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4 SoCal Auto Dealers Settle With FTC Over Deceptive Advertising Charges

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LOS ANGELES (CBSLA.com) — Four Southern California car dealers are accused of deceiving customers with ads for deals that are too good to be true, according to a new federal report.

As part of a nationwide crackdown called Operation Steer Clear, the Federal Trade Commission Thursday alleged Casino Auto Sales of La Puente and Rainbow Auto Sales of South Gate violated the FTC Act by “deceptively advertising that consumers could purchase vehicles at specific low prices when, in fact, the price was $5,000 higher.”

Both dealers’ ads involved a mix of English and Spanish, according to the agency.

Honda of Hollywood, Los Angeles, and Norm Reeves Honda of Cerritos were also accused of violating the FTC Act by “deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts.”

The ads also allegedly violated the Consumer Leasing Act (CLA) and Regulation M, by failing to disclose certain lease related terms. Norm Reeves Honda was additionally accused of violating the Truth in Lending Act (TILA) and Regulation Z, by failing to disclose certain credit related terms.

“Using deceptive ads is a practice auto dealers should steer clear of,” Director of Consumer Protection Jessica Rich said at a press conference.

“In many of the cases there was fine print that was either highly inconsistent and hard to find or confusing,” Rich said, noting that all four dealerships have consented to a settlement with the FTC.

In a written statement, Norm Reeves Honda told KCAL9 in part: “In the advertising at issue, Norm Reeves Honda used a standard disclosure template that resulted in an unclear lease offer. This was an oversight on the part of Norm Reeves and it has caused us to review and enhance our advertising and review policies.”

Honda of Hollywood, Rainbow Auto Sales and Casino Auto Sales declined to comment.

The FTC named 10 auto dealers, located in California, Georgia, Illinois, North Carolina, Michigan and Texas, in its full report and said nine of those had agreed to a settlement. The agency is taking action against a tenth dealer.

The FTC says the lesson for consumers is to read the fine print and if it is contradictory or confusing, walk away.

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