There’s a whole lot of free going around — fat-free; caffeine-free; CFC free; carbon free and pesticide free.  Who can turn down a “freebie” except when it’s not.  To quote Lesley Fair at the FTC, “free means free.”  And the FTC spends a lot of time chasing down offers that aren’t really free.  This includes free trials where the terms and conditions are not adequately disclosed and free prizes that come with undisclosed strings attached.  In addition, a few years back a certain tax preparation firm advertised “free money” in the form of an instant or early tax refund.  Although popular for obvious reasons, this promotion ended in the California Attorney General alleging the firm was engaged in deceptive advertising practices because the advertised “instant or early tax refunds” were actually short term loans secured by consumers expected income tax refunds.  And the states get into the act as well.  Some states have very specific rules regarding disclosure, including Ohio where “terms, conditions and obligations” of the free offer are supposed to be printed in type size no less than half as large as the font size of the word “free.”

The latest salvo in the war against deceptive “free” offers comes with regard to offers to “pay your [car] off in full, no matter how much you owe!”  In the past these kinds of ads were rarely a problem when in better economic times, trade-ins were often worth more than what consumers owed on them.  However, last week the FTC entered into settlement agreements with five car dealerships across the country to prevent the dealerships from running these types of advertisements that allegedly promised to “pay off” a consumer’s trade-in no matter what is owed on the vehicle.

The problem today is that many consumers are upside down on their car loans (if only you could get this deal on your underwater house).  When these consumers came to take advantage of the advertised “deal,” rather than pay off the negative equity, as promised, the car dealerships rolled the extra balance into the consumer’s new car loan.  In one case while advertising that the car dealership would pay off the balance of any trade-in, the dealership actually made the consumers pay the balance off out of pocket.

So make sure any terms and conditions associated with your “free” offer are clearly and prominently disclosed.  And we can say with confidence that this admonition is positively and absolutely “free.”