Update: FTC and Wisconsin Regulators Continue Stepped Up Advertising Enforcement Activity

As we reported late last year, in August 2016 the FTC filed a federal lawsuit against nine southern California auto dealers, operating as Sage Automotive Group, alleging a number of deceptive and unfair sales and finance practices, including: “Yo-yo” financing tactics, “packing” F&I add-on products into financed transactions, publishing phony online reviews without disclosing reviewers’ relationship to the dealerships, and “enticing” customers into the dealership with allegedly misleading advertising that did not conspicuously disclose material conditions.

On March 14, 2017, the FTC announced that Sage Automotive Group has agreed to pay more than $3.6 million for return to customers to settle the FTC charges. The stipulated settlement order, entered by the Court on March 22, 2017, also includes injunctive relief (a) prohibiting future unlawful conduct, (b) subjecting the Group for the next 20 years to certain record-keeping requirements relating to advertising and financed transactions, and accounting records from all goods or services sold, and (c) entitling the FTC to monitor the Group’s compliance during this 20 year period by requiring compliance reporting by the Group and permitting document inspection and discovery upon demand by the FTC. The FTC Press Release on the Sage Auto Group Settlement can be found on the FTC website at: https://www.ftc.gov/news-events/press-releases/2017/03/los-angeles-based-sage-auto-group-will-pay-36-million-settle-ftc.

Please review our earlier article for suggestions on monitoring your dealership’s advertising and sales practices. As we previously noted, you should also consult with competent legal counsel to confirm that you correctly understand and apply the variety of regulations governing your dealership’s advertising efforts. Diligence in monitoring your sales promotions will help you avoid being a future example.

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