AG Hardy Myers Files Settlements With Auto Dealerships & Direct Marketers; Warns Others About 'False Credit Offers'
Attorney General Hardy Myers today filed agreements in Marion and Washington County Circuit Courts with two car dealerships and a direct marketing company for allegedly luring consumers onto automobile sales lots with direct mail flyers containing false offers of credit.
Named in the Assurance of Voluntary Compliance (AVC) filed in Hillsboro are Hillsboro Automotive Group, Inc., doing business as Hillsboro Chrysler Jeep, Larry Miller Chrysler Jeep and Larry Miller Hillsboro Chrysler Jeep and Larry H. Miller Corporation-Oregon, doing business as Honda of St. Johns and Larry Miller Honda of St. Johns. The AVC admits no law violation.
Direct Marketing Associates, Corp, doing business as onlinebkmanager.com and Evergreen Automotive Acceptance, and its president, John Rainey, were named in the AVC filed in Salem. The AVC admits no law violation.
"Both the dealers and marketing company were blatantly violating state and federal laws with so-called, pre-approved offers of credit that consumers never received," Myers said. "Unfortunately, these are the first of many sanctions to come concerning these types of misleading offers. The continuing pattern of dealers and marketers ignoring the law and using these illusory credit offers must be stopped."
Oregon Department of Justice legal staff found that both the Hillsboro and St. Johns dealerships sent out "Vehicle Buyback Notice" direct flyers in June offering to "buy back consumers' current vehicles at 20 percent of $4,000 over NADA book value" violating an Oregon Administrative Rule that makes it illegal to guarantee a minimum amount that will be paid for a trade-in vehicle. Additionally, the Hillsboro dealership flyers stated that the recipients had "been pre-approved" for loans "of up to $42,988" at a 4.9% interest rate "with no money down". This offer does not comply with the federal Truth in Lending Act.
Direct Marketing Associates, Corp. of Phoenix, Arizona created and mailed flyers offering pre-approved financing for three Oregon dealerships including Ron Tonkin Chevrolet of Portland and the "Ron Tonkin Family of Dealerships," Northwest Jeep of Beaverton and Kiefer's Kia of Eugene. The Ron Tonkin offers, all through DMA's Evergreen Automotive Acceptance, touted pre-approved loans up to $23,375 only to be disclaimed in "mice-type" at the bottom of the page that the loans were only for $1,000. Targeting consumers who had filed bankruptcy, Tonkin Chevrolet's pre-approved offer for up to $23,375 was to those consumers' whose "Chapter 7 or 13 was discharged or will be discharged." It included no payments up to 45 days, 5.9 percent financing and $0 down. The Kiefer Kia offer stated that the recipients "are approved for an auto loan of up to $19,500.00" through Financial Services. Disclaimed in "mice-type" at the bottom of the page is that the "pre-approval" is only for $1,000.
Oregon Department of Justice staff found that all the offers of credit were false and consumers were not pre-approved for any loan, and certainly not at the offered terms. It was also discovered that Evergreen Automotive Acceptance and Financial Services are not finance companies and cannot extend credit.
Another allegedly illegal practice used by the marketing company included using an exception to the federal Fair Credit Reporting Act that allows businesses to pull credit information in order to make a "firm offer of credit." The company used the exception to obtain the mailing lists but was not making firm offers of credit. The Northwest Jeep flyers stated that the recipients "are approved for an auto loan of up to $23,375.00" through Financial Services. At the bottom of the flyer is a "prescreen and opt-out notice" letting the recipients know that they can stop receiving "prescreened" offers of credit. "Unfortunately, consumers were being deceived into thinking they were approved for a $23,375 loan through Financial Services, when in reality no offer of credit was being extended," Myers explained.
Under the settlement agreement, the marketing company must comply with state and federal law when obtaining mailing lists for marketing "pre-approved" loans and the loans must be firm offers of credit through a valid finance company.
Furthermore, when making a firm offer of credit under FCRA, the marketing company flyers must include consumer information on how to stop receiving offers of credit and insurance through the mail by calling the toll-free number of 1-888-5-OPTOUT.
Oregon Department of Justice has settled or is in settlement negotiations with all three Oregon dealerships.
Consumers wanting more information about Oregon law concerning pre-approved loan offers may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. Justice is online at www.doj.state.or.us.
More information about the requirements of the Fair Credit Reporting Act can be found at the Federal Trade Commission's website at www.ftc.gov.
Jan Margosian, (503) 947-4333 (media line only) firstname.lastname@example.org