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Post date: March 24 2014

A.G. Schneiderman Announces Crackdown On Deceptive Auto Dealer Advertising

Settlements With Six Auto Dealers Ensure That Consumers Won't Be Lured To Dealerships By Illusory “Sale” Prices

Attorney General Also Serves Notice Of His Intention To Sue One Local Dealership

ALBANY — Attorney General Eric T. Schneiderman today announced settlements with six Capital District auto dealers found to have advertising practices that were deceptive and misleading. The six dealerships have pledged to reform their advertising practices; meanwhile, the attorney general has announced his intention to file suit against a seventh dealer on related charges. The dealerships widely promoted sale and lease prices that were illusory because they reflected discounts or rebates that were not available to most consumers, and thus, were not the actual sale or lease price.

“A car is one of the most expensive and significant purchases a consumer can make. When shopping for a car, New Yorkers deserve to be dealt with honestly and fairly—not misled by deals that are too good to be true,” said Attorney General Schneiderman. “These settlements ensure that consumers won’t be lured into dealerships by unrealistic prices that have no basis in reality. Those who violate the law will be held accountable by my office.”

At the seven dealerships, the advertised prices reflected supposed discounts or rebates such as:

  • a “military” rebate, which was available only to certain current or former military personnel;
  • a “college graduate” rebate, which was available only to recent college graduates;
  • a “lease conquest” or “competitive lease” rebate, which was available only to consumers who had leased a vehicle made by a competing manufacturer;
  • a “NE Balloon Cash” discount, which was available only to consumers who financed their purchase.

In some cases, the illusory discounts and rebates totaled as much as $3,000, so the actual price of the vehicle was significantly more than advertised.

Six dealerships in the Capital District entered into settlements, agreeing to reform their advertising practices and pay fines ranging from $7,500 to $15,000:

  • Albany Dodge, 770 Central Avenue, Albany
  • DeNooyer Chevrolet, 127 Wolf Road, Albany
  • DePaula Chevrolet, 785 Central Avenue, Albany
  • Goldstein Auto Group, Inc., 1671 Central Avenue, Albany
  • Lia Nissan, 1258 Central Avenue, Albany
  • Zappone Chrysler Jeep Dodge Ram, 8556 State Route 22, Granville

The Attorney General's investigation also cited some of the dealers for other problems with their ads, and the settlements require the dealers to reform those practices as well.  These problems included:

  • Using footnotes or asterisks that contradict, confuse or materially modify a principal message of an ad;
  • Failing to clearly and conspicuously provide certain required disclosures for lease or finance terms, such as the amount or percentage of any down payment and the annual percentage rate;
  • Restricting a rate or price to a “qualified buyer” or “qualified lessee” without disclosing such qualifications;
  • Using a print size that is so small as to not be easily readable.

The Attorney General found that these practices constitute false advertising and fraudulent, deceptive and misleading business practices.  The practices also did not comply with the Attorney General's Advertising Guidelines for Auto Dealers, which identify certain deceptive advertising practices.

Attorney General Schneiderman also served a seventh dealer, Armory Garage, 926 Central Avenue, Albany, with a statutory notice of his intention to file suit against the dealer. The Attorney General's investigation found that Armory Garage promoted sale prices that reflected discounts and/or rebates for which many consumers did not qualify.  For example, one advertisement prominently featured a Dodge Caravan for a “final price” of $16,990.  However, this price was based on at least five discounts or rebates that were not available to many consumers, including “balloon cash,” “conquest lease cash,” “TDM bonus cash,” a “military rebate” and a “National Association of Realtors” discount. Without these rebates and discounts, the actual price would have increased by as much as $4,000.

The investigation was conducted by Assistant Attorney General Amy Schallop, with assistance from Senior Consumer Frauds Representative John VanVoris. This matter was handled by the Attorney General’s Consumer Frauds Bureau, which is led by Deputy Bureau Chief Laura J. Levine and Bureau Chief Jane M. Azia. The Bureau is part of the Economic Justice Division, led by Executive Deputy Attorney General Karla G. Sanchez.

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