Massachusetts AG Penalizes Dealer for ‘Deceptive Marketing Tactics’

About two months after federal officials ordered five stores to halt certain advertisements, a family-owned franchised dealership in business for more than four decades agreed to pay $225,000 in restitution, civil penalties and attorney fees to resolve allegations that it utilized “deceptive marketing tactics.”
Massachusetts Attorney General Martha Coakley announced the consent judgment against McGee Wholesale Cars, McGee Motorcars and McGee Chevrolet, which has rooftops in Hanover and Raynham.
According to the attorney general’s complaint filed late last week in Suffolk Superior Court, McGee placed advertisements online and in print publications that misrepresented the actual prices of vehicles.
State officials said often the advertisements listed “dealer’s cost” rather than the actual retail price, creating what they contend was the practice of misleading buyers into believing the vehicle was being offered at low prices that the dealership would not meet.
The complaint further alleges that on several occasions, dealership employees asked consumers to sign incomplete documents with the understanding that they would be completed using the negotiated vehicle price, and later entered information which called for a higher price.
Employees also allegedly charged consumers fees for unwanted or undisclosed warranties and services, according to the attorney general’s office.
The consent judgment ordered McGee to pay $125,000 in consumer restitution, $85,000 in civil penalties and $15,000 to cover attorney fees and costs. The judgment also prohibits deceptive marketing and sales practices.
Under the settlement, officials indicated the dealership also will implement a formal training program for all staff members involved in the sales or financing to educate them on proper compliance with state regulations.
Coakley’s office said the dealership cooperated with the investigation and, once the investigation was initiated, the store implemented managerial and procedural changes to address issues raised by the investigation.
McGee denied all allegations of wrongdoing, the attorney general said, though the dealership agreed to resolve the matter with the Coakley’s office.
“We are pleased that the company has agreed to provide restitution to consumers and has taken important steps to make sure that misleading business practices do not occur in the future,” Coakley said.
According to the store website, the McGee dealerships have been doing business for more than 41 years. Robert McGee and Jamie McKay are the owners, and the general manager is Imed Chahed.
Back in March, the Federal Trade Commission revealed steps that seemed to be cracking down on false or exaggerated advertising, as it recently called into question ads from a group of five dealerships around the country.
The FTC charged that the ads — which ran on the dealers’ websites, as well as on sites such as YouTube.com — “deceived consumers into thinking they would no longer be responsible for paying off the loan balance on their trade-in, even if it exceeded the trade-in’s value.”
“Instead, 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,” FTC officials continued.
Basically, the FTC contends that in these ads, the dealerships promised to pay off a consumer’s trade-in no matter what the consumer owed on that particular unit.
And the story that evolved can perhaps serve as a cautionary tale to rooftops all over the U.S.
The dealers named in the FTC’s complaints, Billion Auto, Inc., in Sioux Falls, S.D.; Frank Myers AutoMaxx, LLC, in Winston-Salem, N.C.; Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Conn., respectively, and which advertise jointly; and Ramey Motors, Inc., in Princeton, W.Va., all agreed to the FTC’s orders that require them to stop running ads.