Arizona and New Mexico Auto Dealerships Charged by FTC with Falsifying Consumers’ Information on Finance Documents

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Four auto dealers operating in Arizona and New Mexico were charged by the Federal Trade Commission for an array of alleged illegal activities. The charges include falsifying consumers’ income and down payment information on vehicle financing applications. Additionally, the dealerships misrepresented important financial terms in vehicle advertisements.

“Buying a car is one of the biggest purchases consumers make,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “When consumers tell an auto dealer how much they make and how much they can pay upfront, the dealer can’t turn those facts into fiction.

“The FTC expects auto dealers to be honest with consumers from the first advertisement to the final purchase.”

The FTC complaint is the first of its kind, alleging income falsification by auto dealers. Together with the dealerships, two owners were also named in the allegations. Richard Berry, owner and manager, is named as a defendant, while owner and president Linda Tate, is named as a relief defendant.

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According to the FTC’s complaint, dating back to 2014, Tate’s Automotive tried to increase its sales by falsifying consumers’ monthly income and down payments on financing applications and contracts submitted to third-party financing companies. The four dealerships named in the complaint are Tate’s Automotive, Tate’s Auto Center of Winslow, Tate’s Auto Center of Gallup and Tate Ford-Lincoln-Mercury.

The FTC charged that, during the sales process, Tate’s Auto asked consumers to provide personal information, including the customer’s name, address and monthly income.

After obtaining that information, Tate’s Auto told consumers it would be responsible for submitting the information to financing companies. However, according to the complaint, Tate’s Auto falsely inflated consumers’ monthly incomes. Further, according to the complaint, Tate’s Automotive routinely inflated the amount of a consumer’s down payment as well.

The FTC complaint also alleges Tate’s Auto representatives prevented consumers from reviewing the income and down payment information on their own forms. Representatives often rushed consumers through the process of reviewing and signing financing applications, had consumers fill out forms via phone or failed to give them the income and down payment portion of the application before it was signed.

In certain instances, Tate’s Auto also allegedly altered finance documents after they were signed by the consumer, without their knowledge. Some of the consumers, the FTC alleges, were subsequently approved for financing based on the false information provided by Tate’s Automotive. As a result, finance companies extended credit to consumers who defaulted at a higher rate than qualified buyers.

The FTC also alleges that Tate’s Auto deceived consumers about the terms and conditions of finance and lease offers. For example, Tate’s Auto allegedly advertised discounts and incentives to consumers without adequately disclosing limitations or restrictions that would prevent the majority of customers from qualifying in the first place.

Finally, the FTC alleged that Tate’s Auto’s social media ads violated federal law by failing to disclose required terms. The complaint charges Tate’s Auto with violating the FTC Act, the Truth in Lending Act and the Consumer Leasing Act. Accordingly, the FTC is seeking an injunction barring the defendants from said practices in the future.