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Arizona District Court rules dealer’s advertisement violated TILA and Troutman Pepper consumer leasing law

By on March 9, 2021 0

A Federal District Court in Arizona tenuous in FTC v. State’s Auto Center of Winslow Inc. that the Federal Trade Commission (FTC) has proven that the advertising of several car dealerships (collectively, “Tate’s Auto”) did not include credit information required by law in violation of the Truth in Lending Act (TILA) and the Consumer Leasing Act (CLA). The court declined to issue summary judgment on the FTC Act claims, alleging misleading advertising and misleading information about auto loan applications.

In July 2018, the FTC brought this action against Tate’s Auto and their co-owners, Richard Berry and Linda Tate. The FTC alleged that Tate’s Auto and the owners violated TILA and CLA by failing to include legally required credit information in their ads, and that the defendants’ advertising misled consumers into violating the FTC and inflated consumer financial information on auto loan applications in violation of the FTC law. Tate’s Auto demanded a permanent injunction and monetary damages, but Berry and Tate remained defendants. The FTC has requested summary judgment against the individual defendants.

The FTC alleged that some of the ads violated TILA and CLA by failing to include required payment information among other terms in a clear and visible manner. The FTC identified several advertisements, which stated the down payment but did not include any other required disclosure. The court issued summary judgment on the TILA and CLA claims, finding that some advertisements lacked legally required information, such as repayment terms or the annual percentage rate. TILA requires that advertisements for closed loans, such as auto loans, include the amount or percentage of a down payment, the number of payments or the repayment period, the amount of any payment, repayment terms, the amount of any financial burden. , and the annual percentage rate (including whether this rate can be increased after consumption).

The court disallowed the FTC’s motion for summary judgment on the FTC Act allegations, which prohibit “unfair or deceptive acts or practices.” The court found that the alleged misleading ads did not meet the standard for a summary judgment, but the ads appeared ambiguous. Regarding the second FTC Act claim, Berry and Tate submitted statements that many consumers knew the down payment or income information was distorted on loan applications. As such, the court could not rule in law that Berry and Tate’s practices had misled clients. At present, these allegations appear to be on trial.