By on March 27, 2015

Cory Fairbanks Mazda Dealership

The Federal Trade Commission announced Thursday its results from Operation Ruse Control, a collection of investigations over deceptive dealer practices.

The FTC-led campaign involved 32 law enforcement agencies in the United States and Canada, resulting in 252 enforcement actions (187 in the U.S., 65 in Ontario and British Columbia), six of them involving monetary judgements of over $2.6 million.

Two of those cases involved vehicle purchase add-ons, defined by the agency as “the practice of a dealer or other third party adding to the vehicle sales, lease, or finance agreement charges for other products or services.” In both, National Payment Network made promises to save consumers money, but the associated fees were too high to deliver on the promise. NPN agreed to refund $1.5 million and waive $949,000 in fees, while partner New Jersey-based dealership network Matt Blatt — the latter having received commissions for each of the 1,000 consumers it enrolled into NPN’s scheme — will pay $184,000 in fines to the FTC.

Three cases involving deceptive advertising on the part of Cory Fairbanks Mazda of Longwood, Fla., Jim Burke Nissan of Birmingham, Ala. and Ross Nissan of El Monte, Calif. led to all three from “misrepresenting the purchase cost or any other material fact about the price, sale, financing or leasing of a vehicle,” with the former two also barred from “representing that a discount, rebate, bonus, incentive or price is available unless it is available to all consumers or all qualifications and restrictions are clearly and conspicuously disclosed.”

The last of the six involves a lawsuit against Florida-based Regency Financial Services. The company is alleged to have charged consumers upfront for auto loan modifications, only to deliver nothing in exchange. The FTC is seeking a permanent injunction to stop RFS’ practices, as well as to refund deceived consumers.

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53 Comments on “Operation Ruse Control Brings The Hammer Down On Deceptive Dealer Practices...”


  • avatar
    GranMarkeez

    It’s “waive”, not “wave”.

    Nobody proofreads copy any more…

  • avatar
    Garagezone

    Fairbanks Mazda is one of those places with the $2500 striping (Pep-Boys pinstripe on the sides) $500 floormats, $650 Paint Protection, $500 Upholstery Protection and Dealer charges of $700 added to EVERY new car on the lot. I can imagine they were VERY creative once you got to the signing of the deal with warranties and financing and other beneficial products they could sell ya.

    I looked at cars there once and walked away after seeing hte add-on sticker on every car and asking if they could sell me one without, and they laughed and said no way. Bye !

    • 0 avatar
      BigOlds

      Autofair here in NH. I went to one of their locations ONCE. Every single vehicle had pinstriping and upholstery protection, and I think that was around $700 between the two.

      I was disgusted. When the salesman approached me I told him exactly why I would never be back.

      When we bought my wife’s car (different dealership), the car on the showroom had a sign that said: MSRP-XXXX Discounts-YYYY You Pay:ZZZZ The price was low enough that I walked up to a Salesman and said ‘I will take it” When he wrote up the paperwork, it was a few thousand dollars more. Naturally I went a little nuts, and he told me that I didn’t qualify for all the discounts. I snapped a photo of the car with the sign on it and asked him if he wanted me to make a thing about this.

      I got the car “as advertised”

      Fukkin Bastards, all of them

      • 0 avatar
        duffman13

        This is a common advertising method though, and always accompanied by fine print, at least when it’s in the paper. They are stacking factory rebates to give you that number; the college student, military member, USAA/AARP/AAA member, and current owner of that brand rebates are all usually $500 a piece. if you’re not all of those, you don’t get the extra $2000 off. You could have figured it out by looking at the manufacturer’s website.

        You got the car as advertised sans fine print by being difficult. Good for you, but it is common and completely legal practice unless they’re combining rebates that don’t stack.

        • 0 avatar
          BigOlds

          I disagree.

          You are correct that the ads include such fine print, but this was a sticker on the windshield (actually, a giant tag hanging from the rear view mirror) with no indication that there were qualifiers to get the discount. It stated exactly as I posted above. And its purpose was to get someone excited enough to begin the process, with the intention of pulling out some of the rugs. If there were qualifiers, the tag should have said so. They would not have capitulated if they had a leg to stand on.

          Are you suggesting that I should feel guilty for not putting up with their deceptive practices?

          I have had very few positive experiences with dealerships.

    • 0 avatar
      kvndoom

      One good thing about buying used, is that when the first owner trades in, none of that crap gets factored into book value. It’s free money for the dealer, but the first owner gets reamed. The equivalent of an expensive aftermarket stereo when it comes to resale value.

