9523204 UNITED STATES OF AMERICA In The Matter of LOU FUSZ AUTOMOTIVE NETWORK, INC., a corporation, and LOUIS J. FUSZ, JR., individually and as an officer of the corporation. DOCKET NO. C-3780 COMPLAINT The Federal Trade Commission, having reason to believe that Lou Fusz Automotive Network, Inc., a corporation, and Louis J. Fusz, Jr., individually and as an officer of the corporation ("respondents" or "Lou Fusz”), have violated the provisions of the Federal Trade Commission Act, 15 U.S.C. §§ 45-58, as amended, the Consumer Leasing Act, 15 U.S.C. §§ 1667-1667e, as amended, and its implementing Regulation M, 12 C.F.R. § 213, as amended, and the Truth in Lending Act, 15 U.S.C. §§ 1601-1667, as amended, and its implementing Regulation Z, 12 C.F.R. § 226, as amended, and it appearing to the Commission that this proceeding is in the public interest, alleges: 1. Respondent Lou Fusz Automotive Network, Inc. is a Missouri corporation`with its principal office or place of business at 925 North Lindbergh Blvd., St. Louis, Missouri 63141. Respondent offers automobiles for sale or lease to consumers. 2. Respondent Louis J. Fusz, Jr. is an officer of the corporate respondent. Individually or in concert with others, he formulates, directs, or controls the policies, acts, or practices of the corporation, including the acts or practices alleged in this complaint. His principal office or place of business is the same as that of Lou Fusz Automotive Network, Inc. 3. Respondents have disseminated advertisements to the public that promote consumer leases, as the terms "advertisement" and "consumer lease" are defined in Section 213.2 of Regulation M, 12 C.F.R. § 213.2, as amended. 4. Respondents have disseminated advertisements to the public that promote credit sales and other extensions of closed-end credit in consumer credit transactions, as the terms "advertisement," "credit sale," and "consumer credit" are defined in Section 226.2 of Regulation Z, 12 C.F.R. § 226.2, as amended. 5. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act,15 U.S.C. § 44. LEASE ADVERTISING 6. Respondents have disseminated or have caused to be disseminated consumer lease advertisements (“lease advertisements”) for automobiles in the print media, including but not necessarily limited to the attached Exhibits A through F. These lease advertisements contain the following statements:
[A fine print statement at the bottom of the ad states, “*36 month, 10% down cash or trade. 5.97% Mo. tax, personal property tax included. Only to qualified buyers.”] (Exhibit A)
[A fine print statement at the bottom of the ad states, “*39 mo. lease, 36,000 mi., Stock #75015. First month payment taxes & lease fee not included.”]
[A fine print statement at the bottom of the ad states “36 month closed end lease. 10% down cash or trade. First month’s payment and security deposit due at time of lease. Taxes and fees not included. 12,000 mi. per year.”] (Exhibit B)
[A fine print statement at the bottom of the ad states, “*36 mo. lease, 12,000 miles per year, all taxes included.”] (Exhibit C)
[A fine print statement in the center of the ad states, “30 month closed end lease. 10% down cash or trade. 1st month’s payment, refundable security deposit and license fees due at time of lease. 10,000 miles per year. Residual value $11,644. Taxes excluded.”] (Exhibit D)
[A fine print statement at the bottom of the ad states, “*All payments due at delivery, includes $1000 customer cash & $1000 cap. reduction. Taxes not included.”] (Exhibit E)
[A fine print statement at the bottom of the ad states, “**12 mo. lease Pathfinder, 24 mo. Altima, 36 mo. 240 SX & 3002X. 10% down cash or trade. Based on 5.975% MO tax, 15,000 mi per year.”] (Exhibit F) FEDERAL TRADE COMMISSION ACT VIOLATIONS Count I: Misrepresentation of Inception Fees 7. In lease advertisements, including but not necessarily limited to Exhibit A and the Sunfire Coupe offer in Exhibit B, respondents have represented, expressly or by implication, that the amount stated as "down" is the total amount consumers must pay at lease inception to lease the advertised vehicles. 8. In truth and in fact, the amount stated as "down" in respondents’ lease advertisements is not the total amount consumers must pay at lease inception to lease the advertised vehicles. Consumers are required to pay significant amounts at lease signing, including but not limited to one or more of the following: a downpayment, security deposit, lease fee, first month’s payment, and taxes. Therefore, respondents' representation as alleged in Paragraph 7 was, and is, false or misleading. 9. Respondents' practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). Count II: Failure to Disclose Adequately Inception Fees 10. In lease advertisements, including but not necessarily limited to Exhibits A through F, respondents have represented, expressly or by implication, that consumers can lease the advertised vehicles at the terms prominently stated in the advertisements, including but not necessarily limited to the monthly payment amount and/or amount stated as “down.” 11. These lease advertisements do not adequately disclose additional terms pertaining to obligations at lease inception, including but not necessarily limited to one or more of the following charges: a required downpayment, security deposit, lease fee, first month's payment, and taxes. 