The Washington State Attorney General’s Office announced in mid-November that the owners of a car dealership will pay penalties and attorney’s fees to settle allegations by the Attorney General’s Office of deceptive sales and advertising practices. As usual in enforcement actions like this one, the owners did not admit any wrongdoing, but agreed to comply with the law.

The AG’s Consumer Protection Division filed a complaint and consent decree with RHLI, Inc., the owner of Dewey Griffin Buick-GMC-Subaru, alleging that RHLI “power booked” loans (the AG’s term—these were almost certainly retail installment contracts, and not loans) by misrepresenting the value of vehicles to banks. “Power booking” involves a dealer listing phantom options such as sunroofs, luggage racks, sport packages, etc., in order to qualify customers for credit.

“A dealer is prohibited by law from fudging or making misrepresentations in loan documents,” Assistant Attorney General Mary Lobdell said. “As we unfortunately witnessed in the housing meltdown, misleading or inaccurate documents can have terrible consequences for borrowers and lenders alike.”

The AG’s Office made a series of additional accusations, all denied by RHLI, but which were resolved by the settlement including:

·         Creating a false sense of urgency in advertisements, such as “Emergency Sell-Off” in violation of state law;

·         Failing to disclose conditions or restrictions related to sales offers by, for example, sending out mailers advertising vacation packages with each test drive without also mentioning that the prize required the payment of taxes and fees along with other restrictions;

·         Failing to comply with the Truth in Lending Act;

·         Misleading consumers with deceptive savings by advertising “40 percent off original MSRP” for used vehicles when the MSRP is not the industry standard for pricing used vehicles;

·         Failing to clearly and conspicuously disclose the number of vehicles available at the advertised price in close proximity to the offered price;

·         Violating the Promotional Advertising of Prizes Act by misrepresenting prizes through, for example, a “Match and Win” sales event that offered a $300 gas card that was actually a voucher requiring a $5.00 redemption fee along with the monthly collection of $100.00 of gas receipts to FreeBeeGas.com in return for a $25.00 gas card (unknown to Dewey Griffin, FreeBeeGas.com was a fictitious name used by Tidewater Marketing who had its doors closed by the Florida Attorney General for deceptive practices); and

·         Advertising merchandise as “free” when in fact the item was not free, but included in the negotiated price of a vehicle, in violation of Federal Trade Commission guidelines on advertising as well as industry standards.

As a result of the settlement, RHLI, Inc. agreed to pay penalties of $100,000 with $90,000 suspended, $40,000 in attorney’s fees and $1,345.15 in costs, for a total judgment of $51,345.15. You can bet your alligator briefcase that the dealership wrote a hefty check to its own lawyer.

The lesson here for dealers? First, remember that this dealer admitted no wrongdoing. Nevertheless, it is instructive to look at the AG’s list of allegations above. If the AG staff folks pay a call on your dealership, you can bet that these items will be on a checklist of things that they are looking for in your advertisements and transaction documents.

Do any of these practices sound uncomfortably familiar? If so, you might want to start a little housekeeping project before the law arrives.

Nicole Munro is a partner in the Maryland office of Hudson Cook, LLP. She represents DMS providers, forms printing companies, dealers, sales finance companies, and lenders engaged in motor vehicle finance transactions. She can be reached at 410-865-5430 or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Copyright CounselorLibrary.Com, 2012, all rights reserved. This article will appear in SpotDelivery. Single publication rights only, to Dealer Marketing Magazine. HC# 4829-8370-9966 (1/12). For information, call 410-865-5400 or visit www.counselorlibrary.com.

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