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New York Cites Dealers For "Clunkers" Deception

Dealers allegedly stretch the truth to cash in

August 11, 2009

In New York, Attorney General Andrew M. Cuomo has issued cease-and-desist letters to nearly 40 auto dealers across New York state whose advertisements for the new federal Car Allowance Rebate System were allegedly misleading and deceptive.

Cuomo took the action after reviewing a number of advertisements from various car dealerships that omitted significant requirements that had to be met in order for a consumer to be eligible to get the rebate. According to the complete, the ads mislead consumers into believing that their trade-in vehicle qualifies for the program when it does not or that they are eligible for a several-thousand-dollar rebate, when they are not. The letters order all dealerships to immediately modify promotions and advertisements to clearly explain how the program works.

The "Cash for Clunkers" program provides funds with which auto dealerships may credit consumers $3,500 or $4,500 for trade-ins that may be worth considerably less. It seeks to boost the economy and promote a cleaner environment by encouraging consumers to trade in their current vehicle for a newer, more fuel efficient one.

"This new federal program not only allows consumers to buy new vehicles that they otherwise might not be able to afford, but creates an enormous incentive for people to choose environmentally-sound, fuel-efficient cars," Cuomo said. “This program could be a boon for both our economy and our environment, as well as provide much-needed financial assistance to consumers. Businesses that fail to advertise honestly and try to take advantage of this federal program will face legal action by my office.”

Cuomo said advertisements by several auto dealerships aggressively promoted the program without fully disclosing its limitations, while other dealers advertised similarly named "cash for clunker" promotions that have nothing to do with the CARS program without making the distinction. Cuomo urged consumers to become familiar with the general requirements of the federal CARS program: It applies to the purchase or lease of a new vehicle;

• The trade-in must be in drivable condition;

• The trade-in vehicle’s fuel efficiency must not exceed a combined city/highway fuel economy of 18 mpg;

• The trade-in vehicle must have been insured, and registered to the current owner, for at least one year prior to the trade-in;

• If a transaction falls within the CARS program, the amount credited to the consumer is $3,500 or $4,500 depending on the type of vehicle being traded in, the type of vehicle being purchased, and how much the fuel efficiency of the new vehicle exceeds that of the trade-in. For example, in the case of a passenger vehicle being traded in and a new passenger vehicle being purchased, if the new vehicle has a combined fuel efficiency of at least 4 mpg but less than 10 mpg better than the trade-in vehicle, then the credit is $3,500; if the difference is at least 10 mpg, then the credit is $4,500.

Dealerships must register with the National Highway Traffic Safety Administration.

Dealerships that received cease/desist letters, include, by region:

• New York Metro: Plaza Hyundai, Ltd.; City World Toyota; City World Hyundai

• Nassau County: Garden City Jeep Chrysler Dodge; Hassel Volvo; Karp Volvo; Millenium Toyota and Nissan of Garden City

• Suffolk County: Competition Toyota; Security Dodge; Town & Country Jeep Chrysler Dodge; Atlantic of Bay Shore

• Westchester: Smith Cairns Ford, Inc. of White Plains; Central Avenue Chrysler Jeep Dodge

• Poughkeepsie: Healey Chevrolet; Healey Ford; Newburgh Park Motors

• Buffalo: Basil Resale Sheridan; Basil Toyota; Cappellino Buick; Dave Smith Ford; Emerling Chevrolet; Paddock Chevrolet

• Rochester: Lessord Chrysler Products; Bob Johnson Chevrolet

• Syracuse: Fayetteville Dodge; Royal Nissan-Subaru; Summit Dodge

• Binghamton/Southern Tier: Delhi Motor Company, Inc.; Gault Toyota; Miller Auto Team; Stafford Chevrolet

• Utica: Victory Chrysler Dodge Jeep; Cooper Kia; Steet Ponte Chevrolet; Don’s Superstore; Davidson Chevrolet Cadillac Buick Pontiac GMC of Rome; Carbone Nissan; Carbone Dodge Chrysler Jeep

•Plattsburgh: Dannemora Ford; Garvey Hyundai

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