$300,000 multi-state settlement!

Miller: Ohio Company Must Change Used-Car Auto Advertising

G&A Marketing provided ads for dealers' "sales events" that falsely implied that vehicles were from rental car company bankruptcies, or used other false premises.
DES MOINES. Attorney General Tom Miller said today that an Ohio company must change its tactics when it provides ads and promotions to dealers in Iowa and other states for used-car "sales events."

"We alleged that G&A Marketing created 'false-premise' ads," Miller said, "such as falsely representing that vehicles were from sources such as rental car company bankruptcies, bank repossessions, or fleet liquidations.

"The problem is that such ads mislead customers into thinking vehicles must be sold quickly and at bargain prices, when that is not the case," Miller said. "Consumers are misled, and sometimes they end up paying prices that are even higher than normal."

Gunning & Associates Marketing, Inc., of Milford, Ohio, entered a formal assurance of compliance with Iowa and nine other states that it will not make or imply false claims about the sources of vehicles or make other false claims. The company also will pay a total of $300,000 to the states.

Gunning & Associates Marketing, Inc., does business under various names, including G&A Marketing, Fleet Liquidators of America, and National Fleet Liquidators. It enters into agreements with dealerships around the country to provide promotional materials, advertising, training, and staff assistance for used-car sales promotions, and dealerships typically pay the company an up-front advertising fee and a percentage for every vehicle sold during a "sales event."

Background and details:

States who are party to the settlement with G&A Marketing are Iowa, Oregon, Washington, California, Delaware, Florida, Maine, Tennessee, Vermont, and North Dakota. The District Attorney of Tulare County, California, also is party to the agreement. Negotiations were led by the Iowa AG's Consumer Protection Division and its counterparts in Oregon and Washington.

Gunning & Associates, Inc., does not admit any violations in the "Assurance of Voluntary Compliance" it entered with the states.

The states asserted that vehicles sold in G&A-promoted "sales events" came from the dealers' usual inventories, even though the vehicles might be touted as from government fleets, rental car bankruptcies, bank repossessions, and the like.

One ad created by G&A Marketing and used in Iowa for a "sales event" began with a large headline reading "Major Rental Car Company Has Gone Bankrupt." Another full-page ad for the same event led with these banner headlines: "RENTAL CAR COMPANIES DESPERATE; MOVE QUICKLY TO LIQUIDATE INVENTORY" and "MAJOR RENTAL CAR COMPANY HAS GONE BANKRUPT." Indeed, a major rental car company filed for Chapter 11 reorganization bankruptcy in the 1990s - but the vehicles touted in the sale had nothing to with that.

"We alleged that such representations are designed to give the false impression that the sales offer rock-bottom prices," Miller said. "Dealers are always free to advertise used cars for sale, but the claims they make must be truthful and not deceptive. The ads involved in this settlement didn't make the grade."

The states said that "sales events" often included G&A personnel being involved in vehicle sales, and they noted that Gunning sales staff used very aggressive sales tactics designed to maximize profit, not to offer lower-than-usual prices to consumers.

Under the settlement agreement with Gunning & Associates, Inc., the company:

Must not make false claims in advertised promotions.
Must not make or imply false claims about the sources of vehicles offered for sale, such as falsely claiming the vehicles are from vehicle fleets, auto auctions, or bank repossessions, or that a sale is being sponsored or conducted by a bank, lending institution, fleet, repossession or liquidation company, or that Gunning or its clients are in the liquidation business.
Must comply with federal credit reporting and truth in lending laws in its advertisements.
Must disclose the monthly payment amount based on financing only of the vehicle's purchase price, and not including the cost of optional items.
 

Attorney General settles with local dealer and ad firm for deceptive auto marketing

OLYMPIA – The Washington Attorney General’s Office announced settlements today with a local auto dealer and an out-of-state advertising firm accused of using deceptive promotions to sell cars.

The settlements filed today in Thurston County Superior Court resolve a civil lawsuit filed against Bruce Titus Automotive Group, which operates dealerships in Pierce and Thurston counties, and Level 10 Marketing, Inc., based in Slidell, La. The defendants did not admit any wrongdoing but agreed to pay civil penalties and comply with injunctive provisions concerning their marketing practices.

