FTC Settles Case Against Advertiser of Vehicle Purchase Add-Ons

FTC

FTCOn May 15, the Federal Trade Commission (FTC) announced that a settlement was reached against “a company that deceptively advertised its add-on biweekly auto payment plan” for allegedly violating the FTC Act, 15 U.S.C. Section 45, et seq. The Complaint alleged that the payment liaison company deceptively pitched consumers a bi-weekly auto payment program by failing to disclose that substantial fees for its services often cancelled out any actual savings. By paying bi-weekly rather than monthly, borrowers who signed up for this add-on service ended up making 13 regular monthly payments a year instead of 12. The company would send the borrowers’ payments to the dealership on behalf of the borrower, but was targeted by the FTC for allegedly failing to disclose its fees of over $700 over the course of a typical 5-year auto loan. According to the Consent Order, “depending on consumers’ principal amount, interest rate, and number of payments, in many instances consumers paid more money than they would have under a traditional monthly payment program.” The Consent Order prohibits the company from making certain alleged misrepresentations regarding savings and costs of its add-on programs. The company also agreed to reimburse over $1.5 million in fees to past customers and to waive certain fees for current customers totaling almost $1 million.