Tag Archives: federal trade commission

FTC Sued Over Changes To Certified Pre-Owned Designation

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The Center for Auto Safety along with five other consumer and safety groups have filed a lawsuit against the Federal Trade Commission (FTC) over its recent decision to permit dealerships to advertise a vehicle as Certified Pre-Owned (CPO) despite having open recalls. The FTC reached an agreement last year with General Motors and two other dealerships, allowing them to advertise automobiles as “certified pre-owned” even though they might have an issue related to a safety recall that still needs to be fixed. The agency did require the companies to disclose any uncompleted safety recalls to the buyer.

The groups suing the FTC say that dealerships could previously sell vehicles with dangerous, unaddressed safety recalls, but allowing them to designate them as CPO will permit unscrupulous auto dealers to engage in false and deceptive advertising about the safety of the vehicles they are selling.

FTC Urged To Enforce Mandatory Recall Repairs On Used Vehicles

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According to recent reports from the New York Times, a group of eleven consumer and safety organizations are petitioning the Federal Trade Commission (FTC) to investigate used car dealership, CarMax, for deceptive advertising practices. The group claims that the dealership is advertising their pre-owned vehicles as passing a rigorous 125 point quality inspection, but the inspection fails to carry out the basic step of checking to see if there are any unfixed safety recalls affecting the vehicle. Continue reading →

Better Protections For Automobile Consumers

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The Federal Trade Commission (FTC) is cracking down on automobile dealerships who use deceptive advertising to increase auto sales and service appointments. According to the consumer protection agency, automobile dealers made a variety of misrepresentations in print, internet, and video advertisements that offered zero-down financing when there are substantial fees, deceptive low-payment deals, sweepstakes for prizes that do not exist, and mailings that resemble vehicle recall notifications. Nine vehicle dealerships in six states have already agreed to a settlement that would cease deceptive ad tactics and subject dealers to a fine of $16,000 per violation. Continue reading →

Beware Of Deceptive Auto Ads

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The Federal Trade Commission (FTC) is cracking down on automobile dealerships around the country who have been running ads that mislead consumers into thinking the dealership will pay off the remaining loan balance on their existing car when they trade it in. These dealerships then add the cost of the old car loan into the price of the new loan. The buyer ends up with a loan that they must pay off for a longer period of time because they are paying off their old car and new car at the same time. This is known as negative equity auto trade ins. In some cases, dealers force customers to pay off the old loan in cash before they could get their new car.

The dealers named in the FTC’s complaints include:

  • Billion Auto, Inc., in Sioux Falls, South Dakota
  • Frank Myers AutoMaxx, LLC, in Winston-Salem, North Carolina
  • Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Connecticut
  • Ramey Motors, Inc., in Princeton, West Virginia

Three of the cases allege violations of the Truth in Lending Act (TILA) and its implementing Regulation Z for failing to disclose certain credit-related terms, and the complaints in two of the cases allege violations of the Consumer Leasing Act (CLA) and its implementing Regulation M for failing to disclose certain lease related terms.

Comments can be electronically submitted using the following web links:

Used Car Buyer’s Guide Due for a Face Lift

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The Consumer Buyer’s Guide which hasn’t been updated since 1985, requires all used car dealers to disclose warranty information in writing before the sale of any vehicle. The Buyers Guide should be displayed on the vehicle so customers can see the front and back as they look at the vehicle. Any car dealer or person selling 6 or more motor vehicles in a 12 month period is required to follow the FTC Buyers Guide Rule. This includes posting a Buyers Guide on every car, truck, trailer, ATV, jet ski, RV, semi truck, or any vehicle with a loaded gross vehicle weight rating of less than 8,500 pounds, a curb weight of less than 6,000 pounds, and frontal area of less than 46 square feet. The only exemptions to the FTC Buyers Guide rule are motorcycles, some agricultural equipment, and any State Certified Salvage dealer selling a car for junk, salvage, or parts. All States, the District of Columbia, Guam, American Samoa, Puerto Rico, and the US Virgin Islands require dealers to abide by the FTC Buyers Guide rule. Maine and Wisconsin have there own state laws and warranty disclosure documents that protect buyers during a vehicle transaction. Special Agents of the Federal Trade Commission conduct what are called “Buyers Guide Audits”. They will come to a city without notice and inspect every dealer in the area. These agents operate all over the country to make sure all dealers are complying buy the Federal Trade Commission’s Buyers Guide Rule.

The National Association of Attorneys General says it is time to protect buyers from rebuilt wrecks. The changes involve adding additional information on whether a vehicle was badly damaged in a crash or flood or bought back by the automaker as a lemon. The current emphasis on warranty information needs to be changed as well.

The National Automobile Dealers Association, however, opposes adding such information, which it said constitutes “far-reaching changes” that would “impose significant, costly, and in some cases, impossible burdens on used car dealers.” The attorneys general association said that requiring more information, included from the National Motor Vehicle Title Information System system, would cost little “and would result in an effective and efficient federal double-faceted assault on used-car fraud.” This information system requires all states, as well as insurance companies and junk yards, to report vehicles so badly damaged they were considered totaled and not worth repairing. Consumers can check vehicle identification numbers at a government Web site, but many people don’t know that such valuable information is available therefore, adding a vehicle’s history to the Buyer’s Guide would be a great help to buyers.

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