Dealership's Ads Violated TILA and the CLA by Failing to Include Legally Required Credit Information

The Federal Trade Commission sued several car dealerships and their co-owners for violating the  . . .

by Eric L. Johnson*

The Federal Trade Commission sued several car dealerships and their co-owners for violating the Federal Trade Commission Act, the Truth in Lending Act, the Consumer Leasing Act, and corresponding regulations. Since then, the dealerships settled their claims with the FTC and filed for bankruptcy protection. The FTC moved for summary judgment on its claims against the co-owners, and the U.S. District Court for the District of Arizona granted the motion in part and denied it in part. Counts I and II alleged that the defendants violated the FTC Act by telling customers that they would submit accurate financial information to finance companies but instead inflated income and down payment information. The court denied summary judgment on these counts. The court found that there was insufficient evidence to show that the defendants' practice was likely to mislead customers, given evidence that some customers were aware that their information was inaccurately reported to finance companies and, in some cases, complicit. Counts III and IV alleged that the defendants' advertising misrepresented or failed to disclose material information, in violation of the FTC Act.  

In particular, the FTC alleged that one advertisement with a $169 monthly payment was false, another group of advertisements promoting a "Tires for Life" program did not disclose material limitations and exclusions, and a third advertisement offering a $5,250 discount hid material information behind a fine-print disclaimer in a nondescript hyperlink. The court found that it could not, as a matter of law, determine that these ads were deceptive and, therefore, denied summary judgment on these counts. Counts V and VI alleged that the defendants' advertising violated TILA and the CLA by failing to include legally required credit information. The court granted the FTC summary judgment on these counts, finding that some of the defendants' ads stated down payments but failed to include other required information such as the terms of repayment or the annual percentage rate. See Federal Trade Commission v. Tate's Auto Center of Winslow Inc., 2021 U.S. Dist. LEXIS 23088 (D. Ariz. February 5, 2021).

*Eric ( is a Partner in the law firm of Hudson Cook, LLP, Editor in Chief of's Spot Delivery®, a monthly legal newsletter for auto dealers and a contributing author to the F&I Legal Desk Book.  For information, visit


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