Tag Archive | "Federal Trade Commission"

FTC Announces Significant Hike to Civil Penalty Maximums


WASHINGTON, D.C. — Violations of the Federal Trade Commission’s prohibition on unfair or deceptive acts or practices are going to get more expensive come Aug. 1. That’s when the commission’s interim final rule aimed at increasing a variety of civil penalties takes effect.

According to its website, the FTC has approved final amendments to Commission Rule 1.98 that adjust the maximum civil penalty dollar amounts for violations of 16 provisions the regulator enforces, as required by the Federal Civil Penalties Inflation Adjustment Act Improvement act of 2015. The act directs agencies to implement a “catch-up” inflation adjustment based on a prescribed formula.

The maximum civil penalty amount will increase from $16,000 to $40,000 for the following violations and others listed in the Federal Register Notice:

  • Section 5(l) of the FTC Act: Final commission orders issued under section 5(b) of the FTC Act
  • Section 5(m)(1)(A) of the FTC Act: Trade regulation rules issued by the commission under section 18 of the FTC Act that address unfair or deceptive acts or practices, and other laws enforced by the commission that provide for civil penalties by reference to section 18
  • Section 7A(g)(1) of the Clayton Act: Premerger filing notification requirements under the Hart-Scott-Rodino Improvements Act

The Commission vote to publish the Federal Register Notice amending Commission Rule 1.98 was 3-0.

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FTC Announces Significant Hike to Civil Penalty Maximums


WASHINGTON, D.C. — Violations of the Federal Trade Commission’s prohibition on unfair or deceptive acts or practices are going to get more expensive come Aug. 1. That’s when the commission’s interim final rule aimed at increasing a variety of civil penalties takes effect.

According to its website, the FTC has approved final amendments to Commission Rule 1.98 that adjust the maximum civil penalty dollar amounts for violations of 16 provisions the regulator enforces, as required by the Federal Civil Penalties Inflation Adjustment Act Improvement act of 2015. The act directs agencies to implement a “catch-up” inflation adjustment based on a prescribed formula.

The maximum civil penalty amount will increase from $16,000 to $40,000 for the following violations and others listed in the Federal Register Notice:

  • Section 5(l) of the FTC Act: Final commission orders issued under section 5(b) of the FTC Act
  • Section 5(m)(1)(A) of the FTC Act: Trade regulation rules issued by the commission under section 18 of the FTC Act that address unfair or deceptive acts or practices, and other laws enforced by the commission that provide for civil penalties by reference to section 18
  • Section 7A(g)(1) of the Clayton Act: Premerger filing notification requirements under the Hart-Scott-Rodino Improvements Act

The Commission vote to publish the Federal Register Notice amending Commission Rule 1.98 was 3-0.

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FTC Official Releases 7 Deadly Sins of Dealer Advertising


SAN CLEMENTE, Calif. — The Federal Trade Commission official who led the agency’s Operation Ruse Control, which resulted in 252 auto-related enforcement actions, shared this week the seven deadly sins of advertising that put dealers on her regulatory radar.

Cindy Liebes, director of the Federal Trade Commission’s Southeast Region, shared her list ahead of her Sept. 22 keynote address at DealerSocket’s 2015 Innovate conference, where she will outline the lessons learned from the FTC’s Operation Ruse Control.

“No doubt, one of the FTC’s top priorities is protecting consumers in the auto marketplace. However, I’ve also heard from many honest dealers saying they can’t compete with the dealer down the street who doesn’t follow the rules,” Liebes said. “Regulatory actions against unscrupulous dealers promote fair competition, which is good for any industry and protects the players trying to do the right thing.

“While I can’t speak about current nonpublic investigations, it’s important for dealers to know that the FTC is committed to bringing law enforcement actions in the auto industry,” she added. “We don’t pay attention to the size of a dealer either. Big and small stores need to get their house in order.”

