FTC said deals that promised to pay off car trade-ins, no matter owed what are false
The Federal Trade Commission today said it got five car dealerships to stop running ads in which they promise to pay off a consumer’s trade-in no matter what the consumer owes on the vehicle.
The FTC charged that the ads, which ran on the dealers’ websites and on sites such as YouTube, deceived consumers into thinking they would no longer be responsible for paying off the loan balance on their trade-in, even if it exceeded the trade-in’s value. What those dealers did in fact was roll that so called “negative equity” into the consumer’s new vehicle loan or, in the case of one dealer, required consumers to pay it out of pocket themselves. The cases are the first of their kind brought by the FTC, the agency stated.
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The proposed settlements bar all of the dealers from making similar deceptive representations in the future, the FTC said. The proposed orders also require each of the dealers to keep copies of relevant advertisements and materials substantiating claims made in their advertisements, and to provide copies of the order to certain employees. Finally, the dealers are required to file compliance reports with the FTC to show they are meeting the terms of the orders for the next 20 years.
The dealers named in the FTC’s complaints are: 1) Billion Auto, Inc., in Sioux Falls, South Dakota; 2) Frank Myers AutoMaxx, LLC, in Winston-Salem, North Carolina; 3) Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Connecticut, respectively, and which advertise jointly; 4) and Ramey Motors, Inc., in Princeton, West Virginia.
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The FTC’s complaints alleged that despite the dealers’ claims, consumers still end up being responsible for paying the difference between the trade-in loan balance and the vehicle’s value. The complaints charge that the dealers’ representations that they will “pay off” what the consumers owe are false and misleading, and violate the FTC Act. Examples of the allegedly deceptive advertisements include:
- “Credit upside down? Need a new car? Go to Billionpayoff.com. We want to pay off your car.” The advertisement depicts a car moving, inverts the video to depict it upside down, and then turns it right-side up again. (Billion Auto)
- “Uncle Frank wants to pay [your trade] off in full, no matter how much you owe.” (Frank Myers AutoMaxx)
- “I want your trade no matter how much you owe or what you’re driving. In fact I’ll pay off your trade when you upgrade to a nicer, newer vehicle.” (Key Hyundai and Hyundai of Milford)
- “Ramey will pay off your trade no matter what you owe . . . even if you’re upside down, Ramey will pay off your trade.” (Ramey Motors)
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