Monday, January 20, 2014

Car Dealers of South Fla Beware! The FTC Is Coming to Town

Earlier this month, the Federal Trade Commission held a press conference in California, announcing “Operation Steer Clear”. This is a national effort to rid the U.S. of deceptive auto dealer ads and sales practices. So far they’ve gone after car dealers in only six states and have charge only ten car dealers, but this is just the beginning. Below are charges brought against the first dealers charged by the Federal Trade Commission in “Operation Steer Clear”:


1.     Advertising a vehicle sale price with a footnote disclosure indicating that an additional amount was required in order to get the advertised price;
2.     Prominently advertising an attractive monthly payment with a footnote disclosure indicating that the attractive payment is only for the first few months, and thereafter, the payment substantially increase;
3.     Promoting “$0 Down” deals with a footnote disclosure indicating that acquisition fees and dealer fees were due at lease inception;
4.     Promoting a “0% Interest” rate with a footnote disclosure reflecting that the attractive interest rate was limited – a limitation that would render it insufficient to finance the promoted vehicles;
5.     The failure to give away prizes to individuals who were purportedly entitled to them; and
6.     Miscellaneous Truth-in-Lending and Truth-in-Leasing violations.

What should be frightening to most of the car dealers of South Florida is that they are currently committing all of the above violations and many more. The newspaper, TV, Internet, and radio advertisements routinely violate all of these rules many dealers commit many, if not all of these, in a single advertisement.
You might ask how they have been able to get away with it this long and the answer is lack of local and state regulation enforcement. Apparently this is not just a Florida problem, but a national problem which is why the Federal Trade Commission became involved.

Basically, all the Federal Trade Commission rules say is that you aren’t allowed to trick somebody into coming into a car dealership by making them believe they can buy the car for less money than they really can. But, if you watch, read, or listen to 95% of the car dealerships in South Florida, this is exactly what is going on. Even the car dealers who don’t like to do this are drawn into it out of self-defense. If a car dealer advertises an honest price, the other dealers advertise the same car for less by tricking the customer. The honest dealer loses the sale and the next time he advertises his mission is to out-lie the other car dealers.

My advice to Florida car dealers is to clean up their act before the Federal Trade Commission comes to town. Making the national news because of sleazy advertising and being prosecuted and fined by the FTC is not good for your image or your business. Auto manufacturers and car dealers associations should also take preemptory measures to ward off an attack by the FTC. Car manufacturers look the other way when they see their dealers running illegal and unethical ads. They are afraid to make their dealers stop for fear that the competitive makes won’t and they will lose market share. The car dealer associations are aware of the problem and would like to do something about it, but unfortunately there are too many dealers who run the associations that have their head in the sand (or another place I won’t mention in the interest of good taste). 

I know car dealers in most of the 50 states and I can say for a certainty that South Florida is the worst “playground” for illegal and unethical advertising and sales practices in the USA. South Florida provides all of the ingredients for the “perfect storm” for car dealers to cheat their customers:

(1) Virtually no enforcement of state laws applying to car dealer advertising and sales practices.
(2) The 2nd largest volume car market in the USA with all franchises represented.
(3) A very powerful, well financed lobbying group, the Florida Auto Dealers Association (FADA) to keep the legislators and regulators “in their place”.
(4) Lots of potential victims…a very large elderly population, a large population of recent immigrants or first generation Americans whose first language is not English.
(5) A media environment dependent on car dealer advertising for survival. The newspapers, TV stations, and radio stations are afraid to tell the truth about what’s going on for fear of car dealers boycotting them, stopping their advertising. Local car dealer are the biggest advertisers. Without them, most newspapers, TV stations, and radio stations couldn’t survive. Those regular readers of my column know that my wife, Nancy and I were “fired” from the consumer advocate radio show we did for seven years on WSVU, Seaview Radio in North Palm Beach. This was after several car dealers threatened to not advertise unless they canceled out show, Earl Stewart on Cars.

Time has just about run out and I’m optimistically forecasting that by this time next year we will see a significantly positive change in South Florida car dealer advertising and sales practices. If you would like to speed the process, To file a complaint in English or Spanish, visit the FTC’s online https://www.ftccomplaintassistant.gov/#&panel1-1  or call 1-877-FTC-HELP (1-877-382-4357).


1 comment:

  1. Garry DeArmond was a great sales rep. His humor and warm spirit gave me inspiration to be patient in the car purchasing process. With his support and warm heart, I enjoyed this purchasing process. I also admire how when Garry was not available, his excellent team member Patrick Jacks stepped right in to finish the deal. Garry was also very informative with various specials they have for corporate membership programs, and I'm excited to go and inform my job and co-workers about such great opportunities with car purchasing. I would highly recommend Earl Stewart Toyota to every car purchaser who doesn't want to deal with a hassel or false hopes.

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