9723191 UNITED STATES OF AMERICA In The Matter of RUBIN POSTAER AND ASSOCIATES, INC., a corporation. DOCKET NO. C-3794 COMPLAINT The Federal Trade Commission, having reason to believe that Rubin Postaer and Associates, Inc., a corporation ("respondent" or "Rubin Postaer"), has violated the provisions of the Federal Trade Commission Act, 15 U.S.C. §§ 45-58, as amended, and 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 it appearing to the Commission that this proceeding is in the public interest, alleges: 1. Respondent Rubin Postaer and Associates, Inc. is a California corporation with its principal office or place of business at 1333 Second Street, Santa Monica, California 90401. 2. Respondent, at all times relevant to this complaint, was an advertising agency of American Honda Motor Co., Inc. ("Honda"), and prepared and disseminated advertisements to promote consumer leases of Honda vehicles, as the terms "advertisement" and "consumer lease" are defined in Section 213.2 of Regulation M, 12 C.F.R. § 213.2, as amended. 3. The acts and practices of respondent 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. 4. Respondent has prepared and disseminated or has caused to be disseminated consumer lease advertisements (“lease advertisements”) for Honda vehicles, including but not necessarily limited to the attached Rubin Postaer Exhibits A through C. Rubin Postaer Exhibits A and B are television lease advertisements (attached hereto in video and storyboard format). Rubin Postaer Exhibit C is a print lease advertisement. These advertisements contain the following statements:
Federal Trade Commission Act Violations COUNT I: Misrepresentation in Lease Advertising 5. Through the means described in Paragraph 4, respondent has represented, expressly or by implication, that the amount stated as "down" in respondent's lease advertisements, including but not necessarily limited to "$0 down," is the total amount consumers must pay at lease inception to lease the advertised vehicles. 6. In truth and in fact, the amount stated as "down" in respondent's lease advertisements is not the total amount consumers must pay at lease inception to lease the advertised vehicles. Consumers must also pay additional fees beyond the amount stated as “down,” such as the first month's payment and security deposit, at lease inception. Therefore, respondent's representation as alleged in Paragraph 5 was, and is, false or misleading. 7. Respondent knew or should have known that the representation set forth in Paragraph 5 was, and is, false and misleading. 8. Respondent's 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 in Lease Advertising 9. In its lease advertisements, respondent has 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 the amount stated as "down." These advertisements do not adequately disclose additional terms pertaining to the lease offer, including but not necessarily limited to a required security deposit and first month's payment due at lease inception. The existence of these additional terms would be material to consumers in deciding whether to lease a Honda vehicle. The failure to disclose adequately these additional terms, in light of the representation made, was, and is, a deceptive practice. 10. Respondent knew or should have known that the failure to disclose adequately material terms set forth in Paragraph 9 was, and is, deceptive. 11. Respondent's 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: Consumer Leasing Act and Regulation M Violations 12. Respondent’s lease advertisements, including but not necessarily limited to Rubin Postaer Exhibits A through C, state a monthly payment amount, the number of required payments, and/or an amount “down.” The lease disclosures in these advertisements contain one or more of the following terms required by Regulation M: that the transaction advertised is a lease; 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 periodic 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 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. 13. The lease disclosures in respondent's television lease advertisements, including but not necessarily limited to Rubin Postaer Exhibits A and B, are not clear and conspicuous because they appear on the screen in small type for a very short duration. The lease disclosures in respondent's print lease advertisements, including but not necessarily limited to Rubin Postaer Exhibit C, are not clear and conspicuous because they appear in small type. 14. Respondent's practices violate Section 184 of the Consumer Leasing Act, 15 U.S.C. § 1667c, as amended, and Section 213.5(c) of Regulation M, 12 C.F.R. § 213.5(c), as amended. THEREFORE, the Federal Trade Commission this sixth day of April, 1998, has issued this complaint against respondent. By the Commission, Commissioner Thompson and Commissioner Swindle not participating. Donald S. Clark SEAL: |