Attorney General Cuomo Penalizes Four Hudson Valley Car Dealers For False Advertising

POUGHKEEPSIE, N.Y. (May 14, 2008) - Attorney General Andrew M. Cuomo today announced settlements with four Hudson Valley car dealers that misled consumers by promising certain vehicle offers but hid specific qualifiers in the fine print or untenable disclaimers.

The four dealerships must pay substantial fines and reform their practices to be in compliance with advertising guidelines for automobile dealerships.

“It’s become an unfortunate cliché that many car dealers’ advertising has become wrought with wordy exceptions, minute qualifiers and misleading information,” said Attorney General Cuomo. “And it’s been at the expense of hard working families only looking to get a fair price for a car. These enforcement actions should serve as a warning to car dealership owners everywhere: New York’s consumers must be given honest, fair portrayals of all deals and promotions.”

Middletown Pontiac, Buick, GMC and Saturn of Newburgh (owner of Saturn of Poughkeepsie and West Nyack) mailed flyers to thousands of Hudson Valley residents offering a minimum value for any vehicle the consumer traded in - regardless of its condition. The dealerships attempted to substantially modify these offers in the footnotes, but failed to address the primary misleading offer in the body of the ad.

The Saturn dealerships were also cited for announcing in their flyer that the recipient was pre-approved for a $25,000 credit - another offer that was significantly modified in a footnote with the restriction that the consumer must have a credit score of 760 or above - a “gold-plated” credit rating held by only a small percentage of consumers.

Newburgh Nissan advertised new vehicle prices as “below invoice” on its flier. Invoice is generally understood as the dealer’s total cost, however, a footnote at the bottom of the flier limits the offer by explaining the invoice does not reflect actually dealer invoice, meaning “invoice price” is not the total cost. This flier is deceptive as the footnote altered the facts of the dealer’s offer.

Brag Suzuki in Middletown was cited for two misleading radio commercials. One commercial offered consumers 100% of the original MSRP on any vehicle traded in - regardless of its condition. However, in a disclaimer at the end of the commercial spoken so fast that it is virtually indecipherable, Brag Suzuki considerably altered the offer by stating that there would be a deduction from the MSRP of $0.35 for each mile on the vehicle and, for vehicles more than one-year-old, an unspecified reconditioning charge.

In the second radio spot, Brag Suzuki offered to beat any competitor’s price or pay the consumer $5,000. This offer was also changed at the end of the commercial by requiring the consumer to prove the lower price of a competitor by bringing in a signed purchase order from the competing dealer - an unreasonable requirement.

Each of the dealers has agreed to discontinue the practices cited by the Attorney General and pay fines for the violations. Middletown Pontiac, Buick, GMC is paying $10,000, Saturn of Newburgh is paying $10,000, Newburgh Nissan is paying $5,000 and Brag Suzuki is paying $7,500.

The Attorney General publishes guidelines that clearly spell out the limits of auto dealer advertisements, available online here . Attorney General Cuomo’s Office also conducts seminars with dealers so that they are kept abreast of the guidelines. Examples of what is not permitted include:

• Use of one or more footnotes or asterisk which, alone or in combination materially modify principle message of the ad
• Use of any print in type size so small as to be not easily readable
• Use of any unexplained abbreviation or jargon which confusing, misleading or not readily understood by the general public
• Use of any advertising offering a range of prices, for trade-ins, unless the advertisement discloses the criteria
• Use of any advertising offering a specific trade-in allowance (i.e. “push it, pull it, tow it. $2,000 minimum trade-in”) if the price of the automobile offered for sale is increased because of the amount of the allowance or the offer fails to disclose that it is conditioned upon the purchase of additional options or services
• Use of the terms “meet your best offer” or “we won’t be undersold,” or similar terms, which suggest that a dealer will beat or match a competitor’s price, unless the dealer clearly discloses its price matching policy and any limitations and such policy does not require the presentation of any evidence which places and unreasonable burden on the consumer.
• Use of terms which compare the price of an automobile to the dealer’s purported cost (such as “inventory price, factory invoice) unless terms represents the dealer’s ultimate total vehicle cost.

The case was conducted by Assistant Attorney General Nick Garin of the Poughkeepsie Regional Office under the supervision of Barry Kaufman, Acting Attorney-in-Charge of that office. Senior Consumer Frauds Representative Mark Hoops assisted in the investigation.

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