Beware of car dealer false advertising

By Anthony GiorgianniConsumer Reports

If you’re shopping for a new car, look out for fake or misleading dealership ads in newspapers and direct mail, on the Internet and TV, and elsewhere.

The Federal Trade Commission recently announced the results of a nationwide sweep of car ads that found misrepresentation by 10 dealerships in California, Georgia, Illinois, North Carolina, Michigan, and Texas.

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Nine of the dealers have agreed to settle charges of deceptive advertising. The agency is taking action against the tenth.

The FTC alleged that each of the ads misrepresented one or more of the following, that:

  • Cars could be purchased at a specific low price, when the actual amount was $5,000 higher
  • Vehicles could be leased for $0 upfront when in fact there were substantial fees and other charges
  • Vehicles could be financed with low monthly payments, when in fact the payments were based on temporary “teaser” rates or on undisclosed final “balloon” payments of more than $10,000
  • Consumers had won a prize
  • Consumers could obtain new cars for specific low up-front amounts and low monthly payments when, in fact, the deals were for a lease and required substantially more up-front.

Some of the dealers also were accused of failing to provide customers with disclosures, such as credit and lease-related terms, required by the Truth in Lending and Consumer Leasing Acts.

Read our tips for buying a new car and our new car buying guide. Also check out our new car ratings and reviews.

What to do Always read the fine print in any car-related advertising and before signing a contract for a vehicle purchase or lease. (It’s a commonly-held myth that the law gives consumers three days to change their minds after signing a vehicle purchase agreement). Use a credit card for any down-payment. That way, if you discover the dealer has engaged in misrepresentation, you can contest the charge. If you believe the dealer has engaged in false advertising, omitted required disclosures, or otherwise broken the law, file a complaint with your state consumer protection agency, the Federal Trade Commission, and the Better Business Bureau.

Anthony Giorgianni

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