Law Enforcement Crackdown on Consumer Fraud

Law enforcement has begun to rigorously enforce consumer fraud statutes. The Federal Trade Commission and multiple law enforcement partners have enforced laws protecting consumers in a wide ranging scope, including deceptive advertising, auto loan fraud and deceptive marketing.

The reports of law enforcement goals make the point that car and loan ads must be truthful and clear, and that dealers must be honest. One US Attorney has been quoted as saying that we face "growing fraud and other deceptive practices in auto sales and financing . . . ." Criminal cases have been brought in Birmingham, Alabama, where the US Attorney General's fraud enforcement task force is working with other law enforcement to attempt to prevent deceptive advertising, loan application fraud, odometer fraud, and deceptive marketing of car title loans.

Auto dealers are subject to scrutiny under the Dodd-Frank Act, and the FTC has brought actions involving loan practices involving sales, leases and finance charges on autos. These include warranty issues, payment programs, GAP insurance, credit life insurance, road service, theft protection, deceptive advertising and undercoating. To date, action has been pursued in California, Alabama, Florida and multiple locations in New Jersey. In these cases, the defendants have agreed to settle FTC charges, with the settlements including refunds to consumers, fines paid to the FTC and fee waivers on transactions. Pending settlements seek to prohibit the misrepresentation of purchase costs or other material facts relating to price, sale, financing or leasing and discounts, rebates or incentives unless available to consumers. Temporary injunctions have issued halting the charge of upfront fees in the negotiation of auto loans. A permanent injunction is being sought to stop deceptive practices and to require a return of ill-gotten gains to consumers.