Dealers charged with altering application info

The Federal Trade Commission announced it has filed a complaint charging four auto dealers operating in Arizona and New Mexico with a range of illegal activities, including falsifying consumers’ income and down payment information on vehicle financing applications and misrepresenting important financial terms in vehicle advertisements. The complaint is the FTC’s first action alleging income falsification by auto dealers.

The Commission charges that, during the sales process, the dealers asked consumers to provide personal information—including name, address, and monthly income—and told consumers they would submit the information to financing companies. According to the complaint, however, in many cases the dealers falsely inflated the numbers, making it appear that consumers had higher monthly incomes than they really did. The dealers often inflated the amount of a consumer’s down payment as well, according to the complaint. As a result, financing companies extended credit to consumers who defaulted at a higher rate than qualified buyers. Many of the affected consumers are members of the Navajo Nation.

The Commission also alleges that representatives of the dealers often prevented consumers from reviewing the income and down payment information on the forms, such as by rushing consumers through the process of reviewing and signing the financing applications, having consumers fill out the forms over the phone, and failing to give them the income and down payment portion of the application before they signed.

The FTC also alleges that the dealers' advertising deceived consumers about the nature and terms of financing or lease offers, advertising discounts and incentives without adequately disclosing limitations or restrictions that would disqualify many customers, and that they posted social media ads that failed to disclose required terms. The dealers are charged with violating the FTC Act, the Truth in Lending Act, and the Consumer Leasing Act. The FTC is seeking an injunction barring the defendants from such practices in the future.