost of leasing or purchasing a vehicle.
The dealership is also prohibited from failing to clearly and conspicuously disclose material terms of its promotions or other incentives. It must also comply with the Consumer Leasing Act’s Regulation M and the TILA’s Regulation Z.
According to the FTC’s Dec. 23 press release, the dealership advertised enticing prices, lease or finance terms, and promotions. It then attempted to disclaim its attractive offers using small text in print and video ads. The dealership also ran these ads on its website, Facebook and Twitter pages.
The FTC alleged that one of the ads misled consumer into thinking they could get out of their current loan or lease for only $1. The commission’s complaint alleged the promotion was deceptive since consumers could not get out of their loan or lease for that amount.
“In fact, Trophy would add the balance of any loan or lease obligation to the balance of a new loan,” the FTC stated in its Dec. 23 press release.
In another promotion, “Max Your Tax,” Trophy claimed it would match tax refunds to use for a down payment, but the small print at the bottom of the ad disclosed that the dealership would only match refunds up to $1,000.
At its annual convention in January, the National Automobile Dealers Association issue “A Dealer Guide to Federal Advertising Requirements.” It is designed to assist new-car dealers in complying with federal advertising requirements on the sale, financing and leasing of automotive products and services. It provides examples of “bad” ads and “good” ads, as well as chapters on 41 different federal advertising topics. To access the guide, click here.