Jo Ann Uchida, executive director of the state Office of Consumer Protection, said today that the settlement calls for General Motors Corp., Honda Motor Co., Isuzu Motors Ltd. and Mitsubishi Motors Corp. to pay the states $1 million and to change their advertisements.
Hawaii's share of the settlement is $50,000, Uchida said.
FTC and the states have alleged that the car makers violated rules against deceptive advertising in the "zero down" ads since consumers, in many instance, pay about $500 to lease the cars, Uchida said.
Under the settlement, the auto makers will clarify their "zero down" ads and will disclose any balloon payments that may be required with each lease.
In the past, the car companies had advertised low monthly car lease payments, mentioning in the ads' fine print that consumers are required to pay thousands of dollars at the end of the lease contract to own the car, Uchida said.
"A big part of the problem with car lease ads has been that the fine print is virtually impossible to read," she said.
The agreement will have no affect on the state's recent suit against Mazda Motors of America Inc. over allegedly deceptive ads. Last month, the Office of Consumer Protection and 13 mainland states sued Mazda, saying the company's zero-down and "penny down" car-leasing ads were misleading because consumers could end up paying as much as $900.
Mazda has settled with the FTC over the charges but the states' charges are pending, Uchida said.
Today's action comes as auto leasing programs have enjoyed increasing popularity. As car costs have risen, many consumers have found that they can no longer buy new models, opting for leasing. Last year, about a third of all new cars driven by consumers nationwide were leased, compared with 19 percent in 1989, Uchida said.