Auto dealerships in Colorado, New York and Pennsylvania signed agreements with the FTC to settle charges that they ran deceptive ads on the Web, failing to disclose the true costs of vehicle leasing, a violation of federal laws.
Marking the first time the FTC has focused on Internet lease ads, the proposed settlements come as investigators have started to crack down on online fraud. Earlier this month, investigators warned Web sites touting infallible cures for head lice that they may suffer consumer redress if the claims aren't backed by scientific evidence.
Earlier this year, three Net companies that sold products claiming to cure serious illnesses settled federal fraud charges and agreed to repay their customers.
Today's proposed agreements require that the dealerships provide "clear and accurate cost information in lease ads to avoid misleading offers and to assist consumers in comparison shopping and making informed vehicle decisions."
According to the FTC, the online ads either did not publicize the total costs of leasing a car, including starting costs, or buried the important information in unreadable fine print--a practice that the FTC called misleading and in violation of the federal laws and the Consumer Leasing Act.
"Internet vehicle advertising can be very useful to consumers--allowing them to comparison shop among many offers without leaving home," Jodie Bernstein, director of the FTC's Bureau of Consumer Protection, said in a statement.
"But the advertised terms must not be misleading, and the key costs must be clearly disclosed. Otherwise, vehicle advertisers are breaking the law, and these violations will not be tolerated," she said.
Subjects of the investigations were R.N. Motors, Red Noland Cadillac, and their owner, Nelson B. Noland of Colorado; Simmons Rockwell Ford Mercury, Simmons Rockwell Autoplaza, Don Simmons, and their owners, Donald M. Simmons II and Richard L. Rockwell of New York and Pennsylvania.