The Attorney General’s Office alleged the defendants advertised cars without disclosing all terms, including stating how many vehicles were available at a specific price, that they suggested that financing could be guaranteed regardless of a consumer’s credit history, and used “simulated checks” and contest promotions that could mislead consumers. Those actions violated the state’s Consumer Protection Act, Prizes and Promotions Act and Department of Licensing statutes, according to the state’s complaint.

“Washington dealers need to be upfront and honest in their advertisements and should carefully select the companies they hire to promote their business,” said Assistant Attorney General Mary Lobdell.  “All companies that do business in Washington must know and operate in accordance with Washington laws.  Both dealers and ad firms can be found in violation of Washington laws if their promotions fail to include all legally required disclosures.”

Bruce Titus Automotive Group and its president, Bruce Titus, will pay $5,000 in civil penalties plus $30,000 in attorneys’ fees and legal costs. An additional $5,000 in civil penalties was suspended provided they comply with the settlement terms.

Level 10 and David Bottner, in his capacity as president, will pay $15,000 in attorneys’ fees and legal costs. They also agreed to pay $10,000 in civil penalties, suspended provided they comply with the settlement terms.

According to the state’s complaint, the defendants sent ads that offered misleading prices and made it appear that the cars were substantially discounted. They also allegedly charged undisclosed fees and advertised vehicle lease and financing terms without all mandated disclosures. Some promotions were sent in envelopes labeled “OPEN IMMEDIATELY – TIME DATED MATERIAL” that resembled official certified mail. Other mailers looked like checks and included the words “PAY TO THE ORDER OF” but were actually ads. And some vehicle ads included statements such as “credit problems – no problem.”

Under the settlement terms, the defendants are prevented from doing any of the following:

• Misrepresenting the number of vehicles offered at an advertised price,

• Generating ads that create a false sense of urgency or that guarantee credit or a minimum trade-in value,

• Using words, phases or initials in ads that aren’t easily understood by consumers or using a font size that’s difficult to read,

• Collecting a vehicle documentary fee without disclosing that it will be added to the sale price,

• Failing to state the odds of a winning a prize and the value of that prize, or

• Failing to include other required disclosures or clearly stating vehicle sale prices in ads.

The case does not relate to Titus-Will dealerships.

The Attorney General’s Office sued another Louisiana-based ad firm, Automotive Consultant Group, for similar violations in August. That case is still pending.

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Settlements and Verdicts: Level 10 Marketing

Auto Dealer Marketing

Olympia, WA: (Oct-30-07) The Washington State Attorney General’s Office brought charges against Bruce Titus, an Olympia automobile dealer, alleging that he used deceptive promotions to sell vehicles. The suit claimed that Level 10 Marketing, a Louisiana marketing company, was also involved in the deceptive sales campaign. The Attorney General’s suit alleged that the dealer and marketing company advertised cars for sale without disclosing all terms, including how many vehicles were available at a specific price.

Though neither Level 10 Marketing nor Bruce Titus accepted any liability, Bruce Titus agreed to pay $5,000 in civil penalties and $30,000 in legal costs and fees, to resolve the allegations. Further, as part of the settlement terms, Titus agreed to refrain from creating a false sense of urgency in his ads; using type sizes that are difficult to read in ads; and failing to state the odds of winning a prize in a promotion. [THE OLYMPIAN: AUTO MARKETING]
 

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Kenner Company Fined $5 Million By Georgia

Tuesday, July 17, 2007        Contact: Bill Cloud

$300,000 multi-state settlement!

