Excerpt
Sage Auto coerced users to sign different contracts, charged for unauthrosied add-ons and faked its reviews.
Our analysis
FTC took action against the Sage Auto Group for employing deceptive tactics in their auto sales and financing practices. The defendants utilized "yo-yo" financing tactics, pressuring consumers who had already signed contracts and driven off the dealership lots into accepting different, less favorable deals.
-They also added unauthorized charges for aftermarket products and services to consumers' car financing agreements. The defendants enticed consumers, including financially distressed and non-English speaking individuals, through various forms of advertising, including print, internet, radio, and television, making misleading claims about vehicle availability, low prices, low monthly payments, and low down payments.
-Additionally, they deceptively offered lease agreements as purchase options and falsely claimed they would pay off consumers' trade-in vehicles when consumers remained responsible for any outstanding amounts.
-Furthermore, the defendants were alleged to have used fraudulent online reviews to promote their dealerships and discredit negative feedback related to their illegal practices. They and their agents posted positive, five-star reviews that appeared to be from impartial reviewers but failed to disclose their affiliation with the dealerships.
These deceptive practices violated Section 5(a) of the FTC Act, 15 U.S.C. § 45, and encompassed forced actions, fake social proof, and hidden costs.
Outcome
As a case outcome, the Sage Auto Group and its owners are ordered to pay $3.5 million in fines and are prohibited from making misrepresentations related to the sale, financing, or leasing of vehicles, addressing deceptive and unfair sales and financing tactics.
Parties
Federal Trade Commission and Universal City Nissan
Case number
2:16-cv-07329
Decision
Related deceptive patterns
Forced action involves a provider offering users something they want - but requiring them to do something in return. It may be combined with other deceptive patterns like sneaking (so users don't notice it happening) or trick wording (to make the action seem more desirable than it is). Sometimes an optional action is presented as a forced action, through the use of visual interference or trick wording. In cookie consent interfaces, forced action is sometimes carried out through "bundled consent". This involves combining multiple agreements into a single action, and making it hard or impossible for a user to selectively grant consent.
The fake social proof deceptive pattern creates an illusion of popularity and credibility by presenting users with falsified or exaggerated endorsements, such as reviews, testimonials, or activity messages. This manipulation preys on the social proof cognitive bias, in which which individuals are likely to conform to the behaviour of others. It is a shortcut that allows people to avoid the hard work of carrying out a critical evaluation of their own. By using the fake social proof deceptive pattern, providers can trick users into making a purchase or engaging with their offerings.
Hidden costs involve obscuring or omitting additional fees, charges, or costs until the user is well into the purchasing or sign-up process. By that point, the user has already invested time and effort into the transaction and is more likely to proceed despite the unexpected costs.
Related laws
Prohibits deceptive acts or practices that misrepresent or omit material facts.