Business 8th Edition by Marianne Jennings

Exercise 15

$99 per Month plus Fine Print
Facts
Terry Buick, Inc. (defendant) is an automobile retailer that displayed across the street-side face of its building large yellow signs in block letters that read:
NO MONEY DOWN INSTANT CREDIT! $99\MO.
Terry Buick was located on Route 9, a very busy public highway in Poughkeepsie, New York. The actual credit terms of the sales were printed on 2¼" × 3?" stickers, which could be read only by close inspection and were attached to the windshields of cars that were for sale. These small stickers showed the price of the car, the down payment, the term in months, and the average interest rate applied to installment payments. The state of New York brought suit for violation of the credit advertisement regulations of TILA.
Judicial Opinion
BENSON, Justice
This action for an injunction under 15 U.S.C. § 1664 (Truth in Lending Act), General Business Law Article 22-A and CPLR § 6301 enjoining Terry Buick, Inc. from continuing to advertise the terms for credit on vehicles it is selling in an illegal, false and deceptive manner is determined as follows:
The Court viewed the defendant's place of business with the attorneys and examined a number of the windshield stickers. They were legible only upon inspection from a distance of a few feet and set forth the financial details of each offer. Examination of the slickers showed that almost every offering required a down payment to obtain $99 per month financing. Other used cars had only "99\MO" painted on their windshields. According to the testimony of one witness, the salesman did not know the price of several of such cars. He testified that no cars were offered for sale for $2,000 down and $99 per month.
The plaintiff relied heavily upon the testimony of an undercover agent, a woman in the employ of the Attorney General who went to the defendant's place of business in the guise of a prospective purchaser and engaged a salesman in conversation about the cars. She recorded the conversation secretly and offered the tape, which the Court admitted into evidence. The plaintiff emphasized in argument a statement which the salesman made to the plaintiff's agent in which he admitted that the purpose of the advertising was to capture people's attention as they drove by and get them into the dealership.
The Truth in Lending statutes which govern the defendant's conduct are 15 U.S.C. § 1664(d) and New York General Business Laws §§ 350 and 350-a. The Federal statute is amplified by Regulation Z, 12 C.F.R. § 226.24. State courts have concurrent jurisdiction to enforce the Federal statute.
§ 1664(d) reads as follows:
If any advertisement... states the amount of the down-payment, if any, the amount of any installment payment, the dollar amount of any finance charge, or the number of installments or the period of repayment, then the advertisement shall state all of the following items...
1. the downpayment, if any;
2. the terms of repayment;
3. the rate of the finance charge expressed as an annual percentage rate.
The regulation adopted pursuant to the statute requires that "The creditor shall make the disclosures required by this subpart clearly and conspicuously."
The Court's inspection of the defendant's place of business and its advertising material showed beyond question that the announcement signs were a "come on" designed to lure the eager seeker of a good deal. It also showed that "what you see is not what you get." We have not given the testimony of the undercover agent much weight. It was a contrived tactic practiced upon a relatively guileless salesman by a young woman who pretended to be a purchaser. Her testimony is not necessary, however, to convince the Court that defendant's public announcement of its deals fell far short of the candid display which the law requires. The law requires full disclosure described in the plain language of the statute. A look at the defendant's advertising scheme leads directly to the conclusion that it was designed to attract customers by half truths or falsity. No customer could buy a car on the terms boldly announced on the face of the building. The defendant's intentions did not have to be explained by testimony. No undercover agent was needed to obtain admissions. The message spoke for itself and could not be misread. It was "misleading in a material respect."
Truth in lending laws were not adopted for the canny shopper. They were made for the gullible and those easily led.... 'In weighing a statement's capacity, tendency or effect in deceiving or misleading customers, we do not look to the average customer but to the vast multitude which the statutes were enacted to safeguard, including the ignorant, the unthinking and the credulous who, in making purchases, do not stop to analyze but are governed by appearances and general impressions." The plaintiff was not required to show that anyone had been deceived or that the advertising had injured anyone. It met its burden by showing its misleading effect
The defendant's violation of Federal and New York State truth in lending laws has been demonstrated.
The motion for an order granting a preliminary injunction enjoining the defendant Terry Buick, Inc. from continuing to advertise the terms for credit on vehicles it is selling in an illegal, false and deceptive manner is granted.
Where were the details of the credit transaction explained?