Multi-state Car Dealer to Pay $10M Settlement for Allegedly Overcharging Black Customers, Tacking On Additional Fees Without Their Knowledge

Ed Napleton Automotive, headquartered in Illinois, has agreed to $10 million to settle a lawsuit filed against the auto dealer for charging thousands of Black consumers for add-ons without their consent.

The Federal Trade Commission and Illinois filed the consumer complaint against the dealer, eight of its dealerships in Illinois, Florida, Pennsylvania and Missouri on March 31. The lawsuit alleges Black customers at the dealerships were charged about $190 more in interest and paid $99 more for similar add-ons than “similarly situated” white customers.

“Working closely with the Illinois Attorney General, we are holding these dealerships accountable for discriminating against minority consumers and sneaking junk fees onto people’s bills,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Especially as families struggle with rising car prices, dealerships that cheat their customers can expect to hear from us.”

Napleton is one of the largest Illinois-based auto groups, with 51 dealerships in eight states. According to the complaint, the eight Napleton Automotive dealerships and the general manager of two Illinois locations illegally tacked fees for payment insurance, paint protection, and other add-ons without the customers’ permission.

Some had already rejected the products. The FTC said that the illegal junk fees cost consumers hundreds or even thousands of dollars.

The lawsuit alleges that 83 percent of Black auto buyers surveyed during the investigation were charged add-on fees without authorization or by deception. The customers were told the add-ons were free or mandatory in other cases.

Under the agreement, $9.95 million of the $10 million judgment will be awarded to consumers, and $50,000 will be paid to the Illinois Attorney General Court Ordered and Voluntary Compliance Payment Projects Fund.

The suit alleges the salesperson would wait until the end of “hours-long” negotiation to insert the fees in the customer’s purchase contract, which are often as long as 60 pages.

Jeep vehicles are offered for sale at Napleton’s Auto Group on June 6, 2013 in Chicago, Illinois. (Photo by Scott Olson/Getty Images)

Jeep vehicles are offered for sale at Napleton’s Auto Group on June 6, 2013 in Chicago, Illinois. (Photo by Scott Olson/Getty Images)

In one instance, a dealership in Arlington Heights, Illinois, charged a customer nearly $4,000 in add-on fees after he paid the same amount in a down payment on the vehicle. Therefore, the down payment only covered the illegal fees, and the customer still owed the full cost of the car.

In another incident cited in the complaint, a salesperson told a customer that two oil changes, a tire rotation and windshield protection came with the vehicle purchase. He declined an extended warranty but changed his mind after the salesperson offered him a discount.

The customer found out later the dealership charged $426 for oil changes, tire rotation and windshield protection. He was charged the full amount for the extended warranty and an additional $289 for window etching without his knowledge. The customer claimed he tried to call the dealership several times to cancel, but no one responded. He eventually went directly to the warranty service provider to cancel the add-on.

According to the complaint, Napleton employees also increased the cost of a consumer’s loan for Black customers by increasing the amount they paid in interest.

The actions violate the Illinois Consumer Fraud and Deceptive Business Act.

The settlement requires Napleton dealerships to create a comprehensive fair lending program that would cap the additional interest markup they can charge consumers, among other things.

In addition, the settlement directs the auto dealer to only charge consumers “with express, informed consent.” It prohibits dealerships from misrepresenting the cost, terms, fees associated with buying or leasing a car in the future.

A spokesperson for Napleton said the auto dealer “vehemently” denied any wrongdoing, the Chicago Tribune reported.

“The Ed Napleton Dealership Group has resolved disputed claims made by the Federal Trade Commission and the Illinois Attorney General’s office,” Tilden Katz said in an April 1 statement.

“We made this decision to avoid the disruption of an ongoing dispute with the government. As a result, we reluctantly determined that it was in our best long-term business interests to resolve these matters.”

Ann C. Toledo

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