September 12, 2006

STENEHJEM CRACKS DOWN ON "STAFFED-EVENT" AUTOMOBILE SALES BISMARCK

Attorney General Wayne Stenehjem has taken action against several out-of-state "staffed event" automobile dealers who have come into North Dakota with misleading and illegal sales tactics. After suing the company, Stenehjem secured $10,000 from “Sales 360 LLC” (formerly known as ACG Mediaworks) of Metairie, Louisiana, and its principals Shawn M. Burst and Angelina Darr Burst, and prohibited the company from doing business in the state. Stenehjem also issued a Cease and Desist Order against a Kentucky business for its part in a Sales 360 staffed event. In a "staffed event," a local auto dealership contracts with an out-of-state sales team to promote and operate a three- to five-day sale. The sales team, which is paid on commission, promises tremendous profits for the local dealer but leaves the state immediately after the sale, leaving the dealer to contend with customer problems. Across the country Attorneys General are seeing a pattern of false promises, high-pressure sales techniques and cheated consumers associated with "staffed events." "North Dakotans are ill served by these 'staffed event' salespeople coming into our state," said Stenehjem, "These companies use false advertising to bring in consumers who are then subjected to unfair sales practices and high pressure sales tactics to entice them into making a purchase. Local automobile dealers surely cannot be happy with the dissatisfied customers and loss of credibility that results.” Stenehjem’s lawsuit stemmed from a Sales 360 staffed event in Fargo for which Sales360 prepared and mailed 119,000 flyers to area consumers. The flyers contained misleading statements about the terms of sale for vehicles, credit approval, and number of vehicles, and also violated North Dakota's contest prize law in their use of a scratch-off game in which every person won the "Jackpot!.” The day before the “sale,” the "staffed event" personnel raised the vehicle prices to enable them to offer "better" deals. Stenehjem’s lawsuit alleged violations of North Dakota's False Advertising Law, Consumer Fraud Law, Contest Prize Notice Law and the law requiring out-of-state businesses obtain a certificate of authority from the Secretary of State prior to transacting business, as well as violations of a previous settlement agreement Sales360 had entered into with the Attorney General in 2004 relating to a "staffed event" in Jamestown. At that time, Sales 360 paid $5,000 to the Attorney General and promised to comply with North Dakota law. Sales 360 has been the subject of investigations in other states relating to allegations of unfair and deceptive trade practices. Burst's brother, Bernard "Benny" Burst, operates a "staffed event" company, Smart Automotive Group, LLC, of Metairie, Louisiana, which has been the subject of legal action in another state for deceptive practices.
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"So-called 'staffed event' companies are on notice that they must comply with all state laws, including consumer protection, advertising, licensing and registration, insurance, employment and taxation if they choose to do business in North Dakota," said Stenehjem. Stenehjem issued a Cease and Desist Order against Blake Paxton and Paxton & Associates, LLC of Lexington, Kentucky. Paxton declined to cooperate with the Attorney General’s investigation. Paxton conducted the sale and directed the activities of sales personnel, including re-pricing vehicles, and allowing misrepresentations by the sales personnel. Violation of the Cease and Desist Order is subject to civil penalties of up to$1,000 per violation in addition to civil penalties of up to $5,000 for each violation of the state’s Consumer Fraud Law. North Dakota also has joined with nine other state Attorneys General and a California District Attorney in a settlement with Milford, Ohio "staffed event" companies Gunning & Associates Marketing, Inc. and Fleet Liquidators of America, Inc., doing business as Fleet Liquidators of America, National Fleet Liquidators, G & A Marketing and G & A Marketing, Inc. (collectively, "G & A"). G & A had begun conducting a "staffed event" earlier this year in Dickinson but was directed to leave early by the local dealer after complaints were received. G & A had been under investigation by several other jurisdictions for misleading advertising and illegal sales practices. Under the multi-state settlement, the company must pay $300,000 in restitution and change the way it does business by complying with pertinent state and federal consumer protection and licensing laws. # # #

Kenner Company Fined $5 Million By Georgia

POSTED: 9:43 am CDT July 18, 2007

KENNER, La. -- The Georgia State Consumer Affairs Office has levied a $5 million penalty against a Louisiana automotive marketing company accused of misleading Georgia consumers.

The Governor's Office of Consumer Affairs said Smart Automotive Group has been "making unfair and deceptive representations in direct mail promotions" to Georgia residents, some after the company's attorney said it was no longer conducting business in the state.

The state has issued $1.6 million penalties against the company and each of its two owners, Michael and Ben Burst, in connection with violations of the Fair Business Practices Act.

Officials with Smart Automotive did not return a call for comment Tuesday.

The Kenner-based company is accused of making false claims about the uniqueness of a sales event, telling customers they had won prizes when they had not and telling consumers they were pre-approved for loans that did not exist.

