By all accounts, 2014 was a particularly busy one for the Federal Trade Commission in taking enforcement actions in the automobile sales and financing industry.  The FTC’s last public action of 2014 in the auto finance and sales area involved a suburban Dallas dealer, charged with using deceptive ads to promote the sale and lease of its vehicles, including advertisements that consumers could get out of their current loan or lease for $1.

The FTC’s complaint was filed against TXVT Limited Partnership, doing business as Trophy Nissan (Trophy), and alleged that Trophy violated the FTC Act as well as the Consumer Leasing Act (CLA) (including Regulation M), and the Truth in Lending Act (TILA) (including Regulation Z).

The FTC charged that Trophy engaged in several deceptive practices, including advertising particularly attractive prices, lease or finance terms, and promotions and then included small text disclaimers in its print and video ads.

As part of the proposed consent order, Trophy is prohibited from:

  • misrepresenting that it will pay off a customer’s trade-in;
  • misrepresenting material terms of any promotion or other incentive;
  • misrepresenting the cost of leasing or purchasing a vehicle; and
  • failing to clearly and conspicuously disclose material terms of a promotion or other incentive.

The proposed consent order also requires Trophy to comply with CLA and Regulation M as well as TILA and Regulation Z.  In its press release regarding this action, the FTC explains that this case “is part of the Commission’s continued efforts to protect consumers in the auto marketplace.”

A quick review of the FTC’s activity in this area shows a significant uptick over the past year in the number and scope of enforcement actions – a trend we expect to continue into 2015.  The upcoming year promises to be an active one for the FTC in its continued enforcement efforts to ensure that representations made by dealers, particularly as to financing and leasing terms, are accurate and clearly stated in advertisements, whether on television, in print, or on social media.