What not to do when advertising a lease

FTC Lassos Cowboy Dealer for Lease Ad Violations, be sure to avoid these mistakes

As mentioned last month, here is the article on how to properly advertise leases. The reason for this article on vehicle advertising is simple: Failure to comply with the these very basic advertising rules leaves you wide open for numerous violations and 15 years of regular reporting to the Federal Trade Commission (FTC). It doesn’t take much to open up an investigation — all the FTC needs to do is pull up your print ads or simply look online.

On December 1, the FTC announced that Cowboy Toyota and Scion (out of Texas of course) agreed to settle FTC charges that it deceptively advertised loan and leasing terms in ads placed in newspapers.

The complaint alleges the dealerships violated the FTC Act by misrepresenting many claims, including that:

  • No down payment was required;
  • The advertised low monthly payments were available to consumers who financed their purchases;
  • The advertised interest rates, monthly payments, and other terms were available to consumers with bad credit; and
  • Certain new 2016 Toyotas were available for purchase at the time of the ads in 2017.

According to the FTC, Cowboy Toyota’s misrepresentation of the cost of purchasing or leasing cars, qualifications or restrictions for financing or leasing cars, and the availability of cars violated the FTC Act. The dealership also failed to clearly and conspicuously disclose credit or lease terms that are required to state under the Truth in Lending Act (TILA) or the Consumer Leasing Act (CLA) when they touted certain “triggering” terms of the credit or lease, such as the monthly payment.

For the next 15 years, this Cowboy dealer will need to regularly report to the FTC, providing accounting records showing the revenues from all goods or services sold, and copies of all ads and copies of all consumer complaints among numerous other reporting requirements.

As part of the compliance, the dealer agreed to: 

  • Avoid misrepresenting the cost of leasing a vehicle, including the total amount due at lease inception, the down payment required, the acquisition fee, any other payments required at the beginning of the lease, and the amount of all monthly payments over the term of the lease.
  • Accurately represent any qualifications or restrictions on a consumer’s ability to obtain offered financing or lease terms, including restrictions based on their credit history.
  • Clearly and conspicuously disclose all financing and lease terms in its ads, as well as all related qualifications or restrictions.
  • If most consumers likely will not qualify for the credit rate advertised, the order requires the dealership to clearly and conspicuously disclose that fact.
  • Not misrepresent the number of vehicles, makes, or models that are available for purchase or lease,
  • Avoid violating TILA and its implementing Regulation Z by requiring clear and conspicuous disclosures regarding a variety of purchase or lease terms, including the percentage of any down payment required, the amount of any payment, the amount any finance charge, the terms of loan repayment and the annual percentage rate (APR) associated with a loan.
  • Comply with the CLA and its implementing Regulation M by prohibiting deceptive lease advertisements and requiring that all ads clearly and conspicuously disclose a range of facts, including that the advertised deal is a lease, the total amount due on delivery, the number and timing of scheduled payments, and whether or not a security deposit is required.