The company specializes in promotional events and direct mailings for the automotive sales industry.

Sales360 employees twice hung up on a Daily Camera reporter seeking comment.

Outside marketing firm blamed for tactics used on senior citizens

By Christine Reid (Contact)
Saturday, November 18, 2006

Boulder's Champion Ford is under investigation on criminal allegations that it twice tried to sell overpriced cars to senior citizens.

According to a police search warrant affidavit, Agnes Lecinski, 82, paid $24,206.80 for a used Volkswagen Beetle advertised for $7,991, and John and Donna Adams, 73 and 74, nearly purchased a used Ford Focus for the same price as a brand-new one.

Boulder police, who have served several search warrants demanding records from the dealership, have yet to make any arrests. They are pursuing possible charges of theft and conspiracy to commit theft from at-risk adults — felonies that, combined, can be punishable by up to 7 1/2 years in prison.

Detective Robert Wands wrote in one search warrant that the two incidents two days apart in June "may indicate a standard sales practice among the sales teams working at that car dealership."

But Champion President Bob Carmendy said all but one of the people named in the warrants are members of an outside marketing company — Sales360 — and not his staff. The company does marketing campaigns for dealerships all over the country, he said, and he has never heard a bad report about the way it conducts business.

Champion Ford used the company for the first time this summer during a special sales event and they "seemed OK," Carmendy said. But he said he won't use Sales360 again because of the complaints.

"We just don't do business that way," he said. "We don't hold anybody's feet to the fire on anything."

Carmendy said his dealership, at 3200 28th St., probably gets 60 percent of its business from seniors, makes smaller profit margins than the average lot and has worked hard to build a good reputation and customer base since opening last year.

He said it's disappointing to have contract employees damage that and pointed out that neither deal stuck.

"I think we're as much of a victim because everything's rescinded," Carmendy said. "Nobody's been defrauded out of anything."

Sales360 employees twice hung up on a Daily Camera reporter seeking comment.

The deals

Agnes Lecinski, whom police said is in the early stages of dementia, told officers she believed she had won nearly $1,700 from a scratch-away mailer sent out about the sales event, and agreed on June 27 to test drive the used Volkswagen so she could collect her prize.

The salesman, James Peterson, shifted the car's gears for her because she was unable to do it herself, the warrant said. When they returned to the lot, Peterson led her into the showroom and was joined by David Brymer, Tarvel Poe and Mark Banaszak — a Champion Ford employee at the time — to "close the deal," according to the police warrant.

During a three-hour process, Lecinski agreed to buy the car, trading in her 2003 Dodge Neon, writing a $10,000 check and unknowingly taking out a 71-month loan, the warrant said. It said she didn't question the price because she thought the car was new.

Once the paperwork was done, Lecinski asked Peterson to follow her home because she was worried about managing the stick shift. During the drive home, she stalled in an intersection and Peterson got out of his car to help, police reported.

When Lecinski's daughters learned of her purchase, they called the next day to ask that it be canceled.

"They really took her for a ride," said her daughter Agnes Kalthoff.

Carmendy and another manager initially refused to cancel the deal but returned Lecinski's check and trade-in vehicle after police were called, the warrant said.

Carmendy said Friday he never spoke to Lecinski's daughters.

The day after Lecinski's deal was revoked, the Adamses visited Champion to look at cars and agreed to buy a 1993 Ford Focus for $14,000 after they were told the car went new for "about $23,000" police reported.

During the paperwork process, Donna Adams said, she got up to stretch and saw a sticker price of $14,000 in the window of a 2007 Ford Focus.

When she and her husband walked out on the sale, police reported, the same four salesmen who dealt with Lecinski became intimidating and threatening. The Adamses were warned they would be sued in civil court if they didn't go through with the deal, police reported.

Salesmen for hire

Sales360, based in Louisiana, boasts on its Web site that it is the nation's leader of staffed events and marketing services for the automotive industry.

"By bringing a sense of professionalism, integrity and excitement to the automotive sales industry, we firmly believe we are leading a revolution in the way pre-owned cars are sold," the Web site reads.

