9723192
B236150
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
In the Matter of
FOOTE, CONE & BELDING ADVERTISING, INC., a corporation.
DOCKET NO.C-3792
COMPLAINT
The Federal Trade Commission, having reason to believe that Foote, Cone & Belding
Advertising, Inc., a corporation ("respondent" or "FCB"), has 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 it appearing to the Commission that this
proceeding is in the public interest, alleges:
1. Respondent Foote, Cone & Belding Advertising, Inc. is a Delaware corporation
with its principal office or place of business at 101 East Erie Street, Chicago, Illinois
60611.
2. Respondent, at all times relevant to this complaint, was an advertising agency of
Mazda Motor of America, Inc. ("Mazda"). Respondent has 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.
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 prepared and
disseminated, consumer lease advertisements ("lease advertisements") for Mazda
vehicles, including but not necessarily limited to the attached FCB Exhibits A through D.
FCB Exhibits A through C are television lease advertisements (attached hereto in video and
storyboard format) and Exhibit D is a print lease advertisement. These advertisements
contain the following statements:
A. [Audio:] "One penny down. Great leases. Very little time. On Protegé. A penny
(down). And one eighty-nine. The B2300 SE. A penny down. And one ninety-nine. 626. A penny
and two-o-nine. Miata. . . . A penny and two nineteen. Passion for the road. Put your
penny down."
[Video:] [open on a man jumping through a rain of pennies.]
"MAZDA ONE PENNY DOWN 36 MO. LEASES [running footage of Protégé] $189 A MO.
[over graphic of a penny spinning] [running footage of B2300] $199 A MO. [over graphic of
a penny spinning] [running footage of 626] $209 A MO. [over graphic of a penny spinning]
[running footage of Miata] $219 A MO." [over graphic of a penny spinning]
[The advertisement contains the following lease disclosure at the bottom of the screen
in white colored fine print superimposed on a black background and accompanied by
background sounds and images: ". . . Offer on '96 Protegé DX w/Conv. Pkg., MSRP
$14,720. Assumes $1325 dealer contribution. 36 mo. payments = $6,809.04. Initial fees =
$439.15. Purchase option at lease end = $7,654.40 Offer on '96 B2300 SE . . . MSRP
$14,605. Assumes $859 dealer contribution. 36 mo. payments = $7,198.92. Initial fees =
$449.98. Purchase option at lease end = $7,594.60. Offer on '96 626 DX w/Conv. Pkg., MSRP
$17,540. Assumes $1,241 dealer contribution. 36 mo. payments = $7,532.64. Initial fees =
$459.25. Purchase option at lease end = $9,471.60. Offer on '96 Miata . . . MSRP $19,280.
Assumes $1,198 dealer contribution. 36 monthly payments = $7,908.84. Initial fees =
$469.70. Purchase option at lease end = $10,796.80. . . . $450 Acq. fee plus taxes, title,
license, & registration also due at lease signing. Early termination = $200. Lessee
liable for $.10/mile over 36,000, maintenance, repairs & excess wear/tear. . . ."
The fine print is displayed on four screens, each containing a block of at least five
lines, and each block appearing for approximately three seconds.](FCB Exhibit A).
B. [Audio:] "Lease a 626. Zero down, two-o-nine a month."
[Video:] "From $0 DOWN $209 A MO. 36 MONTHS."
[The advertisement contains the following lease disclosure at the bottom of the screen
in white colored fine print superimposed on a black background and accompanied by
background sounds and images: ". . . 36 mo. payments = $7,551. Initial fees = $459.75
plus $450 acq. fee, taxes, title, license & registration. Early termination fee =
$200. Lessee liable for $.10/mile over 36,000, maintenance, repairs & excess
wear/tear. Purchase option at lease end = $9471.60. . . ." The fine print is
displayed on three screens, each containing a block of at least three lines, and each
block appearing for approximately two seconds.](FCB Exhibit B).
C. [Audio:] "Its Mazda Jump . . . on Summer."
[Video:] "ZERO DOWN LEASES 36 MONTHS"
[cut to Protégé badge. Mazda Protégé running footage]
[Audio:] "On Protegé. Zero and one eighty-nine."
[Video:] "$0 DOWN PYMT. $189 A MONTH WELL-EQUIPPED"
[cut to B2300 badge. Mazda B2300 running footage]
[Audio:] "B2300 SE-5. Zero and one ninety-nine."
