In the past few months dealerships in New York and from across the country have been the focus of consumer lawyers and federal, state and local consumer agencies.
Here are just a few of the recent enforcement actions against automobile dealerships.
New York: TCPA Violations
A class action suit was recently filed against a New York dealership for violations of the Telephone Consumer Protection Act of 1991 ("TCPA"). Specifically, the suit alleges that the dealership sent unauthorized sales solicitations via text message. The TCPA prohibits autodialed calls or text messages, as well as prerecorded calls, unless made with the prior express consent of the called party.
The potential liability for violating the TCPA makes it imperative that dealers work closely with their marketing teams to ensure compliance with the TCPA. During any sales or service appointment with a consumer seek their written authorization for the receipt of sales solicitations. Once you have obtained the consumer's written consent add the name to your list of authorized consumers. This list should be the only list used by your marketing teams to solicit any sales or service business via text message.
New York City: Deceptive Lending Practices
The New York City Department of Consumer Affairs (DCA) recently announced settlement agreements with three financing companies (Credit Acceptance Corp., Clover Commercial Corp, and Westlake Financial Services) for financing subprime loans with exorbitant interest rates. The settlement agreements secured $311,260.57 in restitution for 50 consumers plus the termination of several loans. Earlier in 2017, DCA charged four Brooklyn used car dealerships with deceptive and unlawful trade practices, including misleading consumers about the price of automobiles, concealing and misrepresenting the terms of sale and financing, and failing to inspect the automobiles. The cases against the lending institutions arose from the loans processed through those Brooklyn dealers.
DCA Commissioner Lorelei Salas stated that "the City will not tolerate predatory financing and sales practices. We will continue to hold dealerships and financing companies accountable in an effort to protect innocent New Yorkers from purchasing unusable cars and loans that place excessive financial burdens on themselves and their family members."
Going after the finance companies is a new tactic for DCA. The goal is to seek an outlet to compensate consumers for deceptive trade practices even if the dealerships themselves are out of business. DCA also seeks to have the finance companies place tighter scrutiny on loans processed through used car dealerships.
Texas: FTC Advertising Violations
A new car dealership in Dallas, Texas agreed to a settlement with the Federal Trade Commission over charges that the dealership deceptively advertised loan and lease terms in a regional Spanish-language newspaper.
The FTC said the dealership's ad stated that a consumer could buy or lease a vehicle at certain terms, but the limitations to those terms, run in fine print at the bottom of the ads, were only in English.
The FTC also cited the dealership for misrepresenting several other essential finance and/or lease terms and for failure to clearly and conspicuously disclose finance and/or lease terms as required under the Truth in Lending Act and/or the Consumer Leasing Act.
