Greenway Auto Group settles with FTC over car-price allegations surfacing in March
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Just three days after the Federal Trade Commission dismissed its complaint against Asbury Automotive Group over allegations of “payment packing,” the regulator on Thursday secured a settlement with Greenway Auto Group.
The settlement involves another lawsuit alleging Greenway advertised prices that “were thousands of dollars below what it actually charged,” according to the FTC, which added the dealer group has agreed that its price advertisements will “prominently include the actual price a consumer must pay for a vehicle, excluding only charges the government requires consumers to pay.”
In an industry message distributed on Friday, Ignite Dealer Compliance Group said, “This is why we’ve been telling dealers that the FTC’s March guidance needs to be taken seriously. The warning period is over. Enforcement has begun.”
According to the complaint, Greenway inflated the amount it charged the “overwhelming majority of” consumers by tacking on to the advertised price mandatory fees, packages and penalties.
In a March letter, the FTC said its Bureau of Consumer Protection warned Greenway about its misleading advertising practices, advising the company to ensure that the “price consumers see in advertising is the actual price they will pay.”
According to the complaint, however, the FTC said Greenway responded by “adding false assurances of price transparency to their websites while continuing to advertise vehicles for thousands less than their actual prices.”
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The complaint alleged Greenway charged consumers more than $3,350, on average, over the advertised price in more than 92% of transactions.
The fees Greenway allegedly imposed on top of the advertised price included administrative fees, dealer fees, delivery fees and processing fees.
Officials said Greenway’s advertised prices at times also allegedly reflected conditional rebates and discounts available only to a subset of consumers.
Furthermore, the FTC alleged Greenway lured consumers into dealerships with scam mailers representing that recipients had won thousands of dollars in cash prizes that could be collected at a Greenway dealership, but the prizes were not real.
In addition to requiring price transparency and prohibiting deceptive prize mailers, the proposed order prohibits specific misrepresentations, including whether charges, fees, taxes, products or services are optional or required and whether any type of or source for financing is required.
“Truthful advertising in the auto industry is vital because purchasing a car is one of the most significant financial decisions consumers make,” said Christopher Mufarrige, who is director of the FTC’s Bureau of Consumer Protection.
“Consumers can’t make informed choices when the actual price is hidden. Price transparency is critical to a properly functioning market and is a top priority for the Trump FTC,” Mufarrige added in a news release.
The FTC vote authorizing the staff to file the complaint and stipulated final order was 2-0. The FTC filed the complaint and stipulated final order in the U.S. District Court for the Middle District of Florida, Orlando Division.
Officials pointed out stipulated orders have the force of law when approved and signed by the District Court judge.