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N.Y. Attorney General Settles With 6 Dealers for Deceptive Ads

March 25, 2014

ALBANY, N.Y. — Attorney General Eric T. Schneiderman announced Monday that the state has reached agreement with six Capital District auto dealers to settled charges of deceptive and misleading advertising practices.

The six dealerships have pledged to reform their advertising practices. The attorney general has also announced his intention to file suit against a seventh dealer on similar charges. The dealerships widely promoted sale and lease prices that were misleading because they reflected discounts or rebates that were not available to most consumers.

“A car is one of the most expensive and significant purchases a consumer can make. When shopping for a car, New Yorkers deserve to be dealt with honestly and fairly — not misled by deals that are too good to be true,” Schneiderman said. “These settlements ensure that consumers won’t be lured into dealerships by unrealistic prices that have no basis in reality. Those who violate the law will be held accountable by my office.”

At the seven dealerships, the advertised prices reflected supposed discounts or rebates such as:

  • a “military” rebate, which was available only to certain current or former military personnel;
  • a “college graduate” rebate, which was available only to recent college graduates;
  • a “lease conquest” or “competitive lease” rebate, which was available only to consumers who had leased a vehicle made by a competing manufacturer;
  • a “NE Balloon Cash” discount, which was available only to consumers who financed their purchase.

In some cases, the illusory discounts and rebates totaled as much as $3,000, so the actual price of the vehicle was significantly more than advertised.

The six dealerships agreed to reform their advertising practices and pay fines ranging from $7,500 to $15,000. Named in the attorney general’s suit were Albany Dodge, DeNooyer Chevrolet, DePaula Chevrolet, Goldstein Auto Group, Lia Nissan and Zappone Chrysler Jeep Dodge Ram.

The Attorney General's investigation also cited some of the dealers for other problems with their ads, and the settlements require the dealers to reform those practices as well.  These problems included:

  • Using footnotes or asterisks that contradict, confuse or materially modify a principal message of an ad;
  • Failing to clearly and conspicuously provide certain required disclosures for lease or finance terms, such as the amount or percentage of any down payment and the annual percentage rate;
  • Restricting a rate or price to a “qualified buyer” or “qualified lessee” without disclosing such qualifications;
  • Using a print size that is so small as to not be easily readable.

The Attorney General found that these practices constitute false advertising and fraudulent, deceptive and misleading business practices.  The practices also did not comply with the Attorney General's Advertising Guidelines for Auto Dealers, which identify certain deceptive advertising practices.

Attorney General Schneiderman also served a seventh dealer, Armory Garage of Albany, with a statutory notice of his intention to file suit against the dealer. The Attorney General's investigation found that the dealership promoted sale prices that reflected discounts and/or rebates for which many consumers did not qualify. For example, one advertisement prominently featured a Dodge Caravan for a “final price” of $16,990. However, the price was based on at least five discounts or rebates that were not available to many consumers, including “balloon cash,” “conquest lease cash,” “TDM bonus cash,” a “military rebate” and a “National Association of Realtors” discount. Without these rebates and discounts, the actual price would have increased by as much as $4,000.

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