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Terry Goddard Settles False Advertising Case for $152,000, Outlines Consumer Protection

(Phoenix, Ariz. – January 4, 2005)  Arizona Attorney General Terry Goddard today announced the settlement of a consumer fraud action with a Tucson auto dealer for $152,000, one of the highest recoveries in state history for deceptive advertising claims.  Goddard announced the settlement during a press conference where he outlined consumer protection priorities for 2005.

The consent agreement settles the lawsuit filed by the Arizona Attorney General’s Office against Precision Toyota of Tucson. The suit alleged the dealer falsely advertised new cars for sale at 50 percent off the manufacturer’s suggested retail price.  The consent agreement requires Precision Toyota to clean up its advertising act.  Future Precision Toyota ads must be clear, truthful and nonmisleading.

“Precision Toyota tried a bait-and-switch tactic, and it backfired,” Goddard said.  “Arizona consumers have the right to expect a fair and truthful marketplace.  This settlement sends a clear message to Arizona businesses that false advertising to bring customers into their showrooms, stores or companies will not be tolerated.”

Precision Toyota must pay the Arizona Attorney General’s Office $152,000. The money will be used to pay for consumer education, attorneys’ fees and investigation costs.   

In its lawsuit, the Attorney General alleged that Precision Toyota violated the state’s Consumer Fraud Act by engaging in false advertising from about August 20 through 30, 2004, in its television, radio and newspaper ads for a “50% off MSRP” sale on all new Toyota vehicles. The “50% off MSRP” sale required consumers to sign up for a 36-month lease on a new vehicle, which also required a down payment. At the end of the lease period, Precision Toyota would give the consumer an option to purchase the vehicle for 50 percent off the vehicle’s residual value.    

“The Precision Toyota case is a prime example of misleading tactics some businesses use to sell their products,” Goddard said.  “I’m committed to ensuring consumers have a level playing field in Arizona’s marketplace.”

The Attorney General’s Office received more than 65,000 consumer complaint calls last year, a figure Goddard said makes clear the need to place high priority on protecting consumers. He addressedseveral areas of emphasis for 2005, which include:

Predatory Lending:  The Attorney General’s Office is committed to safeguarding Arizona consumers from the predatory practices of unscrupulous lenders and mortgage brokers. Specifically, Goddard would like to see Arizona consumers protected from predatory fees and practices involved in highcost loans that 28 other states have already banned. These include:

  • Prepayment penalties that can trap consumers in bad loans.
  • Balloon payments that force some consumers into foreclosure.
  • Insurance that is paid by the consumer but benefits the lender.

Price Gouging:  Arizona consumers have no legal protection from price gougers, as the state learned during the gasoline pipeline break and the flu vaccine shortage. Half the states in the country have laws prohibiting price gouging, and their use has saved millions of dollars for consumers.  Florida Governor Jeb Bush successfully used his state’s price-gouging laws to protect Floridians after their hurricanes this year, and U.S. Health and Human Services Secretary Tommy Thompson urged the use of price-gouging laws to protect consumers during the flu vaccine shortage.  Arizonans need the protection of a price-gouging law when a disaster disrupts the operation of the free market in our state.

Identity Theft:  Arizona has the highest rate of identity theft in the nation, and Goddard is committed to reducing this crime.  He supports rules that require businesses to shred customer financial information when disposing of documents.  He also supports business notification to customers when records or computer systems have been compromised.  The Attorney General’s Office also will step up education efforts to help consumers understand how to prevent ID theft.  

Internet Safety:  Children are becoming computer literate at a younger age than ever and are using the Internet both at home and at school. Goddard is committed to providing information to make the Internet a safe place for children to visit. Because the Internet is an anonymous medium, it is important for parents to understand what Web sites children use and who they talk with via email.  Goddard will continue to take Internet Safety forums to Boys and Girls Clubs across Arizona to ensure that children understand how to be safe while learning from the Internet.  

Wireless Truth in Billing:  Goddard is committed to full disclosure and fair practices for consumers with regard to wireless telecommunications providers. Current law leaves Arizona consumers exposed to fraudulent practices.  These include unauthorized carrier changes (“slamming”) and unauthorized carrier charges (“cramming”). Goddard supports legislation that will allow the Arizona Corporation Commission to regulate wireless telecommunication providers with provisions similar to ones already in place for landline providers.

Gift Card Fee Regulation:   As gift cards have become more popular, consumers should be confident they are getting what they pay for. Goddard believes that if someone buys a $50 gift card,the recipient should be able to redeem it at full value.  At the very least, if a business or retailer charges fees or imposes an expiration date, the consumer should be provided all relevant information on the card where the consumer and recipient can read the terms and conditions.

“Standing up for consumers is a vital part of our work,” Goddard said. “We will be more aggressive than ever this year investigating cases of fraud and abuse, and when appropriate, prosecuting them. For those who may have plans to rip off the people of Arizona, we have this to say: You’ve picked the wrong state.”