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Six Philadelphia automobile dealerships and their individual owners have signed agreements with the Federal Trade Commission to end alleged practices of omitting or burying in fine print key cost information in their vehicle lease and credit ads. The settlement agreements, signed by Dunphy Nissan, Inc. and Serge Naumovsky (together "Dunphy"); Norristown Automobile Co., Inc. and William Milliken (together "Norristown"); Northeast Auto Outlet, Inc. and Arthur Micchelli (together "Northeast"); Pacifico Ardmore, Inc. and Kerry J. Pacifico (together "Pacifico Ardmore"); Pacifico Ford, Inc. and Kerry T. Pacifico (together "Pacifico Ford"); and Marty Sussman Organization, Inc. and Martin E. Sussman (together "Sussman"), will require these dealerships and individuals named to include clear and accurate cost disclosures in their lease and credit ads to help consumers to make an informed decision.

These agreements come shortly after a $40,000 civil penalty was assessed against Suntrup Buick-Pontiac-GMC Truck, Inc.; Suntrup Ford, Inc.; and Thomas Suntrup -- the first such penalty for order violations obtained against an individual auto dealer. These settlements also follow closely the settlement of Mazda Motor Corporation of America for allegedly failing to comply with a Commission order and 24 similar state orders requiring clear and conspicuous disclosure of advertised lease terms. The Mazda settlement included the largest civil penalty ever assessed by the FTC and required the company to pay a total of $5.25 million to the Commission and the states.


"These enforcement actions represent one more step in the FTC's continuing effort to clean up automobile lease and credit advertising," Bureau of Consumer Protection Director Jodie Bernstein said when today's agreement was announced. "Although much of the auto industry has greatly improved their ads as a result of prior Commission enforcement actions, the Philadelphia area dealers have not. They will now, and consumers will have clear and accurate credit and lease information in compliance with the law."

Commission Complaints

The FTC's complaints against Dunphy, Norristown, Northeast, Pacifico Ardmore, Pacifico Ford, and Sussman allege that their vehicle lease advertising violated Section 5 of the FTC Act either by failing to disclose, and/or failing to disclose adequately, essential lease information. The dealerships and individuals named hid many of the costs associated with the lease in fine-print disclosures located far from the more prominent claims of low monthly payments, or simply omitted these costs altogether.

The FTC also alleged the following Section 5 violations in specific complaints:

  • that Dunphy misrepresented the amount due at lease inception, by promoting low down payments or "$0 down" when additional fees were due at lease signing.
  • that Dunphy and Northeast represented that consumers could buy the advertised vehicle for a low monthly charge, while the offer was actually for a lease.
  • that Northeast misrepresented that the dealer's "double your down payment" offer was available for the vehicles advertised, when the offer was not available for the vehicles advertised.

As for financed purchase (credit) advertising, the FTC alleged that Dunphy, Norristown, Northeast, and Pacifico Ardmore violated Section 5 of the FTC Act by failing to disclose, and/or failing to disclose adequately, critical terms of the advertised credit transactions. The dealerships and individuals named either omitted the annual percentage rates ("APR") and terms of repayment for these credit offers or placed this information in fine-print disclosures located far from the more prominent claims of low downpayments.

The Commission's complaints also allege violations of federal laws and regulations that require lease and credit advertising containing certain "triggering" terms - such as down payments or monthly payments - to disclose "clearly and conspicuously" certain other essential "triggered" terms of the deal. The Consumer Leasing Act (CLA) and its implementing Regulation M, which govern lease transactions, require that ads for leasing plans that contain a triggering term also state clearly and conspicuously additional terms of the offer including, among other things, that the transaction advertised is a lease; the total amount of any payments such as a security deposit or capitalized cost reduction required at lease inception; and the number, amount and timing of scheduled payments.

The Truth in Lending Act (TILA) and its implementing Regulation Z requires that ads for financed purchase plans using a triggering term also state clearly and conspicuously the amount or percentage of the down payment, the terms of repayment, and the APR, which is a measure of the true cost of the financed purchase. These laws and regulations are designed to ensure that consumers are provided full, accurate, and understandable information about the lease and credit offers.

The complaints against the six Philadelphia dealerships and individuals named allege that their lease ads used triggering terms under the CLA and Regulation M, but either failed to disclose, or failed to disclose clearly and conspicuously, other required information, such as the total amount due at lease signing. In addition, these complaints allege that the lease ads state a downpayment amount more prominently than the disclosure of the total amount due at lease signing, in violation of Regulation M.

