FTC Continues Crackdown on Auto Ads

Ohio, Maryland dealers' prices, discounts bring charges

Too good-to-be-true auto dealer ads drove the Federal Trade Commission to action, charging two dealers in Maryland and Ohio with falsely advertising the cost or discounts for vehicles.

The FTC charged Timonium Chrysler of Cockeysville, Md., of advertising discounts and prices not available to a typical consumer. Ganley Ford West in Cleveland was charged with violating the FTC Act, which prohibits unfair or deceptive advertising.

It's the second time the FTC has cracked down on deceptive auto ads. A little over a year ago, the FTC brought suit against five auto dealers for falsely promising to pay off consumers' trade-ins no matter how much the consumer owed on the car. 

"Buying a car is a huge financial commitment, and people often calculate what they can pay down to the penny," said Jessica Rich, who was named director of the agency's bureau of consumer protection in June. She vowed to continue to scrutinize deceptive auto ads. "[Consumers] should be able to depend on the dealers to provide truthful information, and they can depend on the FTC to enforce consumer protection laws on the lot."

In the case of Timonium, ads on the dealer's website promoted dealer discounts and Internet prices but didn't disclose that consumers would have to qualify for a series of rebates not generally available. Even if a consumer managed to put together all the rebates, the cost of the car was still greater than the advertised price.

Ganley advertised discounted vehicles on its website and in the local paper but failed to disclose that the discounts only applied to more expensive models of the advertised vehicles.

"You could drive a truck through the gap between what the dealership advertised and the actual terms of the offer," Lesley Fair, a senior attorney with the FTC's bureau of consumer protection, wrote in a blog post. "When consumers see an advertised offer, it's reasonable for them to conclude that's what they'll pay."

The FTC's proposed 20-year order prohibits both dealers from advertising prices or discounts unless accompanied by clear disclosures. For the next five years, both dealers must maintain and make available copies of all ads and promotion materials to the FTC upon request.