FTC orders auto dealerships shut down in settlement
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The Federal Trade Commission said Friday that a group of auto dealerships in Arizona and New Mexico must stop business operations as part of a court-approved settlement resolving agency charges that the dealerships deceived consumers and falsified information on vehicle financing applications.
The FTC alleged in a case filed in 2018 that the dealerships Tate’s Auto Center of Winslow Inc., in Winslow, Arizona; Tate’s Automotive Inc.; Tate Ford-Lincoln-Mercury Inc., Tate’s Auto Center of Gallup Inc. and Richard Berry, a dealership officer, falsified consumers’ income and down payment information on vehicle financing applications and misrepresented important financial terms in vehicle advertisements. It said the case continues against Mr. Berry and another defendant.
The FTC said the settling defendants are now in Chapter 7 bankruptcy proceedings and under the control of a bankruptcy trustee. The settlement includes a $7.2 million monetary judgment against the defendants and makes the Commission an unsecured claimant in the bankruptcy proceedings.
The statement said the settlement prohibits the trustee from selling any consumer information held by the defendants as part of liquidation of the company’s assets and the trustee must either destroy the information or provide it to the commission for destruction.
Andrew Smith, director of the FTC’s Bureau of Consumer Protection’s said in a statement, “These auto dealers sent bogus applications to finance companies to qualify consumers for car loans that they could not afford, subjecting the consumers to defaults and repossessions.
“Falsifying income and down payment information on car loan documents is illegal, and the FTC won’t hesitate to take action against car dealers who engage in this harmful conduct.”
An attorney for the dealerships did not immediately respond to a request for comment.
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