FROM: U.S. FEDERAL TRADE COMMISSION
FTC Takes Action Against Two Auto Dealership Chains For Violating 2012 Orders Prohibiting Deceptive Advertising of Vehicle Costs
The Federal Trade Commission is taking action against two auto dealer groups, operating in five states with more than two dozen retail stores, for civil penalties for violations of FTC administrative orders, which prohibit them from deceptively advertising the cost of buying or leasing a car.
“If auto dealers make advertising claims in headlines, they can’t take them away in fine print,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These actions show there is a financial cost for violating FTC orders.”
Billion Auto, a chain of 20 family-owned automobile dealerships in Iowa, Montana, and South Dakota, and a family-controlled advertising company, Nichols Media, Inc., have agreed to settle charges that they violated a 2012 FTC administrative order. That order prohibits Billion Auto, and any companies in active participation with it, from misrepresenting material costs and terms of vehicle finance and lease offers and requires specific disclosures, mandated by the Truth in Lending Act (TILA) and Regulation Z, and the Consumer Leasing Act (CLA) and Regulation M. The Billion Auto defendants have agreed to pay $360,000 in civil penalties to settle the FTC’s charges.
According to the complaint against Billion and Nichols, the dealerships and advertising company violated the 2012 FTC administrative order by frequently focusing on only a few attractive terms in their ads while hiding others in fine print, through distracting visuals, or with rapid-fire audio delivery. For example, some dealership ads promoted low monthly payments or attractive annual percentage rates and finance periods, while concealing other material items, such as low payments were for leases, not sales; major limits existed on who could qualify for discounts; and offers often included significant added costs.
In a separate action seeking civil penalties, the FTC has charged Ramey Motors, Inc., and three affiliated dealerships, in several locations in Virginia and West Virginia, with violating a similar 2012 FTC administrative order. Among other things, Ramey Motors’ ads allegedly misrepresented the costs of financing or leasing a vehicle by concealing important terms of the offer, such as a requirement to make a substantial down payment. The complaint also charges Ramey Motors with failing to make credit disclosures clearly and conspicuously, as required by the TILA. The FTC also alleges that the auto dealer group failed to retain and produce appropriate records to the Commission to substantiate its offers. Ramey Motors and its affiliates are subject to $16,000 in civil penalties for each alleged violation of the FTC administrative order.
The Commission vote to refer the Billion complaint and proposed stipulated order to the Department of Justice for filing was 5-0. The Justice Department filed the complaint and proposed stipulated order on behalf of the Commission in the U.S. District Court for the Northern District of Iowa on Dec. 11, 2014.
The Commission vote to authorize filing the complaint against Ramey Motors, Inc., Ramey Automotive Group, Inc., Ramey Automotive, Inc., and Ramey Chevrolet, Inc. was 5-0. It was filed in the U.S. District Court for the Southern District of West Virginia on Dec. 11, 2014.
The FTC has brought more than 20 enforcement actions in the auto marketplace in recent years to protect consumers. Anyone looking for a new or used vehicle can check out the agency’s tips in Buying and Owning a Car.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated orders have the force of law when approved and signed by the District Court judge. In the Ramey matter, the case will be decided by the court.
Showing posts with label ALLEGED DECEPTIVE ADVERTISING. Show all posts
Showing posts with label ALLEGED DECEPTIVE ADVERTISING. Show all posts
Friday, December 12, 2014
Saturday, September 13, 2014
FTC CHARGES LEAD TO BAN AGAINST MARKETER OF 'FAT BURNER' DIET PILLS
FROM: U.S. FEDERAL TRADE COMMISSION
FTC Settlement Bans Marketer Behind ‘Fat Burner’ Diet Pills from Manufacturing, Marketing Weight-Loss Products
John Matthew Dwyer III, the co-founder of HealthyLife Sciences, LLC, has agreed to be banned from the weight-loss industry to settle FTC charges of deceptive advertising.
Dwyer and HealthyLife Sciences advertised that their Healthe Trim supplements – which were sold online and at CVS, GNC, and Walgreens for up to $65 for a month’s supply – would cause rapid and substantial weight loss of as much as 165 pounds, according to the FTC. HealthyLife Sciences sold an Original Formula that purportedly contained hoodia gordonii as well as formulas containing raspberry ketone, green coffee bean, and garcinia cambogia. The advertising relied heavily on consumer testimonials, which portrayed losing weight as easy.
“Losing weight is rarely easy, and it would be a miracle if a pill made it so,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Consumers should be skeptical when a product like this one claims to make weight loss easy.”
