FTC Continues to Steer Consumers away from Deceptive Automobile Lease and Credit Ads

Chrysler and Two Ad Agencies Settle Commission Charges That Their Car Ads Were Deceptive

For Release

Chrysler Corporation, its national advertising agency, Bozell Worldwide Inc., and Martin Advertising, Inc., a regional advertising agency for General Motors’ dealerships and dealer associations, have agreed to settle Federal Trade Commission charges that their auto ads violated federal laws. The settlement agreements are part of the FTC’s continuing law enforcement and consumer education effort aimed at deceptive lease and credit advertising in the automobile industry. Like prior Commission settlements with seven major auto manufacturers, three national advertising agencies, and numerous dealerships, Chrysler, Bozell, and Martin allegedly created and disseminated deceptive lease and/or credit advertisements that omitted key cost information or buried this information in small -- and at times unreadable -- print. Chrysler and Bozell also misrepresented that the luxury vehicle model displayed in the ad was available at the low, advertised lease terms, the Commission said. The settlements would prohibit the companies from disseminating such deceptive lease and credit advertising in the future.

"These cases are part of the FTC’s campaign to clean-up misleading auto advertising so that consumers can read and understand essential cost information before they lease or buy a car," said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. "While we have seen significant improvement in this area, we will continue to target industry members who fail to provide consumers with the real costs of these deals."


Chrysler, based in Auburn Hills, Michigan, operates in two principal industry segments: automotive operations and financial operations. Its automotive operations include the manufacture and assembly of cars, trucks, and related parts and accessories. Its financial services operations provide consumer and dealer automotive financing for Chrysler products through Chrysler Financial Corporation and its subsidiaries. Bozell, located in New York, N.Y., is an advertising agency that, among other things, creates and disseminates automobile advertising for Chrysler.

The Commission’s complaints against Chrysler and Bozell allege that the companies violated the FTC Act, the Consuming Leasing Act (CLA), and its implementing Regulation M in their automobile lease advertising. According to the complaints, Chrysler and Bozell represented that consumers could lease the luxury Chrysler vehicles featured in the television ads at the attractive lease terms prominently stated in the advertisements. In truth, according to the FTC, the low monthly payment terms applied to Chrysler models of lesser value than those featured in the ads and consumers were required to pay significant fees at lease signing. The lease ads buried information about lease inception fees in unreadable fine print. This failure to disclose important cost information in a clear and conspicuous way also violated the CLA and Regulation M, the Commission charged.


Martin is located in Birmingham, Alabama, and is an advertising agency that specializes in automobile advertising, creating and disseminating advertisements for General Motors’ automobile dealerships and dealer associations. The complaint against Martin alleges that the company violated the FTC Act, the CLA and Regulation M, and the Truth in Lending Act (TILA) and its implementing Regulation Z in its automobile lease and credit advertising. The Commission’s complaint charges that Martin’s television and radio lease ads were deceptive in several ways. First, certain lease ads misrepresented that consumers could purchase a vehicle by paying low monthly payments, when in fact the offers were for leases. These ads either completely omitted the fact that the offer was for a lease or hid this information in fine print too small for consumers to read or in audio disclosures too fast for consumers to hear. Second, certain lease ads misrepresented the amount that consumers actually were required to pay at lease inception. Third, Martin’s lease ads often either completely omitted or hid important information about lease inception fees in unreadable fine print or incomprehensible audio disclosures. Because consumers could not read (or hear) and understand the disclosures, the disclosures were inadequate to correct the misleading statements that did appear.

The Commission’s complaint against Martin also alleges that its balloon payment credit ads were deceptive. According to the Commission, these ads falsely represented that consumers could buy a car by making only low monthly payments. The ads also inadequately disclose the existence and amount of a final balloon payment, a substantial downpayment, the annual percentage rate, or other terms of repayment. For example, Martin Exhibit E, a balloon payment credit ad, failed to adequately inform consumers, among other things, that a final payment of over of over $9,000 and a $3,350 downpayment were required.

The Martin complaint further alleges that the agency’s lease and credit ads violated the CLA and Regulation M and the TILA and Regulation Z, respectively, by omitting required disclosures or by making disclosures that were not clear and conspicuous. In addition, the Martin credit ads violated TILA and Regulation Z by failing to state a rate of finance charge as an "annual percentage rate" or "APR."

Under the consent agreements announced today for public comment, Chrysler, Bozell, and Martin would be prohibited from misrepresenting the total amount due at lease signing or delivery, the amount down, and/or the downpayment, capitalized cost reduction, or other amount that reduces the capitalized cost of the vehicle (or that no such amount is required). The companies also would be prohibited from stating any charge that is part of the total due at lease signing or delivery, or that no such charge is required (such as a low downpayment amount) -- other than a statement of the periodic payment -- more prominently than a statement of the total amount due at lease signing or delivery. The proposed settlement orders also would prohibit the companies from stating the amount of any payment unless the ad also states, clearly and conspicuously, all of the terms required by the CLA and Regulation M including: (1) that the transaction advertised is a lease; (2) the total amount due at lease signing or delivery; (3) whether or not a security deposit is required; (4) the number, amount, and timing of scheduled payments; and (5) that an extra charge may be imposed at the end of the lease term.

The proposed orders with Chrysler and Bozell would prohibit the companies from misrepresenting the vehicle model available to consumers in connection with any advertised lease offer. The proposed settlement with Martin would prohibit Martin from misrepresenting that any motor vehicle lease advertisement pertains to a cash or credit offer.

To remedy Martin’s alleged violations in its credit advertising, the order would prohibit Martin from misrepresenting the existence and amount of any balloon payment or the annual percentage rate. In addition, the proposed settlement order would prohibit Martin from stating the amount or percentage of any downpayment, the number of payments or period of repayment, the amount of any payment, or the amount of any finance charge, unless the ad also states, clearly and conspicuously, all of the terms required by the TILA and Regulation Z including: (1) the amount or percentage of the downpayment; (2) the terms of repayment, including but not limited to the amount of any balloon payment; and (3) the correct annual percentage rate.

The settlement orders also would require that all required disclosures be made "clearly and conspicuously" -- that is, in a manner that is readable (or audible) and understandable to a reasonable consumer.

The Commission vote to announce these proposed consent agreements for public comment was 4-0.

A summary of the proposed consent agreements will be published in the Federal Register shortly. They will be subject to public comment for 60 days, after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE:   A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaints, proposed consent orders and the analysis of proposed consent orders to aid public comment, FTC brochures for consumers in the market for a new car -- "Look Before You Lease," "New Car Buying Guide," and "Keys To Vehicle Leasing" (joint project with the Federal Reserve Board and other groups) -- FTC brochure for businesses -- "Advertising Consumer Leases" -- as well as information about prior FTC cases involving lease and finance advertising issues, are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202- 382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 9723267)

Contact Information

Media Contact:
Victoria Streitfeld,
Office of Public Affairs
Staff Contact:
David Medine,
Bureau of Consumer Protection
Rolando Berrelez
Sally Forman Pitofsky