Wednesday, December 26, 2007

Auto Dealer Closes Lot, Agrees to Change Ad Practices

Auto Dealer Closes Lot, Agrees to Change Ad Practices.
By Tim Christie
The Register-Guard 2007

A Eugene auto dealer has agreed to shut down one of his lots, stop what state officials called misleading advertising and pay $10,000 in a settlement agreement with the state Department of Justice.

John P. Kiefer, owner of Kiefer Kia, Kiefer Mazda and U.S. Auto Wholesale, all in Eugene, and CarMart Inc. in Portland, made false credit offers, misled consumers with some advertising and hid the true ownership of one of his dealerships, department officials said Monday.

"When dealerships purposefully confuse buyers in advertising as to whom they are dealing with and exactly what type of deal they are getting, our office must step in and stop the conduct," Oregon Attorney General Hardy Myers said.

"They requested we settle the matter, so that's what we did," Kiefer said. He said he felt his business was being careful with its advertising before, but will now "redouble our efforts to make sure our advertising is compliant" with state law.

To settle the charges, Kiefer reached an agreement called an Assurances of Voluntary Compliance with the Department of Justice. In the deal, in which he admitted no violation of the law, Kiefer agreed to:

• Permanently shut down CarMart, a used car lot in Portland, and not to open another used car store in the Portland metro area for at least one year.

Kiefer said the decision to close CarMart was made before the advertising issues arose with the state. "There was never a recommendation, request or suggestion (to close the lot) until I told them I would close it," he said.

• Advertise using only names of dealerships licensed with the Department of Motor Vehicles and, for one year, submit copies of all ads and direct mail flyers to the Justice Department staff for review 14 days before publication.

• Pay $10,000 to the Justice Department's Consumer Protection and Education Fund.

The Justice Department received numerous complaints about CarMart, department spokeswoman Jan Margosian said. Aimed at consumers who had filed for bankruptcy, the offer enticed customers with a prequalified certificate that supposedly was good for up to $24,995 in financing. Investigators found that consumers were not prequalified for any loan.

Consumers complained that CarMart refused to undo deals and return deposits and consumer trade-ins when the company was unable to obtain financing as negotiated. Oregon's Unlawful Trade Practices Act requires dealerships to do all three.

Kiefer's U.S. Auto Wholesale also ran afoul of investigators. The dealership was not a licensed dealership through the state Department of Motor Vehicles. Several times earlier this year, the dealership advertised a "vehicle disposal" sale at Gateway Mall in Springfield, calling it the "exclusive Oregon location" for a "West Coast auto disbursement" sale. In reality, it was a Kiefer sale, and thus there was no "exclusive Oregon location" nor a "West Coast" sale, the state said.

"When it comes to consumer protection laws in Oregon, advertising needs to be truthful," Margosian said.

Finally, investigators said there was deceptive advertising on an electronic billboard at Kiefer's Eugene Kia dealership, offering consumers free gas. Newspaper ads and placards on individuals cars also offered "free gas for a year" with the purchase of a new Kia.

In what investigators called "mice type" - so small it was barely readable - under each offer, consumers were told the deal was "a combination offer" and to "make your best deal on a package price ... Gas Offer is $500 gas card." State staff found the ads not to be clear and conspicuous and that $500 would not cover gas for a year for a typical driver.

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