The New York City Department of Consumer Affairs ("DCA") was recently awarded more than $3 million in its lawsuit against Major World, which is one of the largest used car dealers in New York City. The DCA alleged that Major World engaged in false advertising and other deceptive and illegal practices when targeting vulnerable low-income and immigrant consumers. The decision was issued by NYC's Office of Administrative Trials and Hearings.
While this action is an important reminder that marketers can be subject to significant liability if they don't comply with NYC's consumer protection laws, the decision also provides some insight into how NYC's administrative law judges approach false advertising cases. Here are just a few highlights from the long and complicated decision.
DCA alleged that Major World falsely advertised that it has "Over 3000 vehicles in-stock" and that it is the "world's largest used car dealer." The ALJ held that these "generalized or exaggerated" statements were non-actionable "puffery," however. The ALJ wrote, "It seems unlikely that even the most ignorant purchaser would have believed that Major World had precisely 3,000 vehicles for sale or would have attached much importance to whether Major World had only 2,100 instead of 3,000 vehicles." The ALJ also wrote that, "it is implausible that a purchaser relied in any way upon the assertion that Major World was the world's largest dealership."
The DCA also alleged that Major World deceptively advertised financing terms such as "$0 down financing available" and "You can drive me for as little as $99 per month." The ALJ agreed, holding that these and similar claims were deceptive because Major World did not properly disclose the loan rate and other material offer terms. The ALJ noted that the fact that the information was disclosed elsewhere on Major World's website was not sufficient to cure the deception.
The ALJ also held that claims that a purchaser had the "best chance" to get approved for a loan at Major World was not deceptive for a number of reasons, including that it was "a vague and subjective statement that no consumer would likely be misled by."
The DCA also alleged that it was deceptive for Major World to offer a free gift or cash back in connection with the purchase of a car. The ALJ agreed, saying these benefits were "illusory" and "meaningless" since the price of the car is typically negotiated.
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
