Auto Dealer Group to Cease Business Operations As Part of FTC Settlement

Topics: Tate’s Auto Group

Auto Dealer Group to Cease Business Operations As Part of FTC Settlement

Agency: Federal Trade Commission
Date: 4 September 2020

Tate’s Auto Group, now in bankruptcy proceedings, was charged with falsifying consumer information on financing applications

A group of auto dealerships in Arizona and New Mexico must cease business operations as part of a court-approved settlement resolving Federal Trade Commission charges that the dealerships deceived consumers and falsified information on vehicle financing applications.

In a case filed in 2018, the FTC alleged that Tate’s Auto Center of Winslow, Inc.; Tate’s Automotive, Inc.; Tate Ford-Lincoln-Mercury, Inc. (doing business as Tate’s Auto Center); Tate’s Auto Center of Gallup, Inc.; and Richard Berry, an officer of the dealerships, falsified consumers’ income and down payment information on vehicle financing applications and misrepresented important financial terms in vehicle advertisements. The case continues against Berry and relief defendant Linda Tate.

“These auto dealers sent bogus applications to finance companies to qualify consumers for car loans that they could not afford, subjecting the consumers to defaults and repossessions,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Falsifying income and down payment information on car loan documents is illegal, and the FTC won’t hesitate to take action against car dealers who engage in this harmful conduct.”

The settling defendants are currently in Chapter 7 bankruptcy proceedings and are under the control of a bankruptcy trustee. The settlement includes a monetary judgment of $7,203,227 against the defendants and makes the Commission an unsecured claimant in the bankruptcy proceedings.

In addition, the settlement prohibits the trustee from selling any consumer information held by the defendants as part of the liquidation of the company’s assets. Instead, the trustee must either destroy the information or provide it to the Commission for destruction.

The Commission vote approving the stipulated final order was 3-0-2, with Commissioners Rebecca Kelly Slaughter and Christine S. Wilson recorded as not participating. The settlement was approved and entered in the U.S. District Court for the District of Arizona.

NOTE: Stipulated final orders or injunctions, etc. have the force of law when approved and signed by the District Court judge.

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