FTC Settles UDAP Claims for Allegedly Deceptive Recall Notices Sent by Washington DC Area Car Dealerships

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The FTC recently settled allegations against a marketing firm and Washington, DC area car dealerships for purposefully sending “urgent recall” notices to consumers that did not own a vehicle subject to a recall.

The FTC claims that the advertisements were sent in order to lure consumers to visit the dealerships.  In doing so, the FTC claims the defendants violated Section 5(a) of the FTC Act’s prohibition on “unfair or deceptive acts or practices in or affecting commerce.”  A stipulated settlement agreement was entered at the same time the complaint was filed on October 10, 2018, in the US District Court for the District of Maryland.  The settlement did not contain a monetary fine or penalty, but rather enjoined the defendants from making any further misrepresentations concerning recall notices.

The FTC’s complaint primarily focused on design aspects of the advertisements at issue, noting that they stated “URGENT RECALL NOTICE” in large, bold-faced, and uppercase letters with white text and red background.  The FTC claimed the scheme and style of the advertisements were similar to the official recall notices that car manufacturers are required to utilize by the U.S. Department of Transportation’s National Highway Traffic Safety Administration.  The complaint also contained excerpts from an internal email sent by one of the defendants that stated: “THESE MAILERS ARE NOT SPECIFIC RECALLS. THESE MAILERS WERE DESIGNED TO CULTIVATE BUSINESS AND GET THE PHONE TO RING.”  The email goes on to explain that “the idea is to stimulate an inquiry and, in the process, provide us with the opportunity to ‘discover’ an open recall on their vehicle[.]”

The FTC’s press release 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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