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N.Y. AG Announces Two Actions Against Dealers

July 14, 2015

NEW YORK — Attorney General Eric T. Schneiderman announced two separate actions this week against a 22-store dealer group and a Hyundai dealership, both related to deceptive advertising practices.

The attorney general’s office has reached a settlement requiring Atlantic Automotive Group to pay $310,000 in restitution and penalties to resolve false advertising claims made at its 22 stores in Nassau and Suffolk Counties. According to the regulator, his Nassau and Suffolk regional offices received more than 250 complaints regarding the dealerships and their advertising and sales practices.

“Purchasing a car is one of the biggest financial decisions many families will make,” Schneiderman said. “New Yorkers have a right to navigate the car buying process without being targeted by false and misleading promotions and sales practices.”

According to the attorney general’s press release, Atlantic Automotive Group mailed advertisements to thousands of Nassau and Suffolk County consumers, with approximately 500,000 promotional items in total distributed by direct mail. The advertisements contained a scratch off game card, a pull tab game card, or a “Triple Diamond” game card where consumers could win a cash prize, a free vehicle, a flat-screen television or an Apple iPad. A winning ticket contained three symbols, but it did not explain what, if anything, the consumer had won. Instead, consumers were instructed to bring the game card to the dealership during event times in order to claim their prize.

The game cards were deceptive and had the capacity to mislead consumers to believe that they were guaranteed winners of valuable prizes, according to the regulator. But virtually none of the consumers won a prize.

The dealerships were also accused of obtaining signatures on contracts of sale and financing agreements from consumers who mistakenly believed that they were filling out paperwork for vehicles they had won, offering false monetary discounts off the sales price of a vehicle, and charging consumers for extended warranties, vehicle maintenance contracts, and administrative fees related to the purchase of vehicles that consumers did not want, had no knowledge of, or were told there was no charge for. The dealerships also allegedly provided consumers with blank documents or partially blank documents for their signatures and later filled out the documents with figures and terms other than what was agreed upon by the consumers, among other violations.

Also on July 14, the attorney general announced a settlement with Hyundai of White Plains LLC to the tune of $32,500. An investigation found that the auto dealer used deceptive and misleading advertising practices in both its print and online ads. Among its deceptive practices, the dealership widely promoted sale and lease prices that were illusory because they included discounts or rebates that were not available to most consumers, and thus, did not represent the actual sale or lease prices. The dealership has agreed to reform its advertising practices and will pay $32,500 in costs and penalties to New York State.

According to a press release, Hyundai of White Plains regularly advertised prices which included discounts or rebates that sometimes totaled as much as $4,500 — meaning that the actual price of the vehicle for many consumers was significantly more than advertised. The only disclosure that the advertised prices included these rebates and discounts was in tiny footnotes at the bottom of the advertisements.

The attorney general's investigation also cited Hyundai of White Plains for other problems with its ads, such as 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; restricting a rate or price to a “qualified buyer” or “qualified lessee” without disclosing such qualifications; and failing to disclose the duration of sales and promotions that were time-limited.

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