A federal district court in Arizona held in FTC v. Tate’s Auto Center of Winslow Inc. that the Federal Trade Commission (FTC) proved several automobile dealerships’ (collectively, “Tate’s Auto”) advertising failed to include legally required credit information in violation of the Truth in Lending Act (TILA) and the Consumer Leasing Act (CLA). The court declined to grant summary judgment on the FTC Act claims, alleging misleading advertisements and deceptive information on car loan applications.

In July 2018, the FTC brought this action against Tate’s Auto and their co-owners, Richard Berry and Linda Tate. The FTC alleged that Tate’s Auto and the owners violated TILA and CLA by failing to include legally required credit information in their advertisements, and that the defendants’ advertising misled consumers in violation of the FTC Act and inflated consumers’ financial information on car loan applications in violation of the FTC Act. Tate’s Auto stipulated to a permanent injunction and monetary damages, but Berry and Tate remained as defendants. The FTC moved for summary judgment against the individual defendants.

The FTC alleged that some of the advertisements violated TILA and the CLA by failing to include required payment information amongst other terms in a clear and conspicuous manner. The FTC identified several advertisements, which stated the down payment but did not include any other required disclosures. The court granted summary judgment on the TILA and CLA claims, concluding that some advertisements were missing legally required information, such as the terms of repayment or the annual percentage rate. TILA requires advertisements for closed-end loans, like automobile loans, to include the amount or percentage of a down payment, the number of payments or period of repayment, the amount of any payment, the terms of repayment, the amount of any finance charge, and the annual percentage rate (including if this rate may be increased after consummation).

The court did not grant the FTC’s request for summary judgment on the FTC Act claims, which prohibit “unfair or deceptive acts or practices.” The court concluded that the alleged deceptive advertisements did not meet the standard for it to grant summary judgment, instead the advertisements appeared ambiguous. On the second FTC Act claim, Berry and Tate submitted declarations that many of the consumers knew the down payment or income information was misrepresented on the loan applications. As such, the court could not hold as a matter of law that Berry and Tate’s practices misled customers. At present, these claims appear to be heading to trial.