Trade-In Scam, FTC Crackdown

From the National Law Journal:
The ads sound enticing – car dealerships that  promise to pay off your trade-in, no matter what you owe.
According to the Federal Trade Commission, the promotions are also not necessarily  true.
Five car dealerships around the country have agreed to stop running
such ads to settle FTC charges, the agency announced March 14. The cases are the
first of their kind for the FTC, which alleges that the payoff ads were false or
deceptive in violation of Section 5 of the FTC Act.
“Buying a new car or truck is a major financial commitment, and the last thing consumers need is to
be tricked into thinking that a dealer will ‘pay off’ what they owe on their
current vehicle, when they really won’t,” said David Vladeck, director of the
FTC’s Bureau of Consumer Protection, in a news release.

For example,  Connecticut-based Key Hyundai and Hyundai of Milford ran ads on You Tube
stating, “I want your trade no matter how much you owe or what you’re driving.
In fact I’ll pay off your trade when you upgrade to a nicer, newer vehicle.”

Or take Ramey Motors in East Princeton, WV, which promised,
“Ramey will pay off your trade no matter what you owe…even if you’re upside down, Ramey will pay off your trade.”

In reality, according to the FTC,  the dealers rolled the negative equity into the consumer’s new vehicle loan or,
in the case of one dealer, required consumers to pay it out of  pocket.

The settlements bar the dealers from making similar deceptive representations in the future, but do not include monetary penalties, nor do the car dealers admit wrongdoing.