In radio and television ads, Dwyer and HealthyLife Sciences claimed Healthe Trim was clinically proven to cause weight loss, and would suppress users’ appetites and boost their metabolisms to help them lose weight without exercising or changing their daily routine. They used the tagline “Get High School Skinny,” and included testimonials from consumers who claimed that the weight was just “falling off.”
Under the settlements, Dwyer is banned from manufacturing and marketing weight-loss products. HealthyLife Sciences is banned from advertising that its products cause weight loss of two pounds or more a week for a month or more without dieting or exercise; cause substantial weight loss no matter what or how much the user eats; cause permanent weight loss; block the absorption of fat or calories to enable the user to lose substantial weight; safely enable users to lose more than three pounds per week for more than four weeks; cause substantial weight loss for all users; or cause substantial weight loss by wearing a product on the body or rubbing it into the skin. The FTC has previously issued guidance that these “gut check” claims are always false when made for dietary supplements, over-the-counter drugs, or patches, creams, wraps, and similar products worn on the body or rubbed into the skin.
The settlement with HealthyLife Sciences also requires that the company have two randomized, double-blind, placebo-controlled human clinical trials to support other claims relating to weight loss, increased metabolism, or appetite suppression. Both Dwyer and HealthyLife Sciences are prohibited from claiming that any dietary supplement, food, or drug is effective unless they have competent and reliable scientific evidence to back up the claims. They also are prohibited from misrepresenting the results of any tests, studies, or research. And they are required to retain data from human clinical trials used to support their advertising claims.
Consumers should carefully evaluate advertising for weight-loss products and for products that claim to cure diseases. For more information, see: Weight Loss & Fitness and Miracle Health Claims. Publishers, broadcasters, and marketers should consult Gut Check: A Reference Guide for Media on Spotting False Weight-Loss Claims.
The Commission vote to accept the proposed administrative consent orders for public comment was 5-0.
The FTC will publish a description of the consent orders in the Federal Register shortly. The orders will be subject to public comment for 30 days, beginning today and continuing through October 14, 2014, after which the Commission will decide whether to make the proposed consent orders final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.
The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Strategy’s goal of increasing the number of Americans who are healthy at every stage of life.
NOTE: When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.
Friday, January 10, 2014
FTC GOES AFTER AUTO DEALERS FOR FALSE ADVERTISING
FROM: FEDERAL TRADE COMMISSION
FTC Announces Sweep Against 10 Auto Dealers
‘Operation Steer Clear’ Drives Home That Auto Ads Must Be Truthful
The Federal Trade Commission announced today that nine auto dealers agreed to settle deceptive advertising charges, and the agency is taking action against a 10th dealer, in a nationwide sweep focusing on the sale, financing, and leasing of motor vehicles.
According to the complaints, the dealers made a variety of misrepresentations in print, Internet, and video advertisements that violated the FTC Act, falsely leading consumers to believe they could purchase vehicles for low prices, finance vehicles with low monthly payments, and/or make no upfront payment to lease vehicles. One dealer even misrepresented that consumers had won prizes they could collect at the dealership.
“Buying or leasing a car is a big deal, and car ads are an important source of information for serious shoppers,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Dealers’ ads need to spell out costs and other important terms customers can count on. If they don’t, dealers can count on the FTC to take action.”
‘Operation Steer Clear’ is the latest effort from the FTC to protect consumers in the auto marketplace. The dealerships that settled are charged as follows:
California
Casino Auto Sales of La Puente, Calif., and Rainbow Auto Sales, of South Gate, Calif., allegedly violated the FTC Act by deceptively advertising that consumers could purchase vehicles at specific low prices when, in fact, the price was $5,000 higher. Both dealers’ ads involved a mix of English and Spanish. Honda of Hollywood, Los Angeles, and Norm Reeves Honda of Cerritos, Calif., violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the Consumer Leasing Act (CLA) and Regulation M, by failing to disclose certain lease related terms. Norm Reeves Honda’s ads also allegedly violated the Truth in Lending Act (TILA) and Regulation Z, by failing to disclose certain credit related terms.
Georgia
Nissan of South Atlanta of Morrow, Ga., allegedly violated the FTC Act by deceptively advertising that consumers could finance a vehicle purchase with low monthly payments when, in fact, the payments were temporary “teasers” after which consumers would owe a different amount. The ads also allegedly violated TILA and Regulation Z, by failing to disclose certain credit related terms.
