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FTC fines auto dealers millions for deception

FTC fines auto dealers millions for deception

LAFAYETTE, Colo. — The Federal Trade Commission (FTC) announced March 14 that a California auto group will pay $3.6 million to settle FTC charges, KPA reported today.

More information is available in the FTC’s press release regarding the Sage Auto Group.

In the past few years the FTC has charged a number of dealerships with violations, but has refrained from initially assessing monetary penalties, opting instead for 20-year consent orders. In 2014, two dealers were penalized for violating those orders – one for $360,000 and the other for $85,000. But, this action is by far the largest amount the FTC has sought against auto dealers, according to KPA.

In addition to deceptive advertising, the California dealers were accused of the following:

  • Subjecting non-English speaking consumers and individuals with poor credit, to deceptive, misleading, and unfair practices when offering add-on products and services or when arranging financing
  • Packing additional charges for add-on products and service into the amount financed without consumers’ informed consent
  • Deceptively claiming that such add-on products are required as a condition of the purchase or financing of the vehicle or will improve consumers’ chances of obtaining financing.
  • Deceptive and unfair tactics to pressure consumers to agree to different financing terms or have otherwise refused to honor the contract (“yo-yo practices”).
  • Dealership employees and their families posting positive, five-star reviews of the dealerships on websites that deceptively purport to be objective or independent.
  • Selecting and pre-printing add-on products on the sales and financing forms, such as the finance & insurance (F&I) product menus, pre-contract disclosures, and the contract, before discussing or presenting them to the consumer.
  • Rushing consumers through the closing process and simply indicating to consumers where to sign.
  • Having consumers sign blank documents.
  • Telling consumers that they would not be charged the cost of the add-on products when, in fact, they were.
  • Telling consumers that they could cancel the add-on products within a specified time for a refund and failing to process the paperwork or have claiming to have lost the paperwork, resulting in delayed cancellations or lower refund payments.
  • Approving deals to customers with risky credit before bank financing had been secured in order to increase their sales numbers knowing that the dealership was not going to be able to secure bank financing on the offered terms.
  • Representing to consumers that they must sign the new contract when dealers failed to assign financing.
  • Refusing to return the consumer’s down payment or trade-in vehicle.
  • Having consumers’ vehicles repossessed where consumers had valid, binding contracts.

It appears that the FTC obtained information about the dealers’ practices from both consumers and former dealership employees, KPA noted in its release.

Although there has been speculation that the new Trump administration would result in less regulatory enforcement against dealerships, it appears from this latest announcement that regulators have no intention of taking their foot off the gas, KPA explained.

KPA’s sales and finance compliance program is designed to assist dealers in identifying and eliminating potential claims such as those described above, the release noted.

For more information, contact Ryan Lane, KPA director of sales and finance compliance, at 303.802.3095 or email rlane@kpaonline.com.

SOURCE: KPA press release

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About Greg Gerber

Greg Gerber is a freelance writer and podcaster who has been writing about the RV industry since 2000. He is the former editor of RV Daily Report.


  1. Sleeze balls!

  2. Gee, I wonder how long it will take the FTC to investigate and fine the RV industry!

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