FTC Cracks Down on Deceptive Auto Ads

Five local dealers forced to pull ads

Local auto ads have never been known for their subtlety, but some went too far, according to the Federal Trade Commission. Five dealers around the country agreed to settle with the FTC over ads that falsely promised to pay off consumers' trade-ins, no matter how much was still owed.

In ads running on dealers' websites and on sites such as YouTube, customers were told that the dealers were going to pay off their old car loans. Despite the ads' promises, it was the consumers who ended up being responsible for paying the difference. Dealers either rolled the negative equity into a consumer's new car loan or required consumers to pay the difference out of pocket.

"Uncle Frank wants to pay [your trade] off in full no matter how much you owe," said one ad from Frank Myers Auto Maxx in Winston-Salem, N.C.

As part of the settlement, the FTC barred the dealers from running the ads and from making similar deceptive claims in the future.

"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, the director of the FTC's Bureau of Consumer Protection.

In  addition to Frank Myers Auto Maxx, the dealers named in the FTC's complaints were Billion Auto, Inc., in Sioux Falls, S.D.; Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Conn.; and Ramey Motors, Inc., in Princeton, W.Va.

For the next 20 years, the dealers are also required to keep copies of relevant ads and materials substantiating claims made in their ads and file compliance reports with the FTC.

The FTC's order will be finalized following a 30-day comment period.