“Only 21 percent know the truth. Do you?”

That tagline, complete with the hashtag #ExposeTheTruth, sounds like it could be part of a political smear campaign or a conspiracy-theory-style television show.

But, as it turns out, it was part of a credit union’s effort to educate the public about interest-rate markups on loans from auto dealerships. That’s in the past, though, since the credit union dropped the campaign under pressure from auto dealers.

The SCCU campaign is nothing more than a rehash by another competitor of previously discredited arguments.

In response to a  heavy criticism from the National Automobile Dealers Association (NADA), Space Coast Credit Union (SCCU) ended its campaign more than a month early and removed all related marketing efforts, including Facebook pages and YouTube clips. But it suggested that the campaign’s message was misunderstood.

“We did not want to harm dealers,” SCCU said in a statement to Credit Union Times last month. “We have great respect and admiration for these local businesspeople who have contributed to the growth of our communities, and we particularly appreciate the valuable service to our members.”

At issue was the “dealer reserve,” a percentage that lenders allow dealers to add to the interest rate on a loan in exchange for their help in arranging customer financing. SCCU said the campaign was intended to educate its members about that markup. But NADA saw things differently.

“The SCCU campaign is nothing more than a rehash by another competitor of previously discredited arguments,” the trade group said in a statement to Automotive News. “The truth is that dealer-assisted financing offers consumers great value and competitive advantages, allowing car buyers to save billions of dollars each year.”

SCCU doesn’t engage in such rate markups itself, though it does pay dealers a flat rate for completed loan referrals.

Misleading Facts?

Auto-industry advocates suggested that the Florida-based credit union overstated the point. The campaign cited a 2013 consent order by the Consumer Financial Protection Bureau and the Justice Department against Ally Financial that required it to pay $80 million in damages to minority consumers (and $18 million in penalties) for what the agencies described as a “discriminatory pricing system.”

“The consent order is an uncomfortable truth,” Automotive News correspondent Jim Henry wrote in a blog post. “But the credit union campaign doesn’t mention the discrimination aspect. The credit union material makes it sound as if Ally paid simply because it engaged in ‘markups.’ Nor does the ad campaign mention that Ally denied discriminating, even as it agreed to pay up.”

The campaign also implied that rate caps of 2 percent or 3 percent were commonly applied, which dealers dispute. NADA says the rate cap is usually less than 1 percent.

Critics said all this added up to a misleading campaign and, as Credit Union Times notes, it may have hurt SCCU’s relationship with dealers, who are business partners with the credit union. For its part, NADA says that it already encourages consumers to look at different loan options.

“Unlike the SCCU, the National Automobile Dealers Association encourages car buyers to compare auto financing rates at all sources—their bank, credit union, or other lenders as well as their dealer,” the association told Credit Union Times. “Despite the fact that dealer-assisted financing is always optional, a large majority of consumers still choose to finance their vehicles through dealers. It is unfortunate to see this type of misguided advice being given to consumers.”

Space Coast Credit Union quickly ended its #ExposeTheTruth campaign after dealer complaints. (via SCCU's now-deleted Facebook page)