      Back in 1999 I fell for the undercoating spiel on a new truck. It added zero dollars, zero cents to the trade-in value. Never again…

    • 0 avatar

      And you did the right thing if you aren’t satisfied. You walked. If enough people walk, they’ll stop doing it.

  • avatar
    PrincipalDan

    “Ruse Control” – dang it, there goes another good band name.

  • avatar

    The dealer sales arrangement is out of control and is an antiquated way of selling product. It is not consumer friendly and is designed to serve the dealership owners. Now if they would only investigate how minorities and sub prime folks are abused by the system either due to their desperate need or ignorance.

    • 0 avatar
      kvndoom

      While I hate to see such abuse as much as you, it’s the “desperate need or ignorance” part that you can’t help. The more we try to save people from themselves, the farther down the drain we go.

      Case in point, out of curiosity I asked the lady who I sold my VW to how much she got for it when it was totaled (I fought the deer, and the deer won). She said “not a dime, because we used it for collateral at a title loan place.” Barring an extreme and sudden financial emergency, you just don’t take out a loan on a paid-off car (no, she didn’t use the $$ for an emergency). Some people dig the hole deeper, and jump back in even when you pull them out.

      • 0 avatar
        bunkie

        ” Barring an extreme and sudden financial emergency”

        One point, one question:

        These are far more common for an awful lot of Americans than one would think.

        Did she disclose the circumstances surrounding the title loan? If not, any judgement you might make is moot.

        I suspect that most people living at the edge of the middle class are gambling all the time, hoping that the dice will come up their way, not out of choice, but out of necessity.

        • 0 avatar
          kvndoom

          She did disclose, and it was a “want money now” and not “need money now.” Something that probably could have been financed in and of itself (can’t say I know their credit worthiness, but I can guess…), but the car was used to get cash to pay for it instead. I’ll leave it at that.

        • 0 avatar
          kvndoom

          To further add, when I met my fiancée she had 2 vehicles that had been paid off but were put down as collateral for *one* loan. She wanted furniture and rugs and drapes and stuff for the house that she and her ex- had been living in.

          The house is long gone (divorce). The loan remained. When the van blew a head gasket and a new engine would cost more than the van was worth, she couldn’t sell the truck because it was only worth half the loan. Her credit was already sh1t because of divorce/bankruptcy so she wound up towing/driving both vehicles to the bank and turning them in. Nothing to show for all that money. Flushed away.

          I counseled her well on the folly of all that. We’ve done great together. :)

          • 0 avatar
            duffman13

            >To further add, when I met my fiancée she had 2 vehicles that had been paid off but were put down as collateral for *one* loan. She wanted furniture and rugs and drapes and stuff for the house that she and her ex- had been living in.

            What?

            Maybe it’s just my good credit, but I haven’t been to a furniture store that didn’t throw 0% financing over a very reasonable term at me when we were going out to buy furniture. None of these places ever made it seem like you needed anything beyond a pulse to get the 0% rate. Why someone would be taking a title loan to buy that sort of stuff is beyond me.

          • 0 avatar
            Toad

            Well, at least her rug matched her drapes.

            Thank you, thank you. Enjoy the show and tip your waitstaff.

      • 0 avatar
        Superdessucke

        We subsidize stupid more and more each day. I wonder how many of our tax dollars went to this.

        With Edmunds, KBB and other tools, it’s pretty hard to get ripped off on a new car nowadays unless you’re dumb as a tree. And if you are that dumb, maybe a financial whippin’ isn’t the worst thing that could happen to you. Paying 40 extra per month for peeling pinstripes for 5 years could teach a valuable lesson.

    • 0 avatar

      Yes, its designed to serve the dealership owners. They’re the ones who made the investment. The “system” is customer friendly enough to retail about 30 million vehicles each year. BUT if you think you have a better way, gather up a group of your buddies, put together some money, and show the world how it should be done. Put your money where you mouth is.

      Perhaps you aren’t familiar with the CFPB’s investigations” into “disparate impact” discrimination? Some of the CFPB’s activities are purely righteous and effective. Others, not so much. All that has to happen now is for members of “protected classes” to receive a membership card so dealers can know who is protected and who isn’t. Then the CFPB needs to tell dealers exactly how they want the protected ones to be dealt with. If they want them to all be treated the same, they need to clear that with the FTC. If they want the protected to all receive the “market price,” they need to allow for a market to actually exist, which it can’t if a substantial portion of the market is somehow removed because it is “protected.”

