Tesla May Have Violated Consumer Protection Laws

Tesla May Have Violated Consumer Protection Laws
<a href="https://pixabay.com/users/Blomst/">Blomst</a> / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) advertisements in the State of California may come under the purview of regulators after a letter of complaint was sent to the California Department of Motor Vehicles. The complaint alleged that Tesla Motors Inc (NASDAQ:TSLA) misled consumers with the monthly payments it advertised.

Tesla May Have Violated Consumer Protection Laws

The advertising complaint was not filed by a concerned consumer group, a hedge fund shorting Tesla Motors or a lawyer looking for a big case to make his name. It came from the California New Car Dealers Association, a member of the group most vocally opposed to Tesla Motors Inc (NASDAQ:TSLA).

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Tesla Motors advertising

The complaint says that Tesla Motors Inc (NASDAQ:TSLA) makes its cars appear less expensive because the company includes Federal tax credits and other grants in the per month payment price on advertisements. The dealer’s association says that those discounts are irrelevant and mislead customers into buying a car that is more expensive than listed.

The firm’s argument relies on the fact that only about a fifth of U.S. tax payers qualify for the Federal tax break on Tesla Motors Inc (NASDAQ:TSLA) cars. Tesla Motors Inc (NASDAQ:TSLA) is allowed to sell its vehicles directly to the public in California, and the dealer’s association isn’t happy about that.

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The suppression of the electric car by the traditional automobile industry has been a popular conspiracy theory for years. The way that Tesla Motors Inc (NASDAQ:TSLA) has been received by car dealerships around the country may seem the closest thing to a confirmation of that theory as possible.

There is a problem, however. The dealers don’t seem to care that Tesla Motors Inc (NASDAQ:TSLA) is making an electric car. They care that the company has the audacity to sell it outside of the traditional dealership system. The most egregious efforts have come from Texas, where the Model S is banned altogether.

If Tesla Motors Inc (NASDAQ:TSLA) is found to have misled consumers with the California ads, it will represent a tiny victory for the dealers associations. Whatever might be thought of Tesla Motors Inc (NASDAQ:TSLA) prospects in the rest of the Unites States, California is a success for the company. There’s very little that could be done to prevent the firm selling its cars there.

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