[Video:] "$0 DOWN PYMT. $199 A MONTH FULLY LOADED SE-5."
[cut to 626 badge. . . 626 running footage]
[Audio:] "Six-two-six. . . Zero and two-o-nine."
[Video:] "$0 DOWN PYMT. $209 A MONTH WELL-EQUIPPED"
[The advertisement contains the following lease disclosure at the bottom of the screen
in white colored fine print superimposed on a black background and accompanied by
background sounds and images: "Closed- end leases to qualified lessees. Approval of
Mazda American Credit & insurance required. Offer on '96 Protegé DX w/ Conv. Pkg.,
MSRP $14,720. Assumes $1,325 dealer contribution. 36 mo. pymts = $6,836.04. Initial fees =
$439.89. Purchase option at lease end = $7,507.20. Offer on '96 B2300 SE Reg Cab w/ A/C
& Pref. Equip. Grp., MSRP $14,605. Assumes $1,888 dealer contribution. 36 mo. pymts =
$7,193.16. Initial fees = $449.81. Purchase option at lease end = $7,740.65. Offer on '96
626 DX w/ Conv. Pkg., MSRP $17,540. Assumes $1,241 dealer contribution. 36 mo. pymts =
$7,558.20. Initial fees = $459.95. Purchase option at lease end = $9,647. All leases incl.
freight, excl. CA/MA/NY emissions. $450 Acq. Fee plus taxes, title, license &
registration also due at lease signing. Early termination = $200. Lessee liable for
$.10/mile over 36,000, maintenance, repairs & excess wear/tear. Must take retail
delivery by 6/3/96. SEE PARTICIPATING DEALERS FOR DETAILS AND ACTUAL TERMS." The fine
print is displayed on three screens, each containing a block of at least four lines, and
each block appearing for approximately three seconds.](FCB Exhibit C).
D. "MAZDA PENNY DOWN GREAT LEASES OR BUY"
[The advertisement contains lease offers for four vehicles:]
"MAZDA PROTEGÉ . . . LEASE 1˘ DOWN $189 MO. 36 MOS. . . . B2300SE SPORT
TRUCK . . . LEASE 1˘ DOWN $199 MO. 36 MOS. . . . 626 SPORT SEDAN . . . LEASE 1˘
DOWN $209 MO. 36 MOS. . . . MAZDA MIATA . . . LEASE 1˘ DOWN $219 MO. 36 MOS."
[The advertisement contains the following lease disclosure at the bottom of the page in
small print: "Offer on '96 Protegé DX (LX shown) w/Conv. Pkg., MSRP $14,720. Assumes
$1,325 dealer contribution. 36 mo. payments = $6,809.04. Initial fees = $439.15. Purchase
option at lease end = $7,654.40. Offer on '96 B2300 SE Reg. Cab (Cab Plus shown) w/ A/C
& Pref. Equip. Grp., MSRP $14,605. Assumes $859 dealer contribution. 36 mo. payments =
$7,198.92. Initial fees = $449.98. Purchase option at lease end = $7,594.60. Offer on '96
626 DX w/ Conv. Pkg., MSRP $17,540. Assumes $1,241 dealer contribution. 36 mo. payments =
$7,532.64. Initial fees = $459.25. Purchase option at lease end = $9,471.60. Offer on '96
Miata w/ pwr. steering & mats, MSRP $19,280. Assumes $1,198 dealer contribution. 36
mo. payments = $7,908.84. Initial fees = $469.70. Purchase option at lease end =
$10,796.80. All leases incl. freight. Protegé/626/B2300 SE excl. CA/MA/NY emissions. $450
Acq. fee + taxes, title, license, & registration also due at lease signing. Early
termination = $200. Lessee liable for $.10/mile over 36,000, maintenance, repairs &
excess wear/tear. Must take retail delivery by 4/1/96. See participating dealer for
details & actual terms."](FCB Exhibit D)
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 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, a security deposit, and/or
an acquisition fee, at lease inception. Therefore, the 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 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, an acquisition fee, and/or the first month's
payment due at lease inception. The existence of additional terms would be material to
consumers in deciding whether to lease a Mazda 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 as 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
FCB Exhibits A through D, 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 FCB Exhibits A through C, are not clear and conspicuous
because they appear on the screen in small type for a very short duration, accompanied by
background sounds or images. The lease disclosures in respondent’s print lease
advertisements, including but not necessarily limited to FCB Exhibit D, 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
Secretary
SEAL: |