Ahh, the dog days of summer. Hot dogs. Balloons. Face painting. Whatever it takes to get folks on the lot, you’re up for it. Right?
Maybe not, if you ask the New York Mitsubishi dealer who recently got a visit from the Attorney General’s office.
Attorney General Andrew M. Cuomo’s office recently announced that a car dealer in New York will have to pay $115,000 in restitution and $35,000 in penalties and costs due to a slew of misdeeds, most of which stemmed from its “Dash for Cash” marketing program.
According to the AG’s press release, the New York dealer will pay customers for “persistently using misleading promotions intended to lure them into the dealership.” Once “baited” into the dealership, the customers were subject to other fraudulent and unfair sales practices.
So, what did the dealership do to get the AG’s office in a fit?
Allegedly, the dealership mailed a scratch-off ticket called “Dash for Cash” to thousands of Nassau County consumers. The scratch-off ticket claimed that customers could win a cash prize, a free vehicle, a vacation, a free gas voucher or a $1,000 shopping spree. A winning ticket contained three symbols in a row but it did not explain, what, if anything, the consumer won. Instead, the scratch-off required the customer to bring the ticket to the dealership in order to claim the prize.
Once at the dealership, said the AGs office, the customers learned that almost everyone won the vacation or shopping spree. However, because of “blackout” periods or expenditure requirements, including shipping and handling costs, the prizes had minimal value.
As if that wasn’t enough, the dealership also allegedly deceived customers by:
• Getting signatures from customer on sale and financing documents while leading customers to believe that they were filling out paperwork for vehicles they had won as part of the “Dash for the Cash” sweepstakes
• Offering false discounts off the sales price of cars by selling the cars at a higher retail sales price which essentially nullified the value of the discount offered
• Having customers sign documents with blank terms, and then later filling the papers out with terms that were not agreed upon
• Failing to give all necessary documents to customers at the time of purchase
• Promising consumers that they could refinance at a better interest rate after making several car payments, or promising to pay one or more months of the insurance payments for the vehicle—and then reneging on those agreements
• Inserting additional cost items without consumers’ knowledge or consent, including VIN etching, service warranties, theft deterrent systems, GPS devices and other expensive options
To top it all off, the dealership repeatedly sold consumers used cars without informing the customers that the vehicles had been used as rental cars, in violation of New York law.
Now, there are a couple of things that struck me in this press release.
First of all, it struck me how there is no shortage of proof that AGs take dealer advertising seriously. The press release noted that the AG’s office received over 50 complaints from citizens of New York, and is urging other harmed citizens to step forward and be counted. Over 50 consumers versus one car dealer—it’s an AG no-brainer.
Second, if these allegations are true, this dealer violated the number one rule in advertising—tell the truth, tell the truth, and tell the truth. (The rule is so good I have to say it three times!)
Third, if the press release was any indication, it sounds like compliance wasn’t particularly high on this dealer’s priority list. But, had this dealership been compliance-savvy, it would have known that most states regulate sweepstakes and other games of chance. Some require registration, while others impose disclosure and other substantive requirements. It is very likely that the dealer featured in this AG press release was aware of none of those things.
Finally, many of these violations, if true, were not technical violations of nit-picky statutes and regulations. Most of these violations involved the dealer engaging in deceptive, low-ball behavior. In other words, the dealership’s tactics didn’t pass the “smell test,” and most of the trouble from the AG’s office could have been avoided if someone had bothered to give this sales event a sniff.
So, a word to the wise in dealer-ville! When you’re whipping out those hotdogs and balloons this summer, don’t let the ABCs of advertising turn into an AG nightmare
Vol. 2, Issue 4