On July 14, the Federal Trade Commission announced that it had entered into a final consent order with Ohio auto dealers Progressive Chevrolet Company and Progressive Motors Inc. (collectively, the “Progressive Dealers”), which the FTC had “charged with deceiving consumers by using advertising that touted low monthly car lease payments and down payments but failed to disclose other key terms of the offers.”
The agreement, which is not accompanied by a financial penalty, prohibits the Progressive Dealers “from advertising the amount of any monthly payment, down payment, or other payment, unless they clearly and conspicuously disclose all qualifications or restrictions on a consumer’s ability to obtain the advertised terms.” Any advertisements by the Progressive Dealers limiting offers to certain credit scores must disclose if a majority of consumers are unlikely to meet that threshold.
The FTC barred the Progressive Dealers from misrepresenting the cost of vehicle purchases and leases, or “any other material fact about the price, sale, financing, or leasing of any vehicle.” Additional prohibitions include “advertising a payment amount, or that any or no initial payment is required at lease inception, without clearly disclosing other key terms.” The order remains in place for 20 years.
This deal is further indication of the considerable scrutiny that government agencies recently have been giving consumer vehicle purchases. We previously reported in the past year on administrative settlements involving the FTC and dealer credit reporting; the Massachusetts Attorney General and excessive interest claims; and the Consumer Financial Protection Bureau and Department of Justice and discriminatory loan practices.
Troutman Sanders LLP has extensive experience representing lenders in the auto finance industry, and will continue to monitor CFPB and other regulatory activity in this area.