Motor Vehicle Commission fines dealer $10,000 over deceptive 'scratch‑off' mailer; amends legal report

The Tennessee Motor Vehicle Commission voted Oct. 28 to impose civil penalties totaling $10,000 against a dealer for advertising the commission deemed misleading.

At a legal‑committee session chaired by Commissioner Carl Kramer, staff displayed a redacted promotional ‘‘scratch‑off’’ mailer and told commissioners that consumers had called saying they had won prizes, drove to the dealership, and then learned the prize claims were conditional on matching confirmation codes and additional on‑site checks. Erica Cable, program attorney, told the commission that some consumers reported being told by the call center that they had won, then were later told they “may not have won.” The legal staff recommended civil penalties based on prior precedent.

Why it matters: Commissioners said the mailer’s design and the process required to claim the top prizes create a reasonable risk of consumer confusion. Commissioners cited prior enforcement against similar promotions and emphasized the Commission’s role in protecting consumers from misleading vehicle‑sale marketing.

What the commission decided: The commission adopted staff’s recommendation to assess $5,000 for each of two consumer complaints tied to the same promotional campaign, for a total $10,000 civil penalty, and included a cease‑and‑desist term in the proposed consent order. The motion to uphold staff’s recommendation was made by Commissioner Norton and seconded by Commissioner Andrews and carried by voice vote. In addition, the commission asked staff to prepare public guidance and an outreach email to licensees explaining that the commission views comparable promotions as deceptive and subject to civil penalties.

Other legal‑report changes: The commission reduced proposed civil penalties on two unlicensed‑activity matters (items 33 and 39) from $10,000 each to $5,000 each, and it changed another matter (item 42) from a letter of instruction to a $1,000 civil penalty with a requirement that the respondent supply proof to the commission within 30 days that website advertising has been corrected.

Staff and precedent: Legal staff noted the commission has previously levied $5,000 penalties for comparable promotional games; counsel said the commission’s advertising rule allows enforcement when advertising is misleading or deceptive. As program attorney Erica Cable told commissioners, “I always recommend our standard thousand dollar civil penalty per advertising violation,” pointing to the staff’s process for determining appropriate penalties and follow‑up requirements.

What's next: If the dealer signs a consent order, terms will include the civil penalties and a cease‑and‑desist provision; staff will publish guidance on the commission website and send an email to licensees outlining enforcement expectations for promotional mailings and third‑party marketing campaigns.

Context: Commissioners and staff flagged rising concerns about third‑party marketing campaigns that deploy outside sales crews and mass mailers and emphasized that licensees retain responsibility for promotions run on their behalf. Several commissioners noted past enforcement actions against comparable promotions and urged consistent enforcement going forward.