FEDERAL TRADE COMMISSION – A marketing services company and its owner will be banned from the auto industry under an Order issued by the Federal Trade Commission after the Commission found that they illegally misled consumers to believe their websites were affiliated with a government stimulus program and sent consumers deceptive mailings about prizes they had supposedly won.
In an opinion and order issued in October, the Commission ruled that Traffic Jam Events, Inc. and its owner, David J. Jeansonne, II, violated both the FTC Act and the Truth in Lending Act (TILA). The Commission concluded the company’s practices were deceptive and unfair to consumers in multiple ways.
The Commission found that the company sent numerous misleading mailings to entice consumers to auto sales sites by suggesting that these sites were affiliated with a government COVID-19 stimulus program when in fact the sales were not part of any such program. The mailers included lines like “IMPORTANT COVID-19 ECONOMIC STIMULUS DOCUMENTS ENCLOSED,” displayed the likeness of the Great Seal of the United States and contained a mock check, labeled “Stimulus Relief Program.”
In addition, the Commission determined that Traffic Jam and Jeansonne sent direct mail advertisements that deceptively indicated that consumers had won specific, valuable prizes—such as $2,500 or $5,000 cash—that the consumer could collect once they visited the car dealership.
Upon appearing to claim the prizes, however, consumers would learn that they had not won the indicated prize. The opinion cites complaints from consumers who responded to mailers that promised significant cash and were offered nominal door prizes instead, including one who drove an hour to get to a dealer only to find that they “Walked in for money, came out with bootlegged airpods.”
The Commission noted that the company and Jeansonne persisted in conducting these unlawful prize mailings despite entering into three prior consent orders with state authorities that identified their ads as deceptive.
The Commission also found that that the company’s mailers violated TILA’s requirements for advertising “closed-end credit” like car loans. Specifically, the company’s mailers prominently quoted monthly payments to purchase vehicles on credit, but did not provide, or hid in small print, key financing terms required by law that consumers need to determine the true cost of the advertised loans.
The Commission’s order bans Traffic Jam and Jeansonne from advertising, selling or leasing automobiles for 20 years. The order also prohibits them misrepresenting any material fact while marketing any product or service of any kind, as well as from any further violations of TILA’s disclosure requirements.
The Commission vote to issue the opinion and order in this matter was 4-0. The respondents have petitioned the Fifth Circuit Court of Appeals for review of the Commission’s opinion and order.
NOTE: When the Commission issues an order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $46,517.
Originally posted on Auto Dealer Today