The FTC also alleged that the credit ads of Dunphy, Norristown, Northeast, Pacifico Ardmore, and Pacifico Ford used triggering terms under the TILA and Regulation Z, yet omitted, or failed to disclose clearly and conspicuously, required information. In addition, all six complaints allege that the dealerships and individuals named stated a rate of finance charge without stating that rate as an "annual percentage rate," using that term, or the abbreviation "APR" in violation of the TILA and Regulation Z.

Consent Agreements

The consent agreements negotiated by the FTC to resolve these charges are being announced today for public comment before the Commission determines whether to issue them as final.

The consent agreements would prohibit the dealerships and individuals named from placing ads that state the amount of any payment due at lease inception (excluding the monthly payment amount) or the fact that any or no inception payment is due, without also disclosing with "equal prominence" the total amount a consumer must pay at lease signing or delivery. The orders would also prohibit the dealerships and individuals named from disseminating lease ads that state the amount of any payment, or that any or no initial payment is required at lease signing or delivery, unless the lease ads also clearly and conspicuously disclose other lease information, such as the total fees due at lease inception and whether or not the consumer must pay a security deposit. The orders would also require the dealerships and individuals named to comply with all provisions of the CLA and Regulation M.

In addition, Dunphy would be prohibited from misrepresenting the costs of leasing, including the amount due at lease inception; both Dunphy and Northeast would be prohibited from representing that the advertised terms apply to a cash or credit offer, when, in fact, they apply only to an offer to lease a particular vehicle. Northeast would also be prohibited from misrepresenting the availability of any advertised offer.

Similarly, the orders would prohibit the dealerships and individuals named from using triggering terms in their credit advertisements, without clearly and conspicuously disclosing other important credit information such as terms of repayment and the APR. They would also be prohibited from stating a rate of finance charge, unless it is identified as an "annual percentage rate" or "APR," and would be required to provide consumers with all cost information specified by TILA and Regulation Z.

Consumer Education Information on Vehicle Leasing

With the announcement of the action in this matter, the FTC also reminds consumers of its educational material available on the subject of vehicle leasing, all of which is available on its web site at or by calling the Consumer Response Center at 1-877-FTC-HELP. This material includes the Consumer Alert "Look Before You Lease," that contains detailed information on the difference between leasing and buying a vehicle, factors to consider when deciding whether leasing is the right option for you, and tips to follow during the leasing process. Among these tips are:

  • Shop as if you are buying a vehicle. Negotiate all the lease terms, including the price of the vehicle. Lowering the lease price will help reduce your monthly payments. In addition, get all the terms in writing;
  • Learn the language of leasing. The Alert contains the definition of a wide range of terms, including: open- and closed-end lease, lease inception fee, capitalized cost, and capitalized cost reduction;
  • Ask whether extra charges will be assessed for excessive mileage, wear and tear, disposition, or early lease termination, and find out the amount of these charges. Check out penalties for an early return, and expect to pay a substantial charge if you give up the vehicle before the end of your lease;
  • Make sure the manufacturer's warranty covers the entire lease term and the number of miles you are likely to drive;
  • Consider "gap insurance" to cover the difference between what you owe on the lease and what the car is worth if it is stolen or totaled in an accident; and
  • Before you sign the deal, take a copy of the contract home and review it carefully - away from any dealer pressure. Be alert for any charges that were not disclosed at the dealership, such as conveyance, disposition and preparation fees.

In addition, the Alert contains a worksheet on Consumer Leasing Act disclosures to help consumers understand what their total costs are likely to be with regard to a particular lease arrangement. It also reminds consumers that federal law requires lessors to provide lease cost information before the lease is signed.

The Commission vote to approve the consent agreements for public comment was 5-0.

Announcements regarding the proposed consent agreements will be published in the Federal Register shortly. The agreements will be subject to public comment for 60 days until January 31, 2000, after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC, 20580.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.

Copies of the news release and legal documents related to this matter are available from the FTC's web site at and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

FTC File Nos.:

Dunphy Nissan, Inc., 992-3082;
Norristown Automobile Co., Inc., 992-3081;
Northeast Auto Outlet, Inc., 992-3080;
Pacifico Ardmore, Inc., 992-3116;
Pacifico Ford, Inc., 992-3079;
Marty Sussman Organization, Inc., 992-3078

Contact Information

Media Contact:
Mitchell J. Katz
Office of Public Affairs
Staff Contact:
Sally Forman Pitofsky
Bureau of Consumer Protection