A woman who answered the phone there Friday and declined to give her name said she couldn't speak to any actions by their salespeople because they are contractors. She hung up when asked for a manager.

A second number listed for the company resulted in "no comment" from another woman, who also declined to give her name. She hung up when asked for Shawn Burst, the company's president.

Another Champion Ford customer made headlines in April 2005, when the newly opened dealership gave away a car as a promotion. The winner, Daniel Barbiere, declined to take the free car — a teal, 1993 Saturn SL1, which he described as unfit for the road with 125,000 miles on the odometer, four bald tires, a cracked windshield and four shades of paint. The dealership said he would also have to pay a $495 handling fee.

Champion later gave Barbiere a truck.

Diane Reimer, spokeswoman for the Colorado Motor Vehicle Dealer Board that oversees the licenses of the state's car dealers, would not say if there is a pending investigation against Champion Ford.

The board — which takes an average of 75 complaints a months — has the authority to fine, suspend and revoke dealership licenses. So far this year, six have been revoked.

Champion Ford has not been sanctioned since it opened, according to the board's Web site.

Contact Camera Staff Writer Christine Reid at (303) 473-1355 or reidc@dailycamera.com.
 

Petro Announces $200,000 Settlement With Car-Dealer Marketing Firm
April 26, 2006

COLUMBUS - Attorney General Jim Petro announced today he has reached a settlement with Gunning & Associates Marketing, Inc. (G&A), under which the Milford, Ohio-based company has agreed to not deceive consumers about the true costs of the vehicles it helps advertise and sell. The company contracts with car dealerships to provide marketing and sales assistance.

In an Assurance of Voluntary Compliance agreement it signed with Petro’s office, G&A also agreed to change its sales training and marketing materials to comply with Ohio consumer protection laws and to pay the state $200,000 for consumer protection enforcement costs.

“This company has agreed to not engage in the future in deceptive acts designed to trick customers into buying cars from their clients,” Petro said. “We are pleased with their cooperation and will hold them to their agreement.”

The settlement resulted from an Attorney General’s Office investigation into the company’s alleged violations of several sections of the state’s Consumer Sales Practices Act as it helped its car-dealership clients advertise and stage “sales events.”

Based on the investigation, Petro alleged the company enticed its clients’ prospective customers by misrepresenting the source of the vehicles for sale, advertising with the intent to not sell the vehicles as advertised, misrepresenting the amount of and reasons for price reductions, implying a false premise for selling vehicles, and misrepresenting the offering price of vehicles, all violations of state law.

For example, Petro’s investigators found that G&A advertised monthly payment amounts but not the total number of payments needed to finance a vehicle purchase. The practice is intended to disguise the total offering price, Petro said, and is a violation of state consumer protection law.

The investigators also noted headlines used by G&A in its advertising -- such as “Ford Marketing Headquarters - Buyback Notice” and “Notice to the Public - Major rental car company has gone bankrupt. Rental Car Co. desperate to liquidate inventory” -- misrepresented the source of vehicles for sale, also a violation of state law.

Although Gunning and Associates denies allegations of wrongdoing, in its settlement with Petro it has agreed to not engage in deceptive marketing practices in Ohio in the future.

Consumers may file complaints with Attorney General Jim Petro’s office online at www.ag.state.oh.us or by calling 1-800-282-0515.

Car dealers, promoter pays $57,000 to settle advertising claims

November 1, 2006

MONTPELIER, Vt. --Two Berlin automobile dealers and an Ohio marketing company are going to pay a total of $57,000 to settle claims of misleading advertising, the Attorney General's office said.

Direct mail advertisements produced by Gunning and Associates Marketing Inc. for Courtesy Motors and Courtesy Toyota "made a host of claims and representations on behalf of the dealerships that were false or misleading, and in violation of Vermont consumer protection law," the Attorney General's office said in a statement.

Gunning and Associates will pay $27,500 in penalties. The two dealerships will pay $30,000, said Assistant Attorney General David Borsykowsky.

The Attorney General's office said some of the misleading claims included a promise of a $1,000 Wal-Mart gift card with the purchase of a used vehicle, which many customers did not receive. Thousands of people were told they were the "grand prize winner," when the grand prize was an opportunity to purchase a vacation.

