SEATTLE- Attorney General Christine Gregoire today announced that Washington with 22 other states and the Federal Trade Commission, have reached a $1 million settlement with four auto manufacturers that promises to change the way auto leases are advertised nationwide.
The settlement with General Motors, Honda, Isuzu and Mitsubishi involves deceptive "O down" and "nothing down" auto leasing advertisements that offer consumers a new car with no down payment.
"The ads led consumers to believe they could lease a new car with no money down," said Gregoire. "Our investigation revealed consumers typically ended up paying nearly eight hundred dollars to take home the car."
"The settlement requires auto leasing advertisements to disclose "clearly and conspicuously" the total costs and fees the consumer must incur to drive the car away," she said. Gregoire further explained that disclosures of lease terms must be readable and understandable to consumers.
Automobile leases have become more popular in recent years. In 1995, 25 percent of new cars delivered directly to consumers were leased, compared to 10 percent in 1989. Gregoire noted that leasing a car can be more complicated for consumers who are used to buying one.
"We've found that a big part of the problem is the advertising," she said. "The fine print in these ads makes it difficult for consumers to fully understand the terms of the lease."
The investigations and negotiations were conducted jointly with the Federal Trade Commission in an unusual show of force by state and federal law enforcement officials.
"When federal and state officials work together like this, it gives advertisers a no nonsense signal that what they're doing has to change," Gregoire said. "It also tells companies what they need to know to avoid trouble."
Other states joined in the agreement are Arizona, California, Connecticut, Florida, Hawaii, Idaho, Iowa, Illinois, Kansas, Maryland, Massachusetts, Minnesota, Missouri, New Jersey, New Mexico, Nevada, New York, Pennsylvania, Tennessee, North Carolina, Nebraska and Indiana.
The states are members of a group that has been investigating auto lease advertising practices across the country. Fifteen of those states, including Washington, recently sued Mazda for advertising "O down" deals.