Federal and local agencies crack down on auto sales fraud
22nd June 2015 · 0 Comments
By George White
Contributing Writer
(Special from New America Media) – Federal, state and local agencies are continuing to crack down on auto sales scam artists who have been taking consumers for a ride.
The Federal Trade Commission (FTC) on May 29 approved final court settlement orders involving two auto dealers that deceptively advertised the sale, financing and leasing of their vehicles. Under the settlement orders, Ross Nissan of El Monte in metropolitan Los Angeles and Jim Burke Nissan of Birmingham, Alabama are prohibited from misrepresenting the cost of buying, financing and leasing of their vehicles.
The settlement orders are the latest enforcement actions stemming from “Operation Ruse Control,” multi-agency sweeps of suspected American and Canadian auto dealers and auto loan financiers made since January 2014.
The FTC said it worked with 32 state and local law enforcement partners to lodge 187 court complaints in the U.S. and 65 actions in Ontario and British Columbia, Canada. The charges include allegations of deceptive advertising, automotive loan application fraud, odometer fraud, deceptive add-on fees and deceptive marketing of car title loans.
“For most people, buying a car is one of the largest purchases they’ll make,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Car ads must be truthful, loan terms must be clear and dealer practices must be honest. That’s why our partners are working together to crack down on deceptive marketing about car sales, leasing and financing.”
The FTC’s action against Ross Nissan of El Monte and Burke Nissan of Birmingham came after the vehicle sellers agreed to settle charges that they ran deceptive ads that violated the FTC Act and the Truth in Lending Act. Their ads touted sales, lease or financing options that seemed attractive but were cancelled out by fine-print disclaimers, according to the FTC complaint.
In a related Operation Ruse action, the FTC recently alleged that the National Payment Network (NPN), based in San Mateo, California, violated the law by pitching – both online and through a network of authorized auto dealers – an auto payment finance program that it claimed would save consumers money.
The company “failed to disclose that the significant fees it charged for the service often cancelled out any actual savings,” the FTC said. “The fees to enroll in NPN’s program averaged $775 on a standard five-year auto loan.”
NPN agreed to a settlement. Under it, the company will refund more than $1.5 million to consumers and waive another $949,000 in fees to current customers.
The FTC said the scale of the fraud by all of those cited in the Operation Ruse investigation is significant and that poor people and minorities have been victimized disproportionately. FTC officials say that some auto loan financiers and some auto dealers exploit language differences by placing ads in Spanish and related disclaimers in English.
Some of the legal complaints have not been resolved. At the FTC’s request, the U.S. District Court for the Southern District of Florida temporarily halted the practices of Regency Financial Services of Lake Worth, Florida. The court also froze defendants’ assets. The FTC alleged that the company charged consumers upfront fees to negotiate auto loan modifications, but then often provided nothing in return. The FTC’s lawsuit, filed on Jan. 26, 2015, is ongoing and the commission is seeking a permanent injunction to stop defendants’ “deceptive practices” and to force the company to provide refunds to customers.
The consumer protection division of the Florida state attorney general’s office and the Los Angeles County Department of Consumer and Business Affairs are among the 32 agencies partnering with the FTC in the enforcement crackdown.
This column is part of New America Media’s joint project with the Federal Trade Commission (FTC). For more information about how to avoid fraud and scams, go to: consumer.ftc.gov.
This article originally published in the June 22, 2015 print edition of The Louisiana Weekly newspaper.