Courtesy Motors owner Jim Mulkin said his company became involved with the marketing agency to promote a sales event.

"This entity assured us that the advertising material and promotions complied with Vermont law," Mulkin said. "We relied on those assurances in our decision to work with them. Regrettably, we learned after the fact that some of their advertising material and promotions did not comply with Vermont law."

Information from: The Burlington Free Press, http://www.burlingtonfreepress.com

Tennessee Fraud Laws
 

A recent settlement under Tennessee fraud laws ensures that auto dealers don’t engage in false advertising. Specifically, the state Attorney General targeted G& A Marketing, a firm that advertised used cars as “fleet liquidations” caused by the bankruptcy of a major rental car company.

“The problem is that such ads mislead customers into thinking vehicles must be sold quickly and at bargain prices, when that is not the case,” the state Attorney General said. “Consumers are misled, and sometimes they end up paying prices that are even higher than normal.”

Gunning & Associates Marketing, Inc., of Milford, Tennessee, entered a formal assurance of compliance with Tennessee and nine other states that it will not make or imply false claims about the sources of vehicles or make other false claims. The company also will pay a total of $300,000 to the states.

While G&A Marketing admitted no wrongdoing, they agreed to cease the deceptive advertising. One ad created by G&A Marketing for a “sales event” began with a large headline reading “Major Rental Car Company Has Gone Bankrupt.” A major rental car company filed for Chapter 11 reorganization bankruptcy recently, but the vehicles touted in the sale had nothing to with that.

“We alleged that such representations are designed to give the false impression that the sales offer rock-bottom prices,” the state Attorney General said. “Dealers are always free to advertise used cars for sale, but the claims they make must be truthful and not deceptive. The ads involved in this settlement didn’t make the grade.”

The states said that “sales events” often included G&A personnel being involved in vehicle sales, and they noted that Gunning sales staff used very aggressive sales tactics designed to maximize profit, not to offer lower-than-usual prices to consumers. The Attorney General said today that the Tennessee company must change its tactics when it provides ads and promotions to dealers in Tennessee and other states for used-car “sales events.”

The company’s previous ad campaigns were in violation of Tennessee fraud laws. “We alleged that G&A Marketing created ‘false-premise’ ads,” the Attorney General said, “such as falsely representing that vehicles were from sources such as rental car company bankruptcies, bank repossessions, or fleet liquidations.

September 12, 2006

ATTORNEY GENERAL MYERS FILES SETTLEMENT WITH NATIONAL MARKETING GROUP

FOR CREATING MISLEADING AUTO ADVERTISING

Attorney General Hardy Myers today filed a $300,000 multi-state settlement agreement with a national marketing group for not only misleading consumers in advertisements about reasons for an auto sale and supposedly low prices but for conducting sales events with unlicensed salespeople. Named in today’s Assurance of Voluntary Compliance (AVC) filed in Marion County Circuit Court are two Milford, Ohio corporations, Gunning & Associates Marketing Inc. and Fleet Liquidators of America, Inc. Also listed are Fleet Liquidators of America, National Fleet Liquidators, G & A Marketing, and G & A Marketing, Inc., dbas of Gunning & Associates Marketing, Inc. The AVC admits no law violation.

“Gunning and Associates not only lied about a major rental car company liquidation sale in its direct mail pieces to thousands of car-buying consumers but bragged about ‘low downs’ and monthly payments that were totally untrue,” Myers said. In Oregon, the flyers named Fleet Liquidators of America as assisting with the sale and included fictitious prices of $59 down and $79 a month.

Beginning in 2004, Oregon, nine other states and a California District Attorney investigated the promotions leading up to the sales and how the actual sales were conducted. Investigators found that G & A contracted with dozens of dealerships throughout the United States getting paid up-front advertising fees and percentages of both the “front end” and “back end” profit for each vehicle sold. Not only did the salespeople work on commission but because G&A guaranteed dealerships $100,000 profit over a four-day-sale, the salespeople had to “payment pack” in order to cover both the dealership and G & A’s profits.