According to Liebes, dealers’ violations include:

  1. Twisting the facts about add-ons: For example, a California-based company deceptively claimed in online ads and through a network of authorized dealers that car buyers who purchased its biweekly payment program would save money. Consumers weren’t told that the cost of the add-on often outstripped any savings. This case resulted in a $2.475 million settlement of refunds and fee waivers.
  2. Lowballing your pitch: Several dealers recently crossed the line by using headlines to tout bargain prices while failing to adequately disclose the true cost of the deal. For example, one Florida dealership pitched “used cars as low as $99.” But $99 was just the minimum bid for cars offered at a liquidation sale, and that didn’t include substantial mandatory fees. The ads also included photos of loaded cars without clearly explaining that some pictures featured — like spoilers and sunroofs — weren’t included in the price.
  3. Luring customers with misleading “zero” promises: One California dealer’s deceptive use of zero promised “$0 initial payment, $0 down payment, $0 drive-off lease.” Another ad promised “$0 down, 0% APR financing, 0 payments and 0 problems.” But consumers had to pay much more upfront to lease or purchase the cars. And “0% APR?” The annual percentage rate for financing those cars for the advertised payment was way more than 0%.
  4. Hiding the strings attached to a deal: An Alabama dealership highlighted eye-catching prices without clearly explaining what the vehicle would really cost consumers. In some cases, ads featured prices that factored in special discounts or rebates that weren’t available to everyone. For example, some prices applied only to recent college graduates, a restriction not prominently disclosed.
  5. Burying key disclaimers in fine print: Fine-print footnotes, unclear “disclaimers” that consumers must scroll down to see, or other buried information won’t live up to the FTC’s “clear and conspicuous” standard. Advertisers often ask how big a disclosure must be, but it’s more than a matter of font size. A clear and conspicuous disclosure is one sufficient for consumers to actually notice, read and understand.
  6. Ignoring applicable credit laws: One common pothole is using certain “triggering terms” under the Consumer Leasing Act, Truth in Lending Act, Reg. Z or Reg. M without making required disclosures. For example, advertising monthly lease payments kicks in a requirement under the Consumer Leasing Act that you disclose other facts about the transaction. Examples are total amount due at lease signing, whether a security deposit is required, and the number, amount and timing of scheduled payments.
  7. Violating prior orders: The FTC may seek monetary civil penalties for violations of prior FTC administrative orders. For example, the FTC recently brought two actions alleging violations of administrative orders, which prohibited dealers from deceptively advertising the cost of buying or leasing a car. One action resulted in the dealer group paying a hefty civil penalty, while the other action is pending. These actions show that there can be a financial cost for violating FTC orders.

To learn more about Liebes’ address as well as other sessions slated for this month Innovate 2015 Conference, visit www.myinnovate2015.com.

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Dealer Fined $690,000 for Consumer-Protection Law Violations


NEWARK, N.J. — A used car dealership has been ordered to pay $693,645.91 after a Superior Court Judge found that it violated state consumer protection laws and regulations a total of 640 times.

The state’s ten-count complaint against RLMB Inc., filed this March, alleged that RLMB and its manager, Michael L. Bloom, violated the Consumer Fraud Act, the Motor Vehicle Advertising Regulations, the Automotive Sales Regulations, the Used Car Lemon Law (UCLL) and UCLL regulations by, among other things, advertising used motor vehicles for sale without disclosing to consumers the vehicle’s prior damage or prior use; selling vehicles “as is” when they qualified for a warranty; and permitting third parties to advertise, offer for sale and/or sell used motor vehicles on Craigslist that were titled to RLMB.

The dealership and Bloom failed to file a response to the complaint, resulting in  Judge Stephan C. Hansbury entering a final judgment by default. The judgment requires the defendants to pay $640,000 in civil penalties, $31,200.91 in reimbursement to the State for its legal and investigative costs and $22,445 in restitution to seven consumers. By the terms of the judgment, the dealership must comply with all applicable state laws and regulations in its business practices.

“The penalty ordered in this matter is appropriate and should send a clear message to all motor vehicle dealerships that violating our consumer protection laws and regulations comes at a steep price,” Acting Attorney General John J. Hoffman said. “We are continuing to review the practices of new and used motor vehicle dealers to ensure consumers are not taken advantage of.”