Illinois
Infiniti of Clarendon Hills of Clarendon Hills, Ill., allegedly violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the CLA and Regulation M, by failing to disclose certain lease related terms.
North Carolina
Paramount Kia of Hickory, N.C., allegedly violated the FTC Act by deceptively advertising that consumers could finance a purchase with low monthly payments when, in fact, the payments were temporary “teasers” after which the consumer would owe a much higher amount, by several hundred dollars. The ads also allegedly violated the TILA and Regulation Z, by failing to clearly and conspicuously disclose certain credit related terms.
Michigan
Fowlerville Ford of Fowlerville, Mich., allegedly violated the FTC Act by sending mailers that deceptively claimed consumers had won a sweepstakes prize, when, in fact, they had not. Some of their ads also allegedly violated TILA and Regulation Z, by failing to disclose certain credit related terms.
Texas
Southwest Kia companies, including New World Auto Imports, Dallas, Texas, New World Auto Imports of Rockwall, Rockwall, Texas, and Hampton Two Auto Corporations, Mesquite, Texas, allegedly violated the FTC Act by deceptively advertising that consumers could purchase a vehicle for specific low monthly payments when, in fact, consumers would owe a final balloon payment of over $10,000. The companies also allegedly deceptively advertised that consumers could drive home a vehicle for specific low up-front amounts and low monthly payments when, in fact, the deal was a lease and they would owe substantially more up-front. The ads also allegedly violated the CLA and Regulation M, by failing to disclose certain lease related terms, and the TILA and Regulation Z, by failing to disclose certain credit related terms.
The proposed consent orders settling the FTC’s charges in the nine cases are designed to prevent the dealerships from engaging in similar deceptive advertising practices in the future. The orders prohibit the dealerships from misrepresenting in any advertisement for the purchase, financing, or leasing of motor vehicles the cost of leasing a vehicle, the cost of purchasing a vehicle with financing, or any other material fact about the price, sale, financing, or leasing of a vehicle. When relevant, the proposed consent orders also address the alleged TILA and CLA violations by requiring the dealerships to clearly and conspicuously disclose terms required by these credit and lease laws. In the case where the dealerships misrepresented that consumers had won a prize, the proposed order also prohibits misrepresenting material terms of any prize, sweepstakes, giveaway, or other incentive.
The FTC would like to thank the Los Angeles Department of Consumer Affairs for its assistance with multiple investigations in California, and the Michigan Department of Attorney General for its assistance with the investigation in Michigan.
The Commission votes to accept the packages containing the nine proposed consent orders and complaints for public comment were 4-0. The agreements will be subject to public comment for 30 days, beginning today and continuing through Feb. 10, 2014, after which the Commission will decide whether to make the proposed consent orders final. Submit a comment electronically:
Casino Auto Sales
Honda of Hollywood
Fowlerville Ford
Infiniti of Clarendon Hills
Nissan of South Atlanta
Norm Reeves Honda Superstore
Paramount Kia
Rainbow Auto Sales
Southwest Kia
Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580.
In addition, the FTC issued an administrative complaint against Courtesy Auto Group of Attleboro, Mass. The FTC alleges the dealership violated the FTC Act by deceptively advertising that consumers can lease a vehicle for $0 down and specific monthly payments when, in fact, the advertised amounts exclude substantial fees. The ads also allegedly violate the CLA and Regulation M, by failing to disclose or clearly and conspicuously disclose certain lease related terms.
The Commission vote to issue the administrative complaint was 4-0.
FTC Announces Sweep Against 10 Auto Dealers
‘Operation Steer Clear’ Drives Home That Auto Ads Must Be Truthful
The Federal Trade Commission announced today that nine auto dealers agreed to settle deceptive advertising charges, and the agency is taking action against a 10th dealer, in a nationwide sweep focusing on the sale, financing, and leasing of motor vehicles.
According to the complaints, the dealers made a variety of misrepresentations in print, Internet, and video advertisements that violated the FTC Act, falsely leading consumers to believe they could purchase vehicles for low prices, finance vehicles with low monthly payments, and/or make no upfront payment to lease vehicles. One dealer even misrepresented that consumers had won prizes they could collect at the dealership.
“Buying or leasing a car is a big deal, and car ads are an important source of information for serious shoppers,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Dealers’ ads need to spell out costs and other important terms customers can count on. If they don’t, dealers can count on the FTC to take action.”
