Lithia Nissan of Fresno Settles with DMV over False Advertising in Junk Mail
SACRAMENTO, Calif.--April 25, 2003--The California Department of Motor Vehicles (DMV) has taken a strong stand against false advertising in junk mail and newspaper advertisements by suspending Lithia Nissan of Fresno from doing business for three days under a settlement agreement announced today, which will take effect in May. The DMV has also referred this consumer fraud case to the Fresno County District Attorney's office for a civil enforcement action.Lithia Nissan is located at 5580 North Blackstone Avenue, Fresno, California, and is a subsidiary of Lithia Motors, Inc., of Medford, Oregon .
The DMV alleged that from June 2000 through November 2001, Lithia Nissan published false advertisements in The Fresno Bee and mailed false advertisements directly marketed to over 75,000 consumers. The DMV charged that Lithia Nissan:
| -- | Falsely advertised a "no gimmick," guaranteed $29,393 loan on all cars in stock, then required consumers to fill out a credit application and denied loans to some of the consumers. |
| -- | Falsely advertised a pre-approved VISA platinum credit card with $5,000 limits, included a credit card in the mailer with instructions to "bring in your new VISA credit card for activation," then required consumers to fill out a credit application and used the consumers' financial information to apply for a VISA credit card over the Internet. |
| -- | Falsely advertised $200 in Free Groceries for test-driving any vehicle when, in fact, the consumer had to pay and mail in an order to receive discount coupons from a limited selection of products. |
| -- | Falsely advertised new and used vehicles for sale at the invoice or wholesale price, then fraudulently failed to sell at the advertised price. |
| -- | Falsely advertised vehicles for sale for "$199 $299 $399 and up" without identifying any specific vehicles at that price. |
| -- | Falsely advertised that a consumer could drive away in a new car for only a $45 documentation fee. |
| -- | Invited consumers to bring in their own cars to sell and falsely advertised that "used car buyers will be on-site bidding for your vehicle, ensuring you top dollar" when, in fact, only appraisers were present and no bidding occurred. |
"The mass marketing advertisements here directly targeted thousands of a specific and vulnerable segment of consumers in the State of California," said DMV Director Steven Gourley. "This enforcement action sends a strong message to Lithia Nissan and all other California dealerships that these kinds of illegal business practices will not be tolerated."
The settlement agreement suspends Lithia Nissan's vehicle dealer license for 13 days. Without admitting any liability, Lithia Nissan agreed to pay the DMV $160,000 to avoid eight of the 13 days suspension, plus reimbursing the department's investigative and legal costs of $25,000. In addition, two of the 13 days will be stayed in abeyance while Lithia Nissan serves four years probation. That leaves three days of license suspension, during which time Lithia will be prohibited from selling any vehicles.
One corporate officer of Lithia Nissan of Fresno, Sidney Bruce DeBoer, 59, of Ashland, Oregon, and one of its former corporate officers, Manfred L. "Dick" Heimann, 59, of Medford, Oregon, own other Lithia dealerships throughout California and have had other Lithia dealer licenses previously disciplined over the past four years. Although given assurances that remedial measures have been taken to prevent any advertising violations from occurring in the future, the DMV will conduct four unannounced audits of Lithia Nissan during the four-year probationary period. Lithia Nissan agreed to reimburse the DMV for the department's costs up to $7,500 per audit.
The alleged violations were brought to the department's attention when DMV investigators received the direct marketing advertisements in their personal mail, and when an anonymous dealer forwarded a copy of The Fresno Bee's advertisement to the DMV for investigation. The case had been set for a hearing before an administrative law judge beginning on May 19, 2003.
The DMV licenses drivers; maintains driving records; registers and issues titles to vehicles and vessels; investigates auto and identity related fraud; licenses vehicle dealers, salespersons, vehicle dismantlers, driving schools, and traffic violator schools. The DMV is a department of the Business, Transportation and Housing Agency, Maria Contreras-Sweet, Secretary. Additional information about the DMV can be found on the department's Web site at: www.dmv.ca.gov