12. These additional terms would be material to consumers in deciding whether to visit respondents’ dealership and/or whether to lease an automobile from respondents. The failure to disclose adequately these additional terms, in light of the representation made, was, and is, a deceptive practice. 13. Respondents' practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). Count III: Misrepresentation of Lease Terms Actually Available 14. In lease advertisements, including but not necessarily limited to Exhibit A, respondents have represented, expressly or by implication, that consumers can lease the advertised vehicles at the advertised terms, including but not limited to the monthly payment amount and amount stated as “down.” 15. In truth and in fact, respondents have not offered the advertised vehicles at the advertised lease terms. Therefore, respondents’ representation as alleged in Paragraph 14 was, and is, false or misleading. 16. Respondents' practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). Count IV: Misrepresentation of One Payment Lease Plans 17. In advertisements for Lou Fusz's “one payment” lease plan, including but not necessarily limited to Exhibit E, respondents have represented, expressly or by implication, that consumers can lease the advertised vehicles by making equal monthly payments for a specified lease term. 18. In truth and in fact, under Lou Fusz's “one payment” lease plan, consumers must pay all lease payments at lease signing. Therefore, respondents' representation as alleged in Paragraph 17 was, and is, false or misleading. 19. Respondents' practices constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a). CONSUMER LEASING ACT AND REGULATION M VIOLATIONS Count V: Failure to Disclose Required Information 20. In lease advertisements, including but not necessarily limited to Exhibits A through F, respondents have stated a monthly payment amount, the number of required payments, and/or an amount “down.” 21. These lease advertisements have failed to disclose the following items of information required by Regulation M: the total amount of any payment such as a security deposit or capitalized cost reduction required at the consummation of the lease or that no such payments are required; the total of scheduled payments due under the lease; a statement of whether or not the lessee has the option to purchase the leased property and at what price and time or, in lieu of disclosure of the price, the method of determining the purchase-option price; and a statement of the amount or method of determining the amount of any liabilities the lease imposes upon the lessee at the end of the term. 22. Respondents' practices have violated Section 184 of the Consumer Leasing Act, 15 U.S.C. § 1667c, and Section 213.5 of Regulation M, 12 C.F.R. § 213.5(c). Count VI: Failure to Make Advertised Terms Usually and Customarily Available 23. In lease advertisements, including but not necessarily limited to Exhibit A, respondents have represented, expressly or by implication, that consumers can lease the advertised vehicles at the advertised terms, including but not limited to the monthly payment amount and amount stated as “down.” 24. Respondents have not usually and customarily offered the advertised vehicles at the advertised lease terms. 25. Respondents' practices have violated Section 213.5(a) of Regulation M, 12 C.F.R. § 213.5(a). CREDIT ADVERTISING 26. Respondents have disseminated or have caused to be disseminated credit sale advertisements ("credit advertisements") for automobiles in the print media, including but not necessarily limited to the attached Exhibit F. These advertisements contain the following statements:
[A fine print statement at the bottom of the ad states, “*To qualified buyers, 24 mo. term, special rates on 24, 36 and 48 mo.“] (Exhibit F) TRUTH IN LENDING ACT AND REGULATION Z VIOLATIONS Count VII: Failure to Disclose Required Information 27. In credit advertisements, including but not necessarily limited to Exhibit F, respondents have stated the number of payments or period of repayment as terms for financing the purchase of the advertised vehicles. 28. These advertisements have failed to disclose the following items of information required by Regulation Z: the amount or percentage of the downpayment and the monthly payment amount. 29. Respondents' practices have violated Section 144 of the TILA, 15 U.S.C. § 1664, and Section 226.24(c) of Regulation Z, 12 C.F.R. § 226.24(c). THEREFORE, the Federal Trade Commission this fifth day of January, 1998, has issued this complaint against respondents. By the Commission, Commissioner Thompson and Commissioner Swindle not participating. Donald S. Clark SEAL: [Exhibits A-F are attached to paper copies of the complaint, but are not available in electronic form.] |