Zero sum game?

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For people in the market for a car, an ad on YouTube for Massachusetts-based Courtesy Auto Group featured some eye-catching numbers:  “Get behind the wheel of the new 2013 Kia Sorento, now lease priced for $239 a month with zero down, or sale priced at $20,980.”  To emphasize the point, the visual on the screen highlighted in bold letters:

with $0 down

But it’s what came later that led to an FTC lawsuit – and the tenth settlement with a dealership to emerge from the agency’s Operation Steer Clear.

Consumers looking at Courtesy's video had to take out their magnifying glasses and brush up on their speed-reading skills because the end of the ad featured 33 lines of small, blurry text that scrolled down the screen with the pedal to the metal.  We won’t make you parse through all 380 words, but here’s just a sample:

. . . Sorento:  Priced with all applicable Manufacturer rebates and incentives.  Does not include tax, title, acquisition, registration or doc fees. Soul: APR financing available, subject to credit approval by Kia Motors Finance (KMF) [Hyundai Motor Finance (HMF) in Massachusetts and D.C.], through KMF/HMK, to very well qualified buyers and not available on balloon financing. Only a limited number of buyers will qualify for advertised APR. Downpayment will vary depending on APR. . . .

How’s that for crystal clear?   To give an example of where the FTC said the ad ran off the road:  The phrase “acquisition” fee hid an additional charge, which the dealership later represented to be $595 – meaning that to drive off the lot at lease inception, people would have to pay a lot more than the advertised “$0 down.”  And that’s not all.  The lawsuit cited other instances where Courtesy prominently touted “zero down” leases with fixed monthly payments, but then dinged people with hidden fees.

The FTC’s complaint alleged that Courtesy’s ads misrepresented the amount due at lease inception, in violation of the FTC Act.  The complaint also charged that the company failed to include information required by the Consumer Leasing Act (CLA) and Reg M.  (Dealers will want to consult the complaint for specifics.)

Although the case initially went into litigation, the company has agreed to a settlement that will change its practices from here on in.  The proposed order bans ads that misrepresent the cost of leasing, financing, or buying a vehicle, or make any other material misrepresentations about price, sale, financing, or leasing.  Among other things, Courtesy Auto is prohibited from stating the amount of a payment – or that any or no payment is required at lease inception – without clearly disclosing the terms required by the CLA.  The FTC is accepting comments about the settlement until April 21, 2014.

What can dealers learn from Operation Steer Clear?  OK, we’re quoting ourselves here, but what the headline giveth, the footnote – or superscript or dense block of text or any other hard-to-find or hard-to-read statement – can’t taketh away.  That’s a bedrock FTC legal principle that applies across the board, including to car ads. 

In addition, it may be time to take your ads in for a CLA tune-up.  Are you disclosing lease information required by the law?  Read Advertising Consumer Leases for compliance tips.



This is what I called decency in norms and actions in consequence of the norms. There is a lot to learn from the FTC by regulators of developing countries, that might have included the norms and chapters the FTC has, but are dead norms in practice
I don't understand the problem here. The "fine print" you quoted is crystal clear to me. Is this as simple as the headline should have said "$239/mo with $0 down for very well qualified buyers"?

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