Beware of car dealer ads that promise to pay off the loan on your trade-in.
In a first-of-its-kind case, the Federal Trade Commission is targeting five car dealers in four states.
Regulators say the dealers deceived consumers by promising to pay off their loans, no matter what was owed on the cars. But the FTC says the balance was usually rolled right into the new car loan. One dealer later required customers to pay it out of pocket.
Settlements with five dealers -- in South Dakota, North Carolina, Connecticut and West Virginia -- will require them to stop running the ads on their webpages and other sites such as YouTube.
The two local dealers named in the FTC's complaints are Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford.
The FTC has brought cases against auto dealers before, but not for this kind of advertising.
Jill Merriam, owner of Key Hyundai of Manchester and Hyundai of Milford said she does not think the ads were deceptive, but admits they made a mistake.
“There were two videos out of maybe fifty or sixty that we had on our YouTube channel and as soon as they notified us we quickly took them down,” Merriam said. “It was an error on our part. The issue for the videos was not the content of the video but that they were lacking a disclaimer."
The FTC said despite the dealers’ claims, consumers still end up responsible for paying their trade-in loans. However, Merriam said her dealerships do, in fact, help customers who owe more than their trade-ins are worth.
“We'll tell them here is the price, here is the payment, here is what we're going to give you for your trade,” Merriam said.
Merriam said the FTC settlement has been described to her as a “slap on the wrist.”
“We make sure at all times when we run an ad that we vet it through our attorney to make sure that there's not something that we're personally missing,” Merriam said.