The Federal Trade Commission (FTC) is on the lookout for crooked dealerships.
Recently, the commission launched an investigation into car dealerships called “Operation Ruse Control,” which resulted in $2.6 million in consumer refunds and other fees and fines for criminal and civil violations. In total, the FTC instituted 252 enforcement actions, 187 in the U.S. and 65 in Canada, and it looks to be just the beginning. Some of the civil and criminal charges include deceptive advertising, automotive loan application fraud, odometer fraud, deceptive add-on fees and deceptive marketing of car title loans.
The FTC is focusing on advertising, loan and leasing fraud and add-ons, which is when a dealership or another third party adds charges to the vehicle sales, lease or finance agreement for other products or services. The FTC received authority over auto dealerships under the Dodd-Frank Act and has wasted no time cracking down on shady practices.
In its release, the FTC gave some examples of what its discovered including National Payment Network Inc. (NPN) offering a program that gave buyers a small discount if they agreed to setting up an auto payment program from their bank accounts. Looking at the fine print, the fees charged to setup the program offset the savings. As a result of the FTC’s findings, NPN is refuding $1.5 million to its customers and waiving an additional $949,000 to customers during the waiver period.
“The clear message is that across this country, and indeed internationally, law enforcement agencies are on the lookout for deceptive and illegal practices by auto dealers, and will take whatever action is necessary to protect consumers,” 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.”