Southern Tier Auto Dealer To Implement Reforms

Attorney General Spitzer today announced a settlement with a prominent Southern Tier auto dealership to reform its advertising practices.

Royal Auto, which operates auto dealerships in Tioga and Cortland counties and in Northern Pennsylvania, agreed to reform its advertising practices to comply with federal and state laws and the Attorney General's guidelines.

"My office is committed to reforming misleading advertising practices that all too frequently result in consumers making bad decisions," Spitzer said.

Since at least November 2001, Royal Auto has used many advertising tactics and campaigns that mislead consumers into believing they would receive a better deal at the dealership than at its competitors.

Specifically, Royal Auto was cited for brochures and ads that lured consumers with promises of such "free" items as computers or airline tickets. The Attorney General's Office objected to these claims because they failed to disclose the additional required commitments and costs to consumers and failed to explain that the cost of the "free" item was actually factored into the final sale price for a vehicle.

In addition, Spitzer's office raised concerns about other advertising claims such as:

• Prominently displaying favorable down payments, for example "Just $89 Down Delivers," but failing to disclose other credit terms as required by federal regulations;
  

• Announcing "Absolutely no credit applications will be refused," which could mislead consumers into believing that everyone would receive financing regardless of credit history;
  

• Falsely implying that a certification office of a prominent firm had selected Royal Auto to conduct a huge factory liquidation sale, when such was not the case;
  

• Claiming "$1,000 Below Dealer Cost," a deceptive comparison between a vehicle sale price to the purported dealer "invoice" price. The Attorney General's guidelines consider this representation to be misleading because the invoice price does not accurately reflect the dealer's ultimate cost; and
  

• Using phrases such as "Up to $4,000 Off," which failed to disclose the basis for the price comparison.

In settling the case, Royal Auto agreed to pay $10,000 to the state in civil penalties and costs. Royal Auto operates dealerships under the following names: Royal Ford & Mercury Motors, Inc.; Royal Chrysler Motors, Inc.; Royal Nissan of Cortland, Inc.; Royal Chevrolet/Cortland, Inc.; Royal Nissan, Inc.; Royal Chevrolet-Oldsmobile-Pontiac-Buick, Inc.; Royal Auto Group; Royal Motor Co.; and Royal Auto Complex.

Spitzer's office has made a priority of reforming the advertising practices of auto dealers throughout the state. Since 1999, the Attorney General's office has settled or filed cases against over 100 auto dealers and obtained fines totaling more than $750,000. The office has also sponsored many training programs with auto dealers to educate them about the pitfalls of many advertising tactics.

This case was handled by Assistant Attorney General Michael Danaher of the Binghamton Regional Office and Assistant Attorney General Judith Malkin of the Syracuse Regional Office.

Individuals with questions or complaints about auto dealer advertisements are encouraged to contact the Attorney General's consumer help line at (800) 771-7755 or visit the office's web site at www.ag.ny.gov.