FTC Alleges Car Dealers Falsely Promised To Pay Off Trade-ins, No Matter What Consumers Owed
The Federal Trade Commission issued a press release today that five car dealers from around the US have agreed to a settlement orders that require them to stop running ads where the car dealers promise to pay off a consumer’s trade-in vehicle, no matter what the consumer owes on the vehicle.
The dealers named in the FTC’s complaints are: 1) Billion Auto, Inc., in Sioux Falls, South Dakota; 2) Frank Myers AutoMaxx, LLC, in Winston-Salem, North Carolina; 3) Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Connecticut, respectively, and which advertise jointly; 4) and Ramey Motors, Inc., in Princeton, West Virginia.
These trade-in deals are called “negative equity” deals, where the consumer is “upside-down” in their car (loan balance exceeds the trade-in value) and the difference is “rolled-into” the financing of the newly purchased car. The FTC has published a new consumer on the topic: Negative Equity and Auto Trade-ins (Click to read).
These car dealer financing tricks can violate the Truth in Lending Act (TILA) and can be unfair and deceptive trade practices.