October 28, 1996, SEATTLE -- Attorney General Christine Gregoire today filed a lawsuit against Mazda Motors of America, Inc. in a multi-state crack down on deceptive advertising used to promote "zero down" or "penny down" automobile leases.
The lawsuit, filed in King County Superior Court, alleges that Mazda requires consumers to pay up-front fees of up to $900 to get the advertised "zero down" or "penny down" lease. The up-front fees include a security deposit and the first month's lease payment and in some cases a $450 acquisition fee.
"Mazda implied a penny would get consumers into a new car," Gregoire said. "What the company didn't make clear was that it actually would cost nearly $1,000 to get that car."
Consumer laws require that advertising terms, such as Mazda's up-front fees, are legible and understandable to consumers.
"Because of the size of the print or the brief time it appears on the television screen, the use of abbreviations, and the confusing terminology, there is little chance consumers would understand it would cost hundreds of dollars to get into that car," Gregoire said.
"This lawsuit is based on the fact that Mazda misled consumers," she added.
This is the first time Washington has filed an auto lease lawsuit since Gregoire requested, and the State Legislature passed, significant changes in the Consumer Leasing Act in 1995. It is estimated that 25 per cent of all new car transactions in Washington are lease agreements.
Consumers throughout Washington were drawn into local Mazda dealerships through "zero down" advertisements that ran on local television stations from February to June 1996. Newspaper advertisements also ran during the same time period in the Seattle Times, the Post Intelligencer and the Tacoma News Tribune.
"Internal Mazda documents discovered in our investigation claim their national advertisement efforts were highly effective in attracting consumers who wanted to avoid the up-front, out-of-pocket expense when leasing a new car," said Gregoire.
The Attorney General's staff works closely with the Washington Automobile Dealers Association and major leasing institutions to correct problems in the auto leasing industry and educate local dealers on how to avoid deceptive advertising.
Other states filing lawsuits against Mazda include Minnesota, California, Connecticut, Arizona, Iowa, Massachusetts, Hawaii, Idaho, Illinois, Maryland, Missouri, Nevada, and Ohio. Mazda Motors of American Inc. is headquartered at 7755 Irvine Center Drive in Irvine, California.
The states attempted to settle without a lawsuit but Mazda was not responsive.