Three Texas dealerships, collectively known as Southwest Kia, have agreed to pay an $85,000 civil penalty to settle Federal Trade Commission charges that they violated an FTC administrative order barring them from deceptively advertising the cost of buying or leasing a car. The case was part of Operation Steer Clear, a nationwide crackdown on misleading advertising regarding vehicle sales, financing and leasing. The FTC charged that the dealerships concealed sale and lease terms that added significant costs or limited who could qualify for vehicles at advertised prices, in violation of a 2014 FTC order.
The FTC cited a TV ad offering two cars for "under $200 per month," but in fine print that appeared for two seconds, disclosing that the offer applied only to leases, not sales, and required a $1,999 payment at lease signing. Another ad claimed a new car could be purchased for $179 per month, but in print too small to read without magnification, disclosed that $1,999 would be due up front, along with tax, title and license fees, and that $8,271 would be due at the end of a 38-month financing term. The FTC also cited a TV ad targeted at people with major credit problems, such as repossessions or foreclosures. The ad showed car payments of $250 per month, but in fine print disclosed that the offer was based on a 4.25 APR rate that few, if any, consumers with such credit blemishes could obtain. The FTC also alleged that the dealers advertised credit and lease terms without clearly and conspicuously disclosing information required by federal law, and failed to keep records required by the 2014 order.
In addition to the penalty, the proposed order prohibits the dealers, in any ad for buying, financing or leasing vehicles, from misrepresenting the cost of purchase with financing, the cost of leasing, or any other material fact about price, sale, financing or leasing. It also prohibits misrepresentations that anyone, including those with poor credit, is likely to receive financing or leasing, including particular finance or lease terms, and bars the dealers from violating the Truth in Lending Act and the Consumer Leasing Act, which require clear and conspicuous disclosure of credit and lease terms.