‘Operation Steer Clear’ is the latest effort from the FTC to protect consumers in the auto marketplace. The dealerships that settled are charged as follows:
California
Casino Auto Sales of La Puente, Calif., and Rainbow Auto Sales, of South Gate, Calif., allegedly violated the FTC Act by deceptively advertising that consumers could purchase vehicles at specific low prices when, in fact, the price was $5,000 higher. Both dealers’ ads involved a mix of English and Spanish. Honda of Hollywood, Los Angeles, and Norm Reeves Honda of Cerritos, Calif., violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the Consumer Leasing Act (CLA) and Regulation M, by failing to disclose certain lease related terms. Norm Reeves Honda’s ads also allegedly violated the Truth in Lending Act (TILA) and Regulation Z, by failing to disclose certain credit related terms.
Georgia
Nissan of South Atlanta of Morrow, Ga., allegedly violated the FTC Act by deceptively advertising that consumers could finance a vehicle purchase with low monthly payments when, in fact, the payments were temporary “teasers” after which consumers would owe a different amount. The ads also allegedly violated TILA and Regulation Z, by failing to disclose certain credit related terms.
Illinois
Infiniti of Clarendon Hills of Clarendon Hills, Ill., allegedly violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the CLA and Regulation M, by failing to disclose certain lease related terms.
North Carolina
Paramount Kia of Hickory, N.C., allegedly violated the FTC Act by deceptively advertising that consumers could finance a purchase with low monthly payments when, in fact, the payments were temporary “teasers” after which the consumer would owe a much higher amount, by several hundred dollars. The ads also allegedly violated the TILA and Regulation Z, by failing to clearly and conspicuously disclose certain credit related terms.
Michigan
Fowlerville Ford of Fowlerville, Mich., allegedly violated the FTC Act by sending mailers that deceptively claimed consumers had won a sweepstakes prize, when, in fact, they had not. Some of their ads also allegedly violated TILA and Regulation Z, by failing to disclose certain credit related terms.
Texas
Southwest Kia companies, including New World Auto Imports, Dallas, Texas, New World Auto Imports of Rockwall, Rockwall, Texas, and Hampton Two Auto Corporations, Mesquite, Texas, allegedly violated the FTC Act by deceptively advertising that consumers could purchase a vehicle for specific low monthly payments when, in fact, consumers would owe a final balloon payment of over $10,000. The companies also allegedly deceptively advertised that consumers could drive home a vehicle for specific low up-front amounts and low monthly payments when, in fact, the deal was a lease and they would owe substantially more up-front. The ads also allegedly violated the CLA and Regulation M, by failing to disclose certain lease related terms, and the TILA and Regulation Z, by failing to disclose certain credit related terms.
The proposed consent orders settling the FTC’s charges in the nine cases are designed to prevent the dealerships from engaging in similar deceptive advertising practices in the future. The orders prohibit the dealerships from misrepresenting in any advertisement for the purchase, financing, or leasing of motor vehicles the cost of leasing a vehicle, the cost of purchasing a vehicle with financing, or any other material fact about the price, sale, financing, or leasing of a vehicle. When relevant, the proposed consent orders also address the alleged TILA and CLA violations by requiring the dealerships to clearly and conspicuously disclose terms required by these credit and lease laws. In the case where the dealerships misrepresented that consumers had won a prize, the proposed order also prohibits misrepresenting material terms of any prize, sweepstakes, giveaway, or other incentive.
The FTC would like to thank the Los Angeles Department of Consumer Affairs for its assistance with multiple investigations in California, and the Michigan Department of Attorney General for its assistance with the investigation in Michigan.
The Commission votes to accept the packages containing the nine proposed consent orders and complaints for public comment were 4-0. The agreements will be subject to public comment for 30 days, beginning today and continuing through Feb. 10, 2014, after which the Commission will decide whether to make the proposed consent orders final. Submit a comment electronically:
Casino Auto Sales
Honda of Hollywood
Fowlerville Ford
Infiniti of Clarendon Hills
Nissan of South Atlanta
Norm Reeves Honda Superstore
Paramount Kia
Rainbow Auto Sales
Southwest Kia
Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580.
In addition, the FTC issued an administrative complaint against Courtesy Auto Group of Attleboro, Mass. The FTC alleges the dealership violated the FTC Act by deceptively advertising that consumers can lease a vehicle for $0 down and specific monthly payments when, in fact, the advertised amounts exclude substantial fees. The ads also allegedly violate the CLA and Regulation M, by failing to disclose or clearly and conspicuously disclose certain lease related terms.
The Commission vote to issue the administrative complaint was 4-0.
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