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Financial Services Law Insights and Observations

FTC bans auto marketer over deceptive mailings

Federal Issues FTC Enforcement Auto Lending UDAP Unfair Deceptive FTC Act Consumer Finance

Federal Issues

On January 28, the FTC announced that it had banned a marketing services company and its owner from the auto industry for allegedly misleading consumers that their websites were affiliated with a government stimulus program and sending consumers deceptive mailings regarding prizes they had supposedly won. According to the opinion, the respondents violated the FTC Act by utilizing deceptive and unfair practices such as sending misleading mailings to persuade consumers to visit auto sales sites by suggesting that these sites were affiliated with a government Covid-19 stimulus program when in fact the sales were not part of any such program. The respondents also allegedly quoted monthly payments to purchase vehicles on credit, but did not provide key financing terms required by law that consumers need to determine the true cost of the advertised loans. Additionally, the respondents allegedly sent direct mail advertisements that deceptively indicated that consumers had won specific, valuable prizes that could be collected upon visiting the car dealership. The FTC noted that the respondents conducted such mailings, despite entering into three prior consent orders with state authorities identifying the ads as deceptive. According to the order, the respondents, are, among other things, banned from advertising, selling, or leasing automobiles for 20 years, and are prohibited from misrepresenting any material fact while marketing any product or service of any kind, as well as from any further violations of TILA’s disclosure requirements.