Costly FTC consent order with dealer group on spot delivery practices
A recent $3.6 million consent order the Federal Trade Commission imposed on a dealer group in California reminds dealers nationwide to follow FTC regulations on vehicle deliveries when financing hasnêt been secured — a.k.a. spot deliveries.
The defendants included nine new-car dealers and their holding and management companies, and their senior officials. The consent order was the result of a multi-count complaint filed in federal court against the dealer group for several sales and advertising practices.
Practices prohibited by the consent order:
« Failing to return the down payment and trade-in if the deal falls through;
« Disposing of the trade before financing has been completed;
« Charging the customer for the terminated transaction;
« Threatening or starting abusive repossession or debt collection practices.
The order prohibits the dealer from charging a consumer for any add-on product or service without having obtained express, informed consent. The order also contains punitive oversight, record-keeping and monitoring obligations with which the dealer group must comply for 20 years (emphasis added).[I]Thanks to Michael Charapp of Charapp & Weiss, LLP, for providing this information.[/I] Download Bulletin PDF