L. I. Auto Dealerships Settle Cases Stemming From Misleading Ads

Attorney General Spitzer today said his office has obtained agreements with a dozen Long Island auto dealers to clean up their advertising practices.

"Fair and forthright advertising levels the playing field for competitors and promotes wise purchasing decisions by consumers," Spitzer said.

As a result of an investigation commenced by Spitzer's Nassau Regional Office, 12 dealerships have agreed to pay a total of $57,500 in penalties and to stop their misleading and deceptive marketing practices.

Examples cited by Spitzer's office of misleading and deceptive advertisements included those which:

• Promote the lowest prices in ads, without disclosing (or doing so in extremely fine print) that the advertised price excluded a range of additional fees and charges or applied rebates of very limited availability;
• Promote "$0 Down payment" that misleads consumers into believing they can complete the purchase/lease of a vehicle without paying-out any money. Consumers later learn that registration fees, taxes and other charges must be paid when the contract is signed;
• Advertise "0% APR" that fails to disclose conditions, qualifications and limitations that materially affect the offer's availability and violates the federal Truth-In-Lending law;
• Advertise low monthly lease payments in violation of federal advertising laws that require the disclosure of information about other costs that would significantly increase the total cost of leasing; and
• Promote "Bad Credit? No Problem!" ads that mislead consumers into believing that they can receive financing regardless of their credit history and fails to disclose that the finance rates for high risk borrowers may be prohibitively high.

Spitzer also cited ads that highlighted remarkably low prices for cars, but failed to disclose that the price was available only with financing through the dealership at higher-than-market rates. Just last month, Spitzer's office announced a proposed new law that would reform this practice commonly referred to as "markups" or "kickbacks." Without disclosing it to consumers, auto dealers tack on additional charges or extra percentage points to loans arranged by the dealership. Finance charge mark-up practices have been widely challenged in recent years, both by consumer and civil rights groups and in a series of lawsuits against various financing arms of auto manufacturers. Evidence presented in these cases and other studies demonstrates that this practice has a significant disparate impact on racial minorities.

These cases are the latest in an on-going effort by the Attorney General's Office to monitor auto advertising practices throughout the state. Since 1999, Spitzer's office has commenced nearly 190 enforcement actions against auto dealers and their advertising associations across the state, the vast majority of which involved violations of federal and state laws that regulate auto advertising.

The dealerships cited in the investigation include:

Huntington Chrysler Plymouth, Inc., d/b/a Town & Country Chrysler Jeep (Levittown);
Legend Nissan, Ltd. (Syosset);
Legend Autorama, Ltd. (Amityville);
Major of the Five Towns, Inc. d/b/a Five Town Nissan and Five Towns Kia (Inwood);
N.S. Auto Sales, Inc., d/b/a/ North Shore Honda and North Shore Saab (Glen Head);
Neil Lincoln/Mercury Hyundai Corp., d/b/a Neil Lincoln-Mercury Hyundai (Medford);
Neil Buick Corporation, d/b/a Neil Buick Pontiac Dodge Isuzu (Medford);
Prestige Motors of Massapequa d/b/a Wantagh Suzuki (Wantagh);
SAMAN Auto Sales, Inc., d/b/a Huntington Dodge (Commack);
Westbury Nissan, LLC (Westbury);
Worldwide Automotive III, LLC, d/b/a Neil Toyota (Lynbrook);
Worldwide Automotive, LLC, using the name Neil Honda (Medford)

These cases were handled by Assistant Attorney General Juan M. Merchan of the Nassau County Regional Office.

Individuals with complaints about auto dealership advertising or sales practices are encouraged to contact Spitzer's consumer help line at (800) 771-7755.