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Lithia Motors, Inc.; Analysis of Proposed Consent Order To Aid Public Comment

American Government Special Collections Reference Desk

American Government Topics:  Lithia Motors

Lithia Motors, Inc.; Analysis of Proposed Consent Order To Aid Public Comment

Donald S. Clark
Federal Trade Commission
3 February 2016


[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5754-5756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01944]


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FEDERAL TRADE COMMISSION

[File No. 152-3102]


Lithia Motors, Inc.; Analysis of Proposed Consent Order To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis to Aid Public Comment describes both 
the allegations in the draft complaint and the terms of the consent 
order--embodied in the consent agreement--that would settle these 
allegations.

DATES: Comments must be received on or before February 29, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/lithiamotorsconsent online or on paper, 
by following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Lithia Motors, Inc.--
Consent Agreement; File No. 152-3102'' on your comment and file your 
comment online at https://ftcpublic.commentworks.com/ftc/lithiamotorsconsent by following the instructions on the Web-based 
form. If you prefer to file your comment on paper, write ``Lithia 
Motors, Inc.--Consent Agreement; File No. 152-3102'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Evan Zullow (202) 326-2914 or Courtney 
Estep (202) 326-2788, Bureau of Consumer Protection, 600 Pennsylvania 
Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for January 28, 2016), on the World Wide Web 
at: http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before February 29, 
2016. Write ``Lithia Motors, Inc.--Consent Agreement; File No. 152-
3102'' on your comment. Your comment--including your name and your 
state--will be placed on the public record of this proceeding, 
including, to the extent practicable, on the public Commission Web 
site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of 
discretion, the Commission tries to remove individuals' home contact 
information from comments before placing them on the Commission Web 
site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does

[[Page 5755]]

not include any sensitive personal information, like anyone's Social 
Security number, date of birth, driver's license number or other state 
identification number or foreign country equivalent, passport number, 
financial account number, or credit or debit card number. You are also 
solely responsible for making sure that your comment does not include 
any sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/lithiamotorsconsent by following the instructions on the web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``Lithia Motors, Inc.--
Consent Agreement; File No. 152-3102'' on your comment and on the 
envelope, and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before February 29, 2016. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``FTC'' or ``Commission'') has 
accepted, subject to final approval, an agreement containing a consent 
order from Lithia Motors, Inc. The proposed consent order has been 
placed on the public record for thirty (30) days for receipt of 
comments by interested persons. Comments received during this period 
will become part of the public record. After thirty (30) days, the FTC 
will again review the agreement and the comments received, and will 
decide whether it should withdraw from the agreement and take 
appropriate action or make final the agreement's proposed order.
    The respondent is a car dealership that sells used motor vehicles. 
According to the FTC complaint, respondent has represented that the 
used motor vehicles it sells have been subject to rigorous inspection, 
including for safety issues, but has failed to disclose that the used 
motor vehicles it sells are subject to open recalls for safety issues.
    For instance, the respondent has posted advertisements on its Web 
site that make the following representations about vehicles that carry 
a dealer-backed ``60 Day/3000 Mile'' warranty: ``160-Point Quality 
Inspection--Lithia 60 Day/3,000 Mile vehicles are put through an 
exhaustive 160-checkpoint Quality Assurance Inspection. We want the 
vehicles to look, feel and smell as new as possible. We inspect 
everything from the tires and the brakes to the suspension, drive 
train, engine components and even the undercarriage. Only vehicles that 
pass all 160 checkpoints (as appropriate to vehicle content) can 
receive our 60 Day/3,000 miles Limited Warranty. See dealer for 
details.''
    Even though it makes such claims, the respondent has allegedly 
advertised on its Web sites numerous Lithia 60-Day/3,000 Mile used 
vehicles that were subject to open recalls for safety issues. In 
numerous instances, when the respondent allegedly advertised Lithia 60-
Day/3,000 Mile used vehicles that are subject to open recalls for 
safety issues, it provided no accompanying clear and conspicuous 
disclosure of this fact. The proposed complaint alleges that this 
failure to disclose constitutes a deceptive act or practice under 
Section 5 of the FTC Act.
    The proposed order is designed to prevent the respondent from 
engaging in similar deceptive practices in the future. Part I prohibits 
the respondent from representing that used motor vehicles it offers for 
sale are safe, have been repaired for safety issues, or have been 
subject to an inspection for issues related to safety unless the used 
motor vehicles are not subject to any open recalls for safety issues or 
the respondent discloses, clearly and conspicuously, in close proximity 
to such representation, any material qualifying information related to 
open recalls for safety issues. Part II is a provision that orders the 
respondent to notify every consumer who purchased from it a 60-Day/
3,000 Mile used motor vehicle between July 1, 2013 and the date of 
entry of the Order that some of the used vehicles it sold during this 
time had been recalled for safety issues which weren't repaired as of 
the date they were sold, how to determine whether a vehicle is subject 
to an unrepaired recall, and information on how to get a vehicle fixed 
if it is subject to an open recall.
    Parts III through VII of the proposed order are reporting and 
compliance provisions. Part III requires the respondent to maintain for 
five years, and produce to the Commission upon demand, any relevant ads 
and associated documentary material. Part IV is an order distribution 
provision that requires the respondent to provide the Order to current 
and future principals, officers, directors, and managers, and to all 
current employees, agents, and representatives having responsibilities 
with respect to the subject matter of the Order. Part V requires the 
respondent to notify the Commission of corporate changes that may 
affect compliance obligations. Part VI requires the respondent to 
submit a compliance report to the Commission 60 days after entry of the 
order, and also additional compliance reports within 10 business days 
of a written request by the Commission. Part VII ``sunsets'' the order 
after twenty years, with certain exceptions.
    The purpose of this analysis is to aid public comment on the 
proposed order.

[[Page 5756]]

It is not intended to constitute an official interpretation of the 
complaint or proposed order, or to modify in any way the proposed 
order's terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-01944 Filed 2-2-16; 8:45 am]
 BILLING CODE 6750-01-P

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