WASHINGTON, Dec. 2, 1999 -- Six Philadelphia automobile
dealerships have signed agreements with the Federal Trade Commission to
end alleged practices of omitting or burying in fine print key cost
information in their vehicle lease and credit ads.
The settlement agreements, signed by Dunphy Nissan, Inc., Norristown Automobile Co., Inc., Northeast Auto Outlet, Inc., Pacifico Ardmore, Inc., Pacifico Ford, Inc. and Marty Sussman Organization, Inc. will require these dealerships and their owners to include clear and accurate cost disclosures in their lease and credit ads to help consumers to make an informed decision.
These agreements come shortly after a $40,000 civil penalty was assessed against Suntrup Buick-Pontiac-GMC Truck, Inc.; Suntrup Ford, Inc.; and Thomas Suntrup -- the first such penalty for order violations obtained against an individual auto dealer.
These settlements also follow closely the settlement of Mazda Motor Corporation of America for allegedly failing to comply with a Commission order and 24 similar state orders requiring clear and conspicuous disclosure of advertised lease terms. The Mazda settlement included the largest civil penalty ever assessed by the FTC and required the company to pay a total of $5.25 million to the Commission and the states.
"These enforcement actions represent one more step in the FTC's continuing effort to clean up automobile lease and credit advertising," Bureau of Consumer Protection Director Jodie Bernstein said when today's agreement was announced.
"Although much of the auto industry has greatly improved their ads as a result of prior Commission enforcement actions, the Philadelphia area dealers have not. They will now, and consumers will have clear and accurate credit and lease information in compliance with the law."
Consumer EducationInformation on Vehicle Leasing
With the announcement of the action in this matter, the FTC also reminds consumers of its educational material available on the subject of vehicle leasing, all of which is available on its web site at www.ftc.gov or by calling the Consumer Response Center at 1-877-FTC-HELP. This material includes the Consumer Alert "Look Before You Lease," that contains detailed information on the difference between leasing and buying a vehicle, factors to consider when deciding whether leasing is the right option for you, and tips to follow during the leasing process. Among these tips are:
Shop as if you are buying a vehicle. Negotiate all the lease terms, including the price of the vehicle. Lowering the lease price will help reduce your monthly payments. In addition, get all the terms in writing;
Learn the language of leasing. The Alert contains the definition of a wide range of terms, including: open- and closed-end lease, lease inception fee, capitalized cost, and capitalized cost reduction;
Ask whether extra charges will be assessed for excessive mileage, wear and tear, disposition, or early lease termination, and find out the amount of these charges. Check out penalties for an early return, and expect to pay a substantial charge if you give up the vehicle before the end of your lease;
Make sure the manufacturer's warranty covers the entire lease term and the number of miles you are likely to drive;
Consider "gap insurance" to cover the difference between what you owe on the lease and what the car is worth if it is stolen or totaled in an accident; and
Before you sign the deal, take a copy of the contract home and review it carefully - away from any dealer pressure. Be alert for any charges that were not disclosed at the dealership, such as conveyance, disposition and preparation fees.
In addition, the Alert contains a worksheet on Consumer Leasing Act disclosures to help consumers understand what their total costs are likely to be with regard to a particular lease arrangement. It also reminds consumers that federal law requires lessors to provide lease cost information before the lease is signed.
