Have you ever seen a car dealership ad that promises to pay off the loan balance of your trade-in, even if you owe more than the value of the trade-in? Well, the Federal Trade Commission has stopped a handful of dealers from continuing to deceive buyers with this too-good-to-be-true offer.

See, what was happening, says the FTC, is that the dealers would just take that negative equity and roll it over into the loan for the new car. One dealer even required customers to go out of pocket for the difference.

"Buying a new car or truck is a major financial commitment, and the last thing consumers need is to be tricked into thinking that a dealer will 'pay off' what they owe on their current vehicle, when they really won't," said David Vladeck, Director of the FTC's Bureau of Consumer Protection. "The Federal Trade Commission is constantly on the lookout for potentially deceptive ads, and brings actions to stop them when appropriate."

The specific dealers named in the FTC complaints are: 1) Billion Auto, Inc., in Sioux Falls, South Dakota; 2) Frank Myers AutoMaxx, LLC, in Winston-Salem, North Carolina; 3) Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Connecticut, respectively, and which advertise jointly; 4) and Ramey Motors, Inc., in Princeton, West Virginia.

An ad for Key Hyundai contained the following statement: "I want your trade no matter how much you owe or what you're driving. In fact I'll pay off your trade when you upgrade to a nicer, newer vehicle." And Ramey Motors promised to "pay off your trade no matter what you owe . . . even if you're upside down, Ramey will pay off your trade."

The FTC has ordered these businesses to stop misrepresenting that they will pay the remaining loan balance on a consumer's trade-in.

The Commission says it began looking into these deceptive practices as a result of one of last year's public roundtables regarding consumer protection issues that may arise in the sale, financing or lease of motor vehicles.

FTC Takes Action To Stop Deceptive Car Dealership Ads [FTC.gov]

Links - http://consumerist.com/2012/03/ftc-goes-after-car-dealers-for-lying-to-customers-about-trade-ins.html