  • avatar
    mike978

    I would be interested in Ruggles take on this.

    • 0 avatar
      wmba

      I’d like to see it as well. Explain how this sort of thing “benefits” the consumer buying at a good old stealership.

    • 0 avatar
      sproc

      Me too. While it sounds flashy, the judgement amounts stated don’t seem like a whole lot of money in the grand scheme. Plus, I assume that they’re all civil actions, with no actual criminal charges. In many cases, the judgements are probably chalked up to the cost of doing business à la Citibank, and won’t really result in much change for consumers.

    • 0 avatar
      Astigmatism

      “All that extra money made by the dealer through scams like this gets passed on back to the consumer – as savings!!! Tesla won’t be able to discount your car for the $1,700 extra they’re making on the patented mirror defogging treatment.”

    • 0 avatar

      My take is that scurrilous dealers should be tarred and feathered. Someone will tell me if I spelled that correctly.

      Dealers breaking the law should be ratted out by anyone and everyone, including myself. However, pin striping ones inventory and adding addendum stickers is not illegal. It might be stupid, but it isn’t illegal.

      Dealers should adhere not only to the letter of the law, but the spirit. And when they stray, they should be slapped down HARD. Honest dealers don’t need to have to compete with cheaters. I want a level playing field.

      One of my pet peeves is any kind of advertising where the disclaimer is delivered in a different voice and at such a speed that it can’t be understood and it doesn’t seem connected to the ad it belongs to. I’d like the FTC to come down on these ads if they can. New regulation might need to be passed.

      I have MANY pet peeves. I’d like to see sales people treated better. The industry has run off a lot of talent over the last decades. What remains is generally lacking in talent and training. Good people need to get paid or they will find greener pastures. Profit has to be earned to pay them. In the struggle over gross profit the competing entities are consumers, dealers, the dealer’s sales people, and the OEMs. The weak group is the dealer’s sales people, who have been squeezed over the years. And now the industry complains it can’t attract quality sales people. Go figure.

      I’m in NYC for the NYIAS and a couple of industry conferences. JD Power and another group will be telling dealers how they should retail vehicles. This has been going on for 25 years. But “new research” is about to be “revealed.” I can’t wait. Instead of asking people who actually interact with consumers, the researchers interviewed consumers before they went to the showroom, actually went there with them, then interviewed them after their visit. Consumers will answer survey/interview questions differently than they actually behave, something that seems to be lost on the research group. They didn’t control for credit score or degree of trade negative equity.

      Stay tuned.

  • avatar
    Cactuar

    Reminds me of the first vehicle I financed. I got told by the F&I lady that the lender would not lend us the money unless we purchased GAP insurance, which was an extra 1000$ I believe. Not knowing what that even meant back then (like most consumer I would think) I purchased the insurance.

    The day after the deal was done I called my lender to ask if they really requested GAP and they told me they never did that. I called the dealer and canceled the insurance, the next week I received a check for 1000$.

    Stealerships can be so desperate to make a sale that they would employ any tactic it seems. Being a cash-only buyer now (thanks Mr. Ramsey!) I’m glad I don’t have to deal with that financing nonsense anymore.

    • 0 avatar
      duffman13

      The worst part of that is that while GAP insurance is generally a good thing to have, the dealer never tells you that you can usually add it to your auto insurance policy for that express purpose at a significant discount compared to what they’re selling it to you for.

      Case in point, our previous car purchase was a Mazda 3 and we bought GAP insurance for what amounted to $6/month over the life of the loan from the dealer. This time I financed through USAA, who is also my auto insurer and added GAP to my auto policy, since the car was used and we did 100% financing again. This time, the GAP insurance is an is somewhere between $1.50-$2/month on my insurance bill for a car that cost me almost $10k more.

    • 0 avatar

      Many state AG offices hire recent college grads to “shop” dealerships specifically looking for such violations. Practices like telling a borrower they have to buy certain insurances to obtain a loan has been illegal for decades. IF a dealer doesn’t know an employee is doing such stuff, the dealer deserves what happens to them. If they know about it, they deserve much worse.

      • 0 avatar

        You might call ahead to a dealer to ask if their Business Office/F&I people are AFIP certified. If they aren’t, find a dealer where they are. If you find unlawful practices at an AFIP certified store, let AFIP know.

  • avatar
    DenverMike

    Dealers are criminals and sleazeballs. Don’t forget the $H!T they pull in the service dept too.

    The OEMs can bust their backs to make a topnotch product, only to have their dealers kill any chances of repeat buy, or buy in the first place.

