Car Dealerships Settle With FTC Over Misleading Ads, Fake Reviews

Nine car dealerships in California have agreed to pay $3.6 million to settle charges that they duped consumers with tactics that include running misleading ads about financing and posting phony online reviews, the Federal Trade Commission said Tuesday.

The companies will also agree to refrain from using deceptive ad tactics in the future. Acting FTC Chairwoman Maureen Ohlhausen dissented from the decision to approve the settlement. She didn't provide a reason for her dissent.

If accepted by a judge, the proposed settlement will resolve a case brought by the FTC last October, when the agency accused nine car dealerships and their owners of engaging in a host of unfair and deceptive practices.

The FTC alleged that the businesses targeted consumers with poor credit and made false ad claims about car financing terms. In one example offered by the agency, the dealership Covina Chevrolet allegedly ran ads offering to lease 2015 Chevrolet Camaro LS for $89 per month. But according to the complaint, people could only obtain the $89 per month lease if they met other requirements -- including currently renting or owning a General Motors car.

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The complaint also included allegations that the businesses posted fake reviews on sites including Facebook, Google and Yelp. "Defendants have received numerous negative reviews on online websites complaining about defendants’ deceptive and unfair practices," the FTC alleged in papers filed in U.S. District Court for the Central District of California. "In numerous instances, defendants and defendants’ employees have posted positive, five-star reviews of the dealerships on these websites that deceptively purport to be objective or independent."

The FTC alleged that at least 13 five-star Facebook reviews for one of the dealerships -- Kia of Downtown -- were posted by the company or its agents.

Kia of Downtown also allegedly populated its own site with reviews that weren't genuine. One of those reviews, allegedly written by an employee, praised the dealership as "truly exceptional."

"If you have any issues you can just contact the dealership to speak to a manager and they will help resolve any issue you might have," that review continued. "They are super helpful and they care about their clients a lot."

After another dealership -- West Covina Nissan -- got bad reviews on Yelp, the dealership's Internet manager, his wife and another manager allegedly posted five-star reviews to the site.

The other dealerships named in the complaint include Universal Nissan, Glendale Nissan/Infiniti, Mercedes-Benz of Valencia, West Covina Toyota, Sage Covina Chevrolet, Sage Pre-Owned and Sage Hyundai.

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