This is completely disgusting, utterly unethical, deeply objectionable, and yes, it is almost certainly illegal. The Federal Trade Commission has indeed filed suit, halted ads, etc in a number of cases - but these likely only represent a tiny percentage of all cases. This doesn't make what the car dealer's do ok, but don't expect the SWAT team to bust some heads any time soon - which is kind of sad, but let's deal with the details.
Let's see what the Federal Trade Commission has to say in their article, Are Car Ads Taking You for a Ride?
Deceptive Car Ads Here are some claims that may be deceptive — and
why:
Vehicles are available at a specific low price or for a specific
discount
What may be missing: The low price is after a downpayment, often
thousands of dollars, plus other fees, like taxes, licensing and
document fees, on approved credit. Other pitches: The discount is only
for a pricey, fully-loaded model; or the reduced price or discount
offered might depend on qualifications like the buyer being a recent
college graduate or having an account at a particular bank.
“Only $99/Month”
What may be missing: The advertised payments are temporary “teaser”
payments. Payments for the rest of the loan term are much higher. A
variation on this pitch: You will owe a balloon payment — usually
thousands of dollars — at the end of the term.
So both of these are what the FTC explicitly says are deceptive practices. Has the FTC taken action in cases similar to this? Yes, they have:
“If auto dealers make advertising claims in headlines, they can’t take
them away in fine print,” said Jessica Rich, Director of the FTC’s
Bureau of Consumer Protection. “These actions show there is a
financial cost for violating FTC orders.”
In the case referenced above, the owners of a 20+ dealership chain was hit with about $250,000 in fines. If you think that's a tiny portion of the unethical gains they made from those ads in the time they were running, I'd say you were absolutely correct and that's little more than a "cost of doing business" for unscrupulous companies. But that's the state of the US nation at this time, and so we are left with "caveat emptor" as a guiding principle.
What can you do about it? Competitors are technically allowed to file suit for deceptive business practices, so if you know any honest dealers in the area you can tip them off about it (try saying that out loud with a serious face).
But even better, you can contact the FTC and file a formal complaint online. I wouldn't expect the world to change for your complaint, but even if it just generates a letter it may be enough to let a company know someone is watching - and if they are a big business, they might actually get into a little bit of trouble.
