The nationwide investigation, dubbed Operation Steer Clear, found dealerships violated several consumer protection acts, including the FTC Act and Consumer Leasing Act. The dealerships misrepresented monthly payments, car costs and leasing fees in print, Internet and video ads.
One dealership, Nissan of South Atlanta, advertised low monthly payments that were, in fact, temporary 'teaser' payments. A Ford dealership in Fowlerville, Mich., violated the FTC Act by sending consumers mail notification of a sweepstakes prize when they had not won anything. In the settlements, which have not yet been finalized but been accepted by the FTC, the dealerships agree to advertise in accordance with FTC guidelines. A tenth dealerships, Courtesy Auto Group, has yet to settle with the FTC.
In a statement, an FTC spokesperson said more dealerships would face penalties.
The crackdown is important, as many car shoppers rely on dealers to be upfront with correct information. There are many way even seemingly scrupulous car dealers can swindle customers. Here are a few tips for staying ahead of the dealers:
Forget Payments, Talk Price. Dealers will try selling you the car that fits what you can afford each month, but that cost more than you bargained for. Taking out longer loans for more expensive cars will give you a lower monthly payment, but you'll also be making that payment for much longer. You can even find yourself underwater on a car loan.
Control Your Loan. Dealers stand to make big money off the interest from your loan alone, which doesn't give them incentive to give you the best deal. Getting pre-approved for a loan from a bank or credit union before you walk in the door will let you know exactly how much you can afford and often at a better APR then the dealership can offer.
Avoid Advertised Car Deals. Even when the ads are on the up and up, they're not to be wholly trusted. Dealerships will advertise their very best deals, but often have no intention of keeping that deal in stock to meet demand. Don't be enticed by fly-by-night deals. Do the research on what car you want and what it should cost. Starting armed with information makes you a savvy consumer.
Don't Feel Pressured. Don't let a motivated salesperson push you into a car. Buy the car when you're ready, not the dealership. If a dealership is putting the heat on you to buy too much car, it may not be the type of dealership you want to do business with.
Keep Clear Of Add-ons. There's always another product or warranty or insurance plan the dealer wants to sell you, but these can add up fast and aren't worth the money.
The best rule of thumb for car shoppers? If the terms of a lease or purchase seem too good to be true, it probably is. Check out more of our tips and strategies for new and used-car shopping here.