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Terry Goddard Announces Deceptive Ad Settlements with Auto Dealers

(Phoenix, Ariz. - May 5, 2010) Attorney General Terry Goddard today announced settlements totaling $195,000 in two cases of deceptive advertising by auto dealers.

One settlement was reached with three Steve Coury dealerships: Steve Coury Ford, Lincoln-Mercury, Inc., of Cottonwood; Steve Coury Automotive Family Inc., of Camp Verde; and Steve Coury Buick Pontiac & GMC Truck, Inc., of Cottonwood. These dealerships, which are referred to collectively in the settlement as Steve Coury Automotive, agreed to pay the State $95,000. 

The other settlement was reached with Avondale Automotive, Inc., of Avondale, which agreed to pay the State $100,000.  

In the Steve Coury Automotive case, the Attorney General’s Office received complaints from consumers from October 2006 to February 2008 about advertising materials sent out by the dealerships that were alleged to be deceptive or misleading.  As a result, the Office opened a consumer fraud investigation. 

According to court documents, the investigation found numerous instances of deceptive advertising by the company in violation of the Arizona Consumer Fraud Act.  Those violations included falsely advertising large discounts off the Manufacturer’s Suggested Retail Price (MSRP) on used vehicles when the MSRP was based on new vehicle prices; the use of contradictory and confusing disclaimers in footnotes buried at the bottom of advertisements or on separate pages; the use of headlines that applied only to one vehicle in a sale; false advertisements claiming guaranteed credit approval, and using game or contest promotions that required consumers to purchase a car to participate in the game or claim a prize.

According to the settlement, which comes in the form of a Consent Judgment and does not constitute an admission of wrongdoing, Steve Coury Automotive agrees:

  • To engage in truthful, non-misleading advertising.
  • To identify the number of vehicles to which an advertised special offer applies.
  • Not to use MSRP prices as a comparison price for used cars.
  • Not to create the false appearance that a consumer is receiving a check in a mailed advertisement.
  • Not to deceptively use terms that indicate a sale is an “emergency sale,” “liquidation sale” or “official” event.
  • Not to imply that credit is available to all applicants.
  • Not to advertise that all vehicles must be sold, unless all vehicles will be sold by the end of the sale, regardless of price.
  • Not to advertise a sweepstakes or a chance to win cash or prizes that requires the purchase of a vehicle.
  • Not to offer a prize that requires a shipping, handling or processing fee without   disclosing the fees and terms in the advertisement.

In the Avondale Automotive case, the State alleged that from November 2005 to 2009, the dealership engaged in various unlawful and deceptive practices relating to the sale and advertisement of new vehicles in violation of the Arizona Consumer Fraud Act.  The major deceptive practices alleged were the failure to sell specific vehicles at advertised prices and a variety of deceptive advertisements. 

Additionally, Avondale Automotive advertised vehicles that were not available for sale, used MSRP as a reference price for used vehicles, falsely represented the vehicles as part of a specially discounted liquidation or clearance event and failed to provide statutorily required disclosure of prior sales of new vehicles.  

The Consent Judgment includes terms to prevent deceptive practices, requiring Avondale Automotive to provide summaries of the injunctive terms to third-party marketers and to provide training to sales staff and managers.

“Arizona law requires that car dealers advertise honestly,” stated Goddard.  “In these tough economic times, it is especially important that dealers not promise sweepstake prizes that they don’t deliver or ‘bait and switch’ customers by advertising guaranteed credit approval, steep discounts, low monthly payments and low interest rates that no one actually receives."

Assistant Attorney General Rebecca Salisbury prosecuted the Steve Coury case. Assistant Attorney General Robert A. Zumoff prosecuted the Avondale Automotive case.  Copies of the consent judgments and complaints are available on the Attorney General’s website, www.azag.gov .

If you believe you have been a victim of consumer fraud, please contact the Attorney General's Office in Phoenix at 602.542.5763, in Tucson at 520.628.6504, or outside the Phoenix and Tucson metro areas at 800.352.8431.  Consumers can also file complaints online by visiting the Attorney General’s website at www.azag.gov .  To file a complaint in person, the Attorney General’s Office has satellite offices throughout the state with volunteers available to help. 

Copies of the Consent Judgments are attached. For more information, contact Molly Edwards at 602.542.8019.