Posted by: Adam Solomon
July 23, 2008
Topic: Marketing and Advertising Law

A Nassau County auto dealer will pay consumers for persistently using misleading promotions intended to lure them into the dealership. The consumers, once baited into the dealership, were also subject to other fraudulent and unfair sales practices.

As part of the settlement Five Towns Mitsubishi of Burnside Ave. in Inwood must pay $115,000 in restitution to consumers and $35,000 in penalties and costs to the state.

Five Towns, owned by principals, Lester Wu, Vladimir Zana and Clara Shvartser, caused advertisements to be mailed to thousands of Nassau County consumers featuring a scratch-off ticket called Dash for Cash in which a consumer could win a cash prize, a free vehicle, a vacation, a free gas voucher or a $1,000 shopping spree. A winning ticket contained 3 like symbols in a row but it did not explain, what, if anything, the consumer won. Instead, they had to bring the ticket to the dealership in order to claim the prize.

Once at the dealership, consumers found that nearly all of them had won the vacation or $1,000 shopping spree. However, the vacation and shopping spree prizes had minimal value due to either blackout periods or expenditure requirements, including shipping and handling costs.

Five Towns also misled consumers by:

Obtaining signatures on contracts and finance agreements from consumers who mistakenly believed that they were filling out paperwork for vehicles they had won as part of the Dash for the Cash sweepstakes
Offering false discounts off the sales price of a vehicle by selling it at a higher retail sales price which essentially nullified the value of the discount offered
Having consumers sign documents with blank sections for figures and terms, and then later filling them out with terms that were not agreed upon
Failing to give all necessary documents to consumers at the time of purchase
Promising consumers that they could refinance at a better interest rate after making several car payments, or promising to pay one or more months of the insurance payments for the vehicle - and then reneging on those agreements
Inserting additional cost items without consumers' knowledge or consent, including VIN etching, service warranties, theft deterrent systems, GPS devices and other expensive options

Businesses conducting promotions must ensure the promotion is structurally sound and is not deceptive or misleading.

NY AG Settles with Auto Dealer for Using Deceptive Scratch-Off Game Cards to Lure Consumers

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