The New York City Department of Consumer and Worker Protection announced that it has sued two companies that operate used car dealerships in New York City for engaging in deceptive and unlawful trade practices. In its lawsuits alleging that Kings Autoshow and JF Motors committed thousands of violations of the City's laws and rules, the DCWP is seeking restitution for consumers, civil penalties, and revocation of their used car dealer licenses.  The DCWP is also seeking to hold the companies' owners, and the general manager of one of the dealerships, personally liable for the alleged violations. 

As part of the announcement of the lawsuits, DCWP Commissioner Peter A. Hatch said, "These dealerships repeatedly victimized their customers and violated consumer protection laws.  We are taking action to a put a stop to their exploitative practices, obtain restitution for the consumers they harmed, and to revoke their licenses so they cannot do this again.”

In the case against Kings Autoshow, DCWP alleged that the company used deceptive advertising to lure consumers to its dealerships and then sold cars at well above the advertised prices.  DCWP said that the company's dealerships persistently made false claims such as, "the price you see is the price you pay" and "no dealer fees."  DCWP also alleged that the dealerships falsely advertised accessories, warranties, and add-ons that did not come with the advertised vehicles.  In addition, DCWP alleged that the company lured consumers with lower credit scores into its dealerships by promising "guaranteed approval" for financing and pre-approval from a fake finance company. 

The lawsuit against JF Motors also alleged that the company sold its cars for prices at well above the prices advertised.  DWCP also alleged that the company's dealerships falsely advertised cars as "certified pre-owned" by the National Independent Automobile Dealers Association, even though the company did not conduct the required inspection, give buyers the promised warranty, or provide the required vehicle history report.  In addition, DCWP charged that the company inflated car prices by adding fake fees.  

While these enforcement actions are targeting what appear to be some pretty extreme practices, there are some important takeaways here for car advertisers and others:

  • If you advertise that a product is available for a certain price, you'd better sell it for that price.  If there are additional amounts that will be charged, you should be up front about that in the advertising.
  • Don't mislead people about what features and options are included with the product.  If you're advertising a price, consumers should be able to buy the product that you've shown or described for that price, unless you've made it clear what's not included -- or what the additional charges will be. 
  • Don't make claims like "no additional charges" or "no fees" when, in fact, there are additional charges or fees -- even if you've disclosed them in the fine print.
  • When advertising consumer credit, in addition to ensuring that you're complying with the myriad of rules that apply here, if the advertised credit terms are only going to be available to a very limited subset of consumers, it's important to explain that.  
  • If you're advertising a product as "certified," you'd better make sure that it is, in fact, certified, and that it was properly certified.  It's also important to be clear about whether the certification was a self-certification or whether it was awarded by a third party.

Finally, it often comes as a surprise to companies with retail stores in New York City, as well to as national advertisers, that New York City has its own set of detailed consumer protection rules and licensing requirements.  If you're operating or advertising in New York City, don't forget to make sure that you've got any required licenses, and that you're keeping the City's specific advertising rules in mind.