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This is the FTC’s first action alleging income
falsification by auto dealers. The complaint also names the dealerships’
owner and manager, Richard Berry, as a defendant, and owner and president,
Linda Tate, as a relief defendant. “Buying a car is one of the biggest purchases
consumers make. When consumers tell an auto dealer how much they make and how
much they can pay upfront, the dealer can’t turn those facts into fiction,”
said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “The
FTC expects auto dealers to be honest with consumers from the first
advertisement to the final purchase.” Corporate Defendants According to the complaint, since at least
2014, Tate’s Auto has sought to increase its sales by falsifying consumers’
monthly income and down payments on financing applications and contracts
submitted to third-party financing companies. The four dealerships named in
the complaint are Tate’s Auto Center of Winslow, Tate’s Automotive, Tate
Ford-Lincoln-Mercury, and Tate’s Auto Center of Gallup. The FTC charges that, during the sales
process, Tate’s Auto asked consumers to provide personal
information—including their name, address, and monthly income—and told
consumers they would submit the information to financing companies. According
to the complaint, however, instead of using consumers’ actual information, in
many cases Tate’s Auto falsely inflated the numbers, making it appear that
consumers had higher monthly incomes than they really did. Tate’s Auto often
inflated the amount of a consumer’s down payment as well, according to the
complaint. The complaint also alleges that Tate’s Auto
representatives often prevented consumers from reviewing the income and down
payment information on the forms, such as by rushing consumers through the
process of reviewing and signing the financing applications, having consumers
fill out the forms over the phone, and failing to give them the income and
down payment portion of the application before they signed. In other cases, Tate’s Auto allegedly altered
financing documents after consumers signed them, without their knowledge.
Such consumers, the FTC alleges, often were approved for financing based on
the false information Tate’s Auto provided. As a result, financing companies
extended credit to consumers who defaulted at a higher rate than qualified
buyers. Many of the affected consumers are members of the Navajo Nation. The complaint also alleges that Tate’s Auto’s
advertising deceived consumers about the nature and terms of financing or
leasing offers. For example, Tate’s Auto allegedly advertised discounts and
incentives to consumers without adequately disclosing limitations or
restrictions that would prevent many customers from qualifying for them. Finally, the FTC alleges that Tate’s Auto’s
social media ads violated federal law by failing to disclose required terms.
The complaint charges Tate’s Auto with violating the FTC Act, the Truth in
Lending Act (TILA), and the Consumer Leasing Act (CLA). The FTC is seeking an
injunction barring the defendants from such practices in the future. Individual Defendants The complaint also names Richard Barry as a
defendant and Linda Tate as a relief defendant. According to the FTC, acting
as owner of the four dealerships, Barry formulated, directed, controlled, had
the authority to control, or participated in Tate’s Auto’s allegedly illegal
conduct. The FTC charges that Tate has received hundreds of thousands of
dollars from the other defendants, including funds directly connected to the
alleged unlawful conduct. The Commission vote authorizing the staff to
file the complaint was 5-0. The complaint was filed in the U.S. District
Court for the District of Arizona. The FTC wishes to acknowledge the valuable
assistance of the Navajo Nation Human Rights Commission during the
investigation of this case. NOTE: The Commission files a complaint when it has “reason to
believe” that the law has been or is being violated and it appears to the
Commission that a proceeding is in the public interest. The case will be
decided by the court. The Federal Trade Commission works to promote
competition, and protect,
and educate consumers. You can learn
more about consumer topics and file a consumer
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