On March 31, the Napleton Automotive Group, a large multi-state dealer group based in Illinois, settled with the Federal Trade Commission (FTC) for $10M for sneaking illegal junk fees for unwanted “add-ons” onto customers’ bills and for discriminating against Black consumers by charging them more for financing. This is the highest monetary judgement for an FTC auto-lending case on record.
According to the complaint, cited dealerships would often wait until the end of the hours-long negotiation process to sneak fees for add-on products and services into consumers’ purchase contracts. These fees were often added despite consumers specifically declining the add-ons or having confirmed prices that did not include them. In other cases, the consumers were falsely told the add-ons were free or were a requirement to purchase or finance their vehicle.
The complaint also alleges that the Napleton dealerships discriminated against black consumers in connection with financing vehicle purchases. Napleton employees had wide latitude to increase the cost of a consumer’s loan by increasing the amount paid in interest or adding add-ons to the final contract.
In light of this last point especially, be reminded that NADA, in conjunction with NAMAD and AIADA, has produced many fair credit compliance tools to assist dealers in tracking the financing rates offered to customers. This type of reporting is critical in defending against such complaints, should they erroneously arise. Visit NADA’s Fair Credit Guidance page here for more information.
Download Bulletin PDF