WASHINGTON, D.C. — The Federal Trade Commission today charged nine Los Angeles-area dealerships and their owners with a wide range of deceptive, and unfair sales and financing practices, including payment packing and using “yo-yo” finanicng tactics. According to the FTC’s announcement, this is the first time the regulator has filed an action against an auto dealer for engaging in yo-yo financing.

The FTC’s complaint, filed in the U.S. District Court for the Central District of California, also charges the dealerships with violating the Truth in Lending Act and Regulation Z, as well as the Consumer Leasing Act and Regulation M for failing to clearly disclose reguired credit and lease information in their advertising. The regulator is seeking to end the alleged practices and return money to consumers.

“The car-buying process is a two-way street,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a statement. “The FTC expects dealers to honor their contractual obligations, and will pursue those who use yo-yo financing tactics and pack unwanted costly add-ons onto consumers’ contracts.”

Charged were Universal Nissan; Kia of Downtown Los Angeles; Glendale Infiniti and Glendale Nissan; Mercedes-Benz of Valencia; West Covina Toyota/Scion; Sage Covina Chevrolet; Sage Pre-Owned; and Sage Hyundai. All are owned and operated by Sage Auto Group.

According to the FTC’s complaint, the dealerships enticed consumers — particularly the financially distressed and non-English speakers — into their showrooms with print, internet, radio and television advertisements that featured misleading claims, including that vehicles could be purchased at lower prices than the dealerships were prepared to sell them for. The dealerships also falsely advertised that customers would receive lower monthly payments and be able to provide smaller down payments for specific cars, the FTC charged.

Other tactics included advertising finance offers that were really leases. The dealerships also falsely advertised that they would pay off consumers’ trade-in vehicles. The FTC also charged the dealerships with using phony online reviews, including ones posted by their own employees, to tout their dealerships and discredit negtative reviews highlighting their illegal practices.

The dealerships were also charged with violating the FTC Act’s prohibition on deceptive and unfair acts or practices for including F&I products like service contracts and GAP in customers’ deals without their knowledge. In some cases, car buyers were told the products were free.

In some instances, according to the complaint, consumers were forced to sign new contracts with different terms than the contract they had already signed. In others, the dealerships allegedly told consumers who completed finance contracts that their agreements had been canceled and that the dealerships were permitted to keep the down payments or trade-ins. If the consumers argued these claims, the FTC charged, the dealerships claimed they could take legal action them if they did not comply.

The FTC’s complaint also lists Joseph Sage, Leonard Sage, Michael Sage, Sage Holding Company Inc., and Sage Management Company Inc. as defendants. The commission’s vote authorizing the filing of the complaint against Sage Auto Group defendants was 2-1.