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From Banking and Finance Law Daily, August 3, 2018

FTC ignites case against auto group for falsifying information, illegal advertising practices

By Stephanie K. Mann, J.D.

The FTC has charged a group of four auto dealers operating in Arizona and New Mexico with falsifying consumers’ income and down payment information on vehicle financing applications and misrepresenting important financial terms in vehicle advertisements in violation of the FTC Act, Truth in Lending Act, and Consumer Leasing Act. The complaint also names the dealerships’ owner and manager, Richard Berry, as a defendant, and owner and president, Linda Tate, as a relief defendant. The FTC is seeking an injunction barring the defendants from such practices in the future and to provide relief to consumers who were victims of these illegal practices (FTC v. Tate’s Auto Center of Winslow, Inc., FTC File No. 162 3207, Case No. 3:18-cv-08176-DJH).

"When consumers tell an auto dealer how much they make and how much they can pay upfront, the dealer can’t turn those facts into fiction," said Andrew Smith, Director of the FTC Bureau of Consumer Protection. "The FTC expects auto dealers to be honest with consumers from the first advertisement to the final purchase."

Falsified information. The complaint, filed in a federal district court in Arizona, alleges that when consumers sought to buy an automobile from the auto group Tate’s Auto, they were asked to provide personal information, including their name, address, and monthly income. However, when the auto group submitted this information to financing companies, it is alleged that instead of using consumers’ actual information, Tate’s Auto sought to increase its sales by falsifying consumers’ monthly income and down payments on financing applications and contracts. An example provided in the complaint details one consumer who told Tate’s Auto that she had a fixed monthly income of about $1,200, but a staffer allegedly inflated it to $5,200 in the paperwork.

The FTC further claims that the auto group representatives prevented consumers from reviewing this falsified information by rushing them through the process of reviewing and signing the financing applications, having consumers fill out the forms over the phone, failing to give them the income and down payment portion of the application before they signed, or altering documents after consumers signed them.

Advertising. The FTC has also alleged that the auto group’s advertising deceived consumers about the nature and terms of financing or leasing offers by hiding the specific terms of the offer. For example, discounts and incentives were allegedly offered to consumers without adequately disclosing limitations or restrictions that would prevent many customers from qualifying for them.

According to the FTC, the owner of the four dealerships formulated, directed, controlled, had the authority to control, or participated in Tate’s Auto’s allegedly illegal conduct.

Companies: Tate’s Auto Center of Winslow, Inc.

MainStory: TopStory EnforcementActions ConsumerCredit Loans TruthInLending UDAAP

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