FTC Announces Crackdown on Car Dealerships for Fraud and Deception

The Federal Trade Commission (“FTC”) has announced that it is broadening its enforcement of deception and fraud investigations into car dealership operations beyond advertising to include auto loans and other add-on products and services.

Dubbed “Operation Ruse Control,” the initiative involves the FTC and 32 law enforcement agencies throughout the U.S. and Canada, and has resulted in 252 enforcement actions to date. Those enforcement actions include charges of deceptive marketing of car title loans, deceptive advertising, odometer fraud and criminal auto loan application fraud.

Under its expanded authority over car dealers under the Dodd-Frank Act, the FTC said that it recently took action against two companies for add-on fraud. The FTC has charged National Payment Network, Inc., a provider of loan acceleration programs, with using deceptive practices in marketing its auto payment programs to consumers. According to the FTC, the company failed to disclose its fees for the service, which averaged $775 on a five-year auto loan.

In association with that case, the FTC charged Matt Blatt Inc. and Glassboro Imports, LLC, a dealership with multiple locations in New Jersey, with failing to disclose NPN fees. The Matt Blatt dealerships received a commission on each NPN loan package sold.

In addition, the FTC has charged auto dealers in California, Florida and Alabama with violations of the FTC Act, the Truth in Lending Act (“TILA”) and the Consumer Leasing Act for running ads promoting attractive sales, lease and financing options that included fine print disclaimers effectively cancelling out those offers.

The FTC is also cracking down on auto loan modification fraud as part of the initiative. It has charged Regency Financial Services of Lake Worth, FL and its CEO Ivan Levy with deceptive practices in making auto loan modifications. The FTC complaint says that Regency Financial charged consumers an up-front fee to negotiate a loan modification on their behalf, but often failed to deliver anything in return for that fee.

The Cogdell Law Firm is a boutique law firm focusing on large, complex business and criminal financial-related litigation, including white collar criminal defense, securities fraud, health care fraud investigation, criminal appeals and state criminal defense. When results matter most, contact Dan Cogdell at (713) 426-2244 or info@cogdell-law.com