    • 0 avatar
      morbo

      I wouldn’t put all my faith the OEMs. Honda gets all kinds of engineering love for being a ‘purer’ car company…. then buys el cheapo airbags for a decade that blow shrapnel in your face. My beloved Chrysler 300C had a teeny, tiny OEM recall, for airbag wiring that, well, wasn’t wired. My lack of faith in Chrysler 1st gen engineering is why I don’t have a blown alternator or PDU: Chrysler undersized the PDU for 2011-2014 LX cars with a (then brand new) V6 and higher end electronics package; I bought the V8 specifically because I don’t trust first generation anything from the OEMs.

      As for the dealers, yeah scumbags pretty much all of them. Apologists and bought shills like Ruggles would say otherwise, but they’re all out to take you for every penny possible. Matt Blatt is near me, Suzuki, Kia, shares a lot with a company (that he probably owns) called ‘Auto Lenders’. In a way more honest I guess; he’s upfront telling you he’s selling you a car loan and not a car.

      Like the man says in Destiny, ‘Watch your back guardian, no one else will.’

    • 0 avatar

      Yup, dealers must be ruining things for the OEMs, to the tune of 16 million new vehicles per year.

  • avatar
    jpolicke

    Why is the FTC pursuing enforcement actions in Ontario & B.C.? Is my flag missing a couple of stars all of a sudden?

    • 0 avatar
      Sigivald

      “The FTC-led campaign involved 32 law enforcement agencies in the United States and Canada”

      It isn’t, but it’s coordinating with Canadian law enforcement.

      I don’t know why they bothered to coordinate with them on this, in that I can’t see how it affects the US market significantly or how anyone benefits for the fact of coordination.

      But they’re not actually enforcing anything in Canada, at least.

      • 0 avatar
        Lou_BC

        My local Chrysler dealer was nailed for misleading advertising and sales tactics. This wasn’t the first time but this time around it ended up in the principal “leaving under mutual agreement”. The dude also withdrew his name from a citizen of the year nomination. My take on it was “leave or see you in court”.

        A multinational approach in the case of automotive dealerships would be necessary because there would be some large chains with dealerships on both sides of the border. It would be necessary to trace practices back to the head office if that happened to be the source.

  • avatar
    NoGoYo

    I wonder if these two scuzzy dealerships in PA that are already being sued by the PA attorney general are part of this. I mean, I would never trust a car lot called “DriveHere.com” or CarVision.com”, but sadly some people did.

    • 0 avatar
      NoGoYo

      http://philadelphia.cbslocal.com/2015/03/25/pa-attorney-general-sues-drivehere-com-car-vision-and-carvision-com/

      It won’t let me edit my comment, but here’s a news link.

  • avatar
    tjh8402

    When I was shopping, Cory Fairbanks was one of the dealers that absolutely refused to quote me an OTD price on a car, no matter how many times I asked. They were very insistent about getting me down to the dealer, instead of working over the phone, text, and email. They also advertise a “lifetime” warranty on their cars when in fact its only a lifetime powertrain when you read the fine print, which is something I found deceptive. I’m sure there’s plenty of other catches in it as well.

    • 0 avatar
      PrincipalDan

      The local Chrysler, Jeep, Dodge dealer (who was taken out back and shot during the bankruptcy dealer cull) was notorious for never naming what the price of the car was only trying to focus on the monthly payment. Their location sat empty for almost two years before Chrysler awarded the franchise rights to a different corporation that had a solid track record with them. Dealer practices have improved considerably.

  • avatar
    Counterpoint

    What??? I thought we needed independent dealers to save consumers from the evil depredations of Tesla. Say it isn’t so!

  • avatar
    ihatetrees

    I once asked a local $hit-heel Toyota dealership what harm there would be in a nationwide TV campaign promoting mid-level Camry’s for $21K (+ tax + title).
    He whined about ‘flexibility’ and hurting local dealership jobs. In other words, his ability to scam uninformed consumers would suffer.
    There are honorable new car dealers, but most are unethical losers protected by semi-corrupt state laws and politicians.

    Check out these vermin dealers on the left coast:
    http://www.bizjournals.com/sanjose/news/2015/03/24/carmax-faces-fight-from-san-jose-new-car-auto.html?page=all

  • avatar

    Carmax has its own issues.

    And YOU obviously don’t understand the issues regarding franchise new car dealers. Dealers are protected be the agreements they have with their OEM. All the state law stuff mostly supports that.

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