In addition to the misleading marketing, G & A sent as part of the package onsite salespeople and a finance and insurance (F&I) manager, all of which were illegally selling automobiles without proper state licensure or without state licenses to handle insurance sales.

Attorney General Myers explained that unsuspecting car buyers were injured in other ways including the company creating the impression that the sales were special when they were not; the company encouraging aggressive sales techniques in order to get the highest possible profits for the dealerships; and the salespersons pushing purchase and monthly payment amounts instead of providing the actual price of the vehicle in order to confuse buyers into paying more than a vehicle is worth. In addition, G & A employees added charges for extra products and services that were not authorized or even desired by consumers.

Under the agreement filed today, the company must change the way it does business by complying with pertinent state and federal consumer protection and licensing laws. The company must follow a “laundry list” of operating procedures including, within the next 90 days, providing notice of the Assurance to any salespersons acting on their behalf in future sales events.

Effective immediately, the company must for the next five years send advertising copy to be used in auto sales in the states of Oregon, California and Tennessee to the respective Attorneys General at least 14 days prior to publication or dissemination.

The total $300,000 in restitution will be paid in two payments, one by October 2006 and by January 2007. As lead state for the case, Oregon will keep $40,000 for restitution, costs, education and other consumer protection purposes and distribute the remainder in varying amounts to the other nine participating states of Iowa, Washington, California, Delaware, Florida, Maine, Tennessee, Vermont, and North Dakota and the District Attorney of Tulare County, California.

“Not only is this a good settlement for car-buying consumers everywhere but it sends a strong message to those ‘copy cat’ companies operating through out the United States to stop the practice or be prosecuted by law enforcement,” Myers said.

In Oregon, the following car dealerships “hosted” G & A sales and are currently operating under settlement agreements with the Department of Justice:

Cascade Auto Group of Klamath Falls;
Coos Bay Toyota;
Skinner AutoPlex of Medford; and
Curt Warner Chevrolet of Vancouver, Washington.
The Oregon Department of Justice has settled with the following “copy cat” companies and car dealers, who used “copy cat” marketing companies:

Thrifty Car Sales Bend, using Dynamic Force Super Sales of Louisiana, and Dynamic Force Super Sales;
Curt Warner Chevrolet of Vancouver, Washington using Smart Automotive Group of Louisiana to send direct flyers to Oregon; and
Kirby Car Company of Tigard and Newberg Dodge Chrysler Plymouth using U.S. Marketing Direct of Florida.

MADIGAN SUES OHIO AD AGENCY, ILLINOIS CAR DEALERSHIP FOR MISLEADING CONSUMERS;

SCREAMING ADS PEDDLED MAKE-BELIEVE CARS

Chicago – Following two similar and misleading newspaper ads in local newspapers that trumpeted the sale of low-priced cars allegedly available because a major rental car company had gone bankrupt, Attorney General Lisa Madigan today filed suit against the Ohio-based ad agency that created the ads and the DeKalb County car dealership that ran one of the misleading ads.

Madigan’s office already has sued a Des Plaines auto dealer for running a similar ad in Chicago in April. Madigan today amended the April lawsuit to add the advertising agency as a defendant.

In the case involving the DeKalb County car dealership, one ad features a screaming headline urging prospective car buyers to “BE AWARE. MAJOR CAR RENTAL COMPANY HAS GONE BANKRUPT. Vehicles Released to the Public for Immediate Sale.” Another ad carries an important, official-sounding “NOTICE TO THE PUBLIC. MAJOR RENTAL CAR COMPANY HAS GONE BANKRUPT.”

In fact, Madigan’s office found no evidence of a bankruptcy filed by a large rental car agency.

“Advertising agencies and the dealerships that hire them are not allowed to make up whatever they think will bring the customers to the lot. The ads must be accurate,” Madigan said. “Consumers reading these ads may have gone down to these dealerships to look at one of these vehicles only to find that they did not exist. This is misleading, and it is illegal.”

Madigan’s new complaint was filed today in DeKalb County Circuit Court against Joyce Pontiac GMC and Jeep Eagle, Inc., and Gunning & Associates Marketing, Inc., for violations of the Illinois Consumer Fraud and Deceptive Practices Act. The complaint alleges the defendants enticed consumers to visit the dealership’s showrooms by claiming in an advertisement that the dealerships would be selling cars from a bankrupt rental car agency for low prices. According to Madigan’s complaint, no rental car agency went out of business and the dealership and the advertising agency used false advertising to lure customers to the lots.

