WASHINGTON, D.C. -

Just before the holiday weekend, the Federal Trade Commission announced a group of dealerships in Arizona and New Mexico must cease business operations.

It’s all part of a court-approved settlement resolving charges the regulator made two years ago that the dealerships deceived consumers and falsified information on vehicle-financing applications.

In a case filed in 2018, the FTC alleged that Tate’s Auto Center of Winslow, Tate’s Automotive, Tate Ford-Lincoln-Mercury (doing business as Tate’s Auto Center), Tate’s Auto Center of Gallup and Richard Berry, an officer of the dealerships, falsified consumers’ income and down payment information on vehicle-financing applications and misrepresented important financial terms in vehicle advertisements.

According to a news release, the case continues against Berry and relief defendant Linda Tate.

The FTC indicated the settling defendants are currently in Chapter 7 bankruptcy proceedings and are under the control of a bankruptcy trustee. The settlement includes a monetary judgment of $7,203,227 against the defendants and makes the FTC an unsecured claimant in the bankruptcy proceedings.

In addition, the regulator said the settlement prohibits the trustee from selling any consumer information held by the defendants as part of the liquidation of the company’s assets. Instead, the trustee must either destroy the information or provide it to the FTC for destruction.

The FTC vote approving the stipulated final order was 3-0-2, with commissioners Rebecca Kelly Slaughter and Christine Wilson recorded as not participating. The settlement was approved and entered in the U.S. District Court for the District of Arizona.

“These auto dealers sent bogus applications to finance companies to qualify consumers for car loans that they could not afford, subjecting the consumers to defaults and repossessions,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection.

“Falsifying income and down payment information on car loan documents is illegal, and the FTC won’t hesitate to take action against car dealers who engage in this harmful conduct,” Smith went on to say.