On November 24, the Federal Trade Commission (“FTC”) announced that it reached a settlement agreement with two Ohio auto dealers relating to allegations that the auto dealers violated Section 184 of the Consumer Leasing Act, 15 U.S.C. § 1667c, and Section 213.7 of Regulation M, 12 C.F.R. § 213.7. Specifically, the FTC’s administrative complaint alleged that the auto dealers failed to disclose key terms of offers when they advertised low monthly car lease payments. These terms included the total amount due at signing, whether a security deposit was required, and credit score requirements. According to the FTC, most consumers did not qualify for the advertised terms.
The proposed consent order prohibits the auto dealers from advertising misleading lease and financing terms. It also requires the lenders to clearly and conspicuously disclose all qualifications or restrictions, including the fact that typical consumers may not qualify for the offer. The auto dealers are also barred from advertising a payment amount, or that no initial payment is required, without clearly disclosing that the transaction is a lease, the amount due on delivery, the number of payments, whether a security deposit is required, and whether an extra charge may apply at the end of the lease. The consent order is to remain in effect for 20 years and is subject to public comment for 30 days continuing through December 28, 2015.