FTC Puts the Brakes on Deceptive Car Dealer Ads in Broad Enforcement Sweep

Sellers buried real prices and terms in the fine print

Local car ads have never been known for their subtlety. But screaming salespeople and crappy graphics don't give dealers permission to bury onerous terms in the fine print. Ten car dealers were swept up Thursday in a broad deceptive ad enforcement action the Federal Trade Commission dubbed Operation Steer Clear. 


Nine car dealers in six states entered into consent decrees with the FTC that they would cease deceptive ad tactics. Any violation of the decree would subject dealers to a fine of $16,000 per violation. In the case of the 10th dealer, Courtesy Auto Group of Attleboro, Mass., the FTC filed an administration complaint and litigation is ongoing.

Going after deceptive car ads has been a perennial focus of FTC enforcement. Just a few months ago, the FTC announced a consent decree with two dealers for falsely promising to pay-off trade-ins no matter how much the consumer owed. Last year, the agency announced deceptive ad settlements with five dealers

“We’re always on the lookout for deception in the auto marketplace,” said Jessica Rich, director of the FTC’s bureau of consumer protection. “We get a lot of complaints, but because it is such an important area and one of the most expensive purchases a consumer makes, we also monitor car ads ourselves.”

According to the FTC’s complaints, the dealers made a variety of false claims in print, Internet and video ads to lure consumers into their showrooms, burying other terms or higher payments in the fine print. One dealer promised low monthly rates that the fine print revealed were just teaser rates. Another dealer promised low monthly payments but buried a balloon payment in the fine print. Another used a sweepstakes that had no winners.

“Dealers’ ads need to spell out costs and other important terms customers can count on,” Rich said during a press conference Thursday morning. “We don’t believe consumers should have to hunt around for them.”

Dealers that settled with the FTC are Casino Auto Sales in California; Honda of Hollywood in California; Fowlerville Ford in Michigan; Infiniti of Clarendon Hills in Illinois; Nissan of South Atlanta in Georgia; Norm Reeves Honda Superstore in California; Paramount Kia in North Carolina; Rainbow Auto Sales in California; and Southwest Kia in Texas.

On the job for half a year, the FTC’s Rich is showing an aggressive streak when it comes to deceptive advertising. Operation Steer Clear caps off a busy week of crackdowns on deceptive ads. Earlier this week, the FTC announced a $34 million settlement with four fad weight-loss companies, including the agency’s second largest monetary settlement ever with Sensa.