FTC Accuses Auto Dealers of Falsifying Consumers’ Financial Information

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The FTC recently filed a complaint in the U.S District Court for the District of Arizona accusing four affiliated auto dealers, as well as two individual owners, of falsifying consumers’ income and down payment information on vehicle financing applications and contracts, and disseminating deceptive vehicle advertisements, to increase sales.

According to the complaint, in numerous instances since at least 2014, the dealers, which are located near, and serve citizens of, the Navajo Nation, obtained personal information from consumers – including their name, address, and monthly income – and then filled out financing applications and contracts for the consumers using falsely inflated monthly income and down payment amounts.  In many instances, consumers were rushed through the process of reviewing and signing the documents, preventing them from noticing inaccuracies.  In other instances, documents were altered after they had been signed, without the consumers’ knowledge.  This resulted in financing companies accepting assignment of credit to consumers for which they did not actually qualify, and on which they defaulted at a higher rate than properly qualified consumers.

The complaint also alleges that the dealers disseminated numerous deceptive advertisements that misrepresented the nature of the offer or terms of vehicle financing or leasing.  Some of the advertisements, for example, offered discounts and other incentives without disclosing applicable limitations and restrictions.  Other advertisements, including vehicle offers for low or no down payment, failed to disclose required terms necessary for consumers to understand key terms of the offers.

The complaint charges the defendants with violating the FTC Act’s prohibition on unfair or deceptive acts or practices, TILA and Regulation Z’s closed-end consumer credit disclosure requirements, and the Consumer Leasing Act and Regulation M’s consumer leasing disclosure requirements. The FTC is seeking an injunction barring the defendants from engaging in such practices in the future, as well as other relief that the court finds necessary to redress injury to the consumers, including but not limited to rescission or reformation of contracts, restitution, the refund of monies paid, and disgorgement.

A copy of the complaint is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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