FTC launches new sweep targeting deceptive dealer practices, from Dealertrack.
The FTC today announced Operation Rush Control, an ongoing 32-partner law enforcement sweep against deceptive auto dealer practices, including both civil and criminal actions. To date, 252 cases have been brought in the U.S. and Canada with six new FTC cases, including more than $2.6 million in monetary judgments. Among the practices being targeted in Operation Rush Control are deceptive dealer advertising (especially “bait and switch” dealer advertising and fine print ad disclaimers), automotive loan application fraud, odometer fraud, deceptive add-on fees, and deceptive marketing of car title loans. Jessica Rich, head of the FTC’s Consumer Affairs Division, indicated the FTC would be “on the lookout” for similar cases.
Enforcement of add-ons
For the first time since receiving expanded authority over auto dealers under the Dodd-Frank Act, the FTC has taken two auto enforcement actions involving add-ons, which is the practice of a dealer or other third party adding to the vehicle sales, lease, or finance agreement charges for other products or services. A few examples include extended warranties, payment programs, guaranteed automobile protection (commonly called GAP or GAP insurance), credit life insurance, road service, theft protection, and undercoating. The FTC indicated these products were hidden in contracts with hidden fees or payment packed into the vehicle price. Other practices cited included dealers who inflate buyer’s incomes to get contracts financed, dealers encouraging straw purchasers, adding non-existent add-ons to increase the loan amount, all of which make the payments unaffordable to consumers.