Joyce Pontiac, located at 1890 Sycamore Rd., DeKalb, and Gunning & Assoc. were charged today with multiple violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Uniform Deceptive Trade Practices Act.

Madigan’s suit seeks to prohibit Joyce Pontiac and Gunning & Assoc. from engaging in further activity that violates Illinois’ consumer protection laws. In addition, Madigan is seeking an order requiring Joyce Pontiac and Gunning & Assoc. to pay restitution, court costs, civil penalties of $50,000 for each violation of the law and additional penalties of $50,000 for each violation that the court finds the defendant committed with intent to defraud.

Also today, Madigan amended a similar lawsuit pending against Gateway Kia Imports, Inc., to include Gunning & Assoc. as a defendant. The lawsuit was originally filed on April 26, 2004, in Cook County Circuit Court. Following the April 2004 filing date, the state learned that Gunning & Assoc. had created the advertisement for Gateway Kia and amended the complaint.

Gunning & Assoc. faces additional charges and penalties now that it has been added as a defendant in the Gateway Kia lawsuit.

Gunning & Assoc., an advertising agency based in Cincinnati, allegedly created the insert advertisement for Gateway Kia that ran in the Chicago Sun-Times on March 9, 2004, and a similar insert advertisement for Joyce Pontiac that ran in the Daily Chronicle, DeKalb County, on May 10, 2004

Assistant Attorney General Greg Grzeskiewicz is handling the cases for Madigan’s Consumer Fraud Bureau.

WESTERN N.Y. AUTO DEALERSHIPS PAY FINES FOR DECEPTIVE PROMOTIONS

Attorney General Eliot Spitzer today announced a series of settlements involving fake "scratch-off" prize promotions and other false advertising for automobile sales.

Four Western New York auto dealerships and a Louisiana-based firm that specializes in auto ad promotions settled investigations by paying in total $67,000 in civil penalties.

"Auto dealerships cannot use deceptive advertisements and worthless prize promotions to attract consumers to their showrooms," Spitzer said.

Spitzer's investigation centered around brochures developed and sent by Sales360, LLC on behalf of DeLacy Ford, Inc. of Elma and Upstate Chevrolet Oldsmobile & Aurora in Attica, which made several deceptive and fraudulent claims. A separate investigation into brochures sent by Jim Ball Pontiac-Buick-GMC, Inc. and Southtown Suzuki, both in Orchard Park, found similar problems.

It is estimated that as many as 300,000 brochures were sent to Western New York households.

Specifically, the brochures:

• Greatly exaggerated the number of vehicles that were available at the promoted, discounted price;
• Used footnotes that contradicted or unreasonably limited offers for trade-ins and discount sales prices; and
• Used "scratch-off" prize promotions - in which every recipient was the "grand prize" winner of thousands of dollars - that required consumers to go to the showroom to claim their prize. There it was discovered that the prize was virtually worthless because it was provided in the form of gift certificates to a web site that charged exorbitant shipping and handling fees for ordered merchandise.

Other practices cited in the settlement agreements included; references to "reprocessed" vehicles in an obvious attempt to confuse consumers looking for "repossessed" vehicles; promises of Wal-Mart gift certificates to consumers that were, in fact, only available to the first 35 customers each day; and false representations that the auto dealership had been "ordered" to sell 200 vehicles.

For more information about avoiding the pitfalls of auto advertising and tips on new and used auto buying, consumers are encouraged to visit the Attorney General’s consumer web page at http://www.oag.state.ny.us/consumer/consumer_issues.html. To file a complaint against an auto dealership, individuals can call the consumer help line at (800) 771-7755.

This case is the latest in an ongoing effort by Spitzer's office to monitor auto advertising and sales practices throughout the state. Since 1999, Spitzer's office has commenced approximately 200 enforcement actions against auto dealers and their advertising associations across the state.

These matters were handled by Assistant Attorney General James Morrissey of the Buffalo Regional Office.