A marketing services company and its owner will be banned from the auto industry under an order from the Federal Trade Commission after the commission found that they illegally misled consumers into believing their websites were linked to a government stimulus program and sent misleading emails to consumers about prizes they supposedly won.
In opinion and order Issued in October, the committee ruled that Traffic Jam Events, Inc. And its owner, David J.Jeansonne, II, violated both the FTC and the Truth in Lending Act (TILA). The panel concluded that the company’s practices were deceptive and unfair to consumers in multiple ways.
The commission found that the company sent numerous misleading mailings to lure consumers to car dealership sites by stating that these sites were affiliated with a government’s COVID-19 stimulus program when in fact the sales were not part of any such program. The messages included lines such as “Important COVID-19 Economic Stimulus Documents Included,” showing what the Great Seal of the United States would look like and containing a mock check, titled “Stimulus Relief Program.”
In addition, the commission determined that Traffic Jam and Jeansonne sent direct mail advertisements deceptively indicating that consumers had won specific valuable prizes—such as $2,500 or $5,000 in cash—that a consumer could collect by simply visiting a car dealership.
However, when appearing to claim prizes, consumers will learn that they did not win the indicated prize. The opinion cites complaints from consumers who responded to mailings promising big money and receiving token prizes instead, including one who drove an hour to get to a dealer only to find they “came in for money, and walked out with illegal airpods.”
The panel noted that the company and Janson insisted on conducting this illegal award correspondence despite entering into three pre-approval orders with state authorities that identified their ads as fraudulent.
The commission also found that the company’s mails violated TILA’s requirements to advertise “closed credit” such as auto loans. Specifically, the company’s correspondence prominently conveyed monthly payments for car purchases on credit, but did not present, or disguise in small letters, the key financing terms required by law and needed by consumers to determine the true cost of advertised loans.
The Commission’s order, Traffic Jam and Jeansonne, bans cars from advertising, selling or renting cars for 20 years. The order also prohibits them from misrepresenting any material fact while marketing any product or service of any kind, as well as from any other violations of TILA’s disclosure requirements.
The authority voted to issue the opinion and the system in this regard by 4-0. The defendants petitioned the Fifth Circuit Court of Appeals for a review of the commission’s opinion and order.
note: When the commission issues an order on a final basis, it holds the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $46,517.