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Post date: September 30 1999

Mazda Agrees To Change Auto Leasing Advertising

Attorney General Spitzer today announced a multi-state settlement with a major auto manufacturer over improper advertising of car leasing arrangements.

Under the settlement, Mazda Motor of America, Inc. has agreed to change its advertisements to conform with federal law and to pay $50,000 to New York State to cover the costs of the investigation. Mazda will pay a total of $1.2 million to 24 states that cooperated in the action with the Federal Trade Commission (FTC).

"Lease advertising practices that mislead consumers by downplaying important information are of great concern for me," Spitzer said. "My office will continue to actively monitor Mazda's compliance with the agreement and with the law, while also regulating the entire industry's observance of the advertising restrictions. In this way, we are leveling the playing field for those competitors who are complying with the law."

The allegation which led to the settlement stemmed from a 1996 court order that required Mazda to clearly disclose key lease terms in its advertising, such as total up-front costs and the number, amount and timing of scheduled payments. The 1996 order settled false advertising suits filed earlier by New York State and many of the states. Despite this settlement, Mazda continued to emphasize low monthly payments while obscuring the total amount due at lease signing.

Spitzer said the Federal Trade Commission worked directly with the states to obtain the settlement. The FTC is announcing a similar settlement with Mazda in which it will pay $4.05 million in civil penalties. The settlement requires Mazda to provide its dealers with consumer education brochures on vehicle leasing for distribution to consumers.

Joining Attorney General Spitzer and the FTC in settling these charges are the following 23 states: Alaska, Arizona, California, Connecticut, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Washington and Wisconsin.

Spitzer provided the following tips to consumers considering leasing a vehicle:

  • Consider all the costs of leasing before signing a lease agreement. Most leases have mileage limits and impose substantial penalties for exceeding those limits. Other costs not imposed in auto purchases, but oftentimes found in leases, may include "acquisition fees," lease and "disposition fees" and charges for excessive wear and use;
  • Find out the "capitalized cost" of the vehicle and consider this the equivalent of the sticker price. This will help you decide which leasing company can offer you the best deal on a vehicle and will help begin your negotiation process;
  • A lease can be a more complicated deal than a purchase. Never go into a dealership intending to purchase and come out having signed a lease. Always ask for written materials to take home and review before agreeing to a lease;
  • Remember that lease terms are negotiable. Don't think the dealer can't negotiate fees or offer a lower monthly payment;
  • Although State law caps the early termination charges that can be assessed when you return your leased car early, these fees can be quite substantial. Be sure you intend to keep the car for the duration of the lease; and
  • You have the right to a second opinion regarding the damage appraisal prior to or following the lease termination. If there remains a dispute over "wear and tear" on the vehicle, contact the Attorney General's arbitration program.

Spitzer said that consumers with complaints about auto leasing or lease advertising should contact the Attorney General's consumer help line at (800) 771-7755.