“The evidence presented to the court by the Division of Consumer Affairs, resulted in a favorable decision for consumers,” said Acting State Director of Consumer Affairs Steve Lee. “Dealerships must not withhold information from consumers that the dealerships are required by law to provide.”

According to the complaint, RLMB required consumers to sign blank sales documents, did not prominently display the Federal Trade Commission Used Car Buyers Guide in vehicles for sale, did not conspicuously post the total sale price of vehicles, failed to itemize documentary service fees, and did not pay the $.50 administrative fee for each used motor vehicle sold, as required by the UCLL, among other things.

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Hudson Cook, LLP Adds Rebecca E. Kuehn as Partner


HANOVER, Md. – Hudson Cook, LLP, a nationwide provider of legal compliance services for the financial services industry, announces the addition of Rebecca E. Kuehn as a partner in its Washington, D.C. office. With over 15 years of experience in consumer financial services and consumer protection matters, Becki counsels financial institutions, consumer reporting agencies, service providers, and others in complying with consumer financial laws and prohibitions against unfair, deceptive, or abusive trade practices. She represents clients before federal and state agencies, particularly the Federal Trade Commission and Consumer Financial Protection Bureau, in investigations and other proceedings.

“Becki’s valuable experience at the Federal Trade Commission and as counsel for a major information services corporation perfectly aligns with the Firm’s practice, and she will be a great asset for our clients,” said Tom Hudson, Chairman of Hudson Cook LLP. Becki served as an Assistant Director in the FTC’s Division of Privacy and Identity Protection, where she led the Fair Credit Reporting Act program and oversaw the Commission’s enforcement, outreach, and rulemaking activities in that area. Most recently, Becki served as Vice President and Senior Regulatory Counsel at CoreLogic, and was the lead attorney and coverage counsel for the CoreLogic credit reporting and consumer data businesses, providing advice and guidance to management on a wide variety of consumer data and privacy-related regulatory issues, including the Fair Credit Reporting Act and the Gramm-Leach Bliley Act.

Becki graduated from The George Washington University National Law Center with high honors, and is admitted to practice in Virginia, Maryland, and the District of Columbia.

 

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Arkansas Dealer to Pay $90,000 Penalty for Not Displaying Buyers Guide


JONESBORO, Ark. — An Arkansas auto dealer and its owners have agreed to pay a $90,000 civil penalty to settle Federal Trade Commission charges that they failed to display a “Buyers Guide” on used vehicles offered for sale, as required by the FTC’s Used Car Rule, reports F&I and Showroom.

In March 2014, the FTC charged Abernathy Motor Company, Wesley Abernathy and David Abernathy with violating the rule, which is designed to ensure that consumers have important purchasing and warranty information when shopping for a used car. The Buyers Guide tells consumers whether the vehicle comes with a warranty and what that warranty covers, among other things.

The rule also provides that the Buyers Guide becomes a part of the sales contract and overrides any contrary provisions in the contract.

In addition to the $90,000 civil penalty, under the proposed final order, Abernathy Motor Company and its owners are prohibited from misrepresenting material facts about used vehicles offered for sale, including mechanical condition, the terms of any warranty offered, and that there is a warranty when a vehicle is sold without one. They are also barred from failing to disclose, before a sale, material terms and conditions, including that a used vehicle is sold without a warranty if none is offered, and the terms of any warranty.

The proposed order also requires the defendants to display prominently a properly completed Buyers Guide on used vehicles, with all of the disclosures required by the Used Car Rule and reflecting the warranty coverage, and to include this statement in sales contracts: “The information you see on the window form for this vehicle is part of this contract. Information on the window form overrides any contrary provisions in the contract of sale.” For sales conducted in Spanish, the dealership must provide the same information in Spanish.

The FTC vote authorizing the staff to file the proposed stipulated order for permanent injunction was 5-0. It was filed in the U.S. District Court for the Eastern District of Arkansas, Jonesboro Division.

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