Tag Archives: Federal Trade Commission

Federal Trade Commission provides over $1 million in refunds to victims of Bronx Honda harmed by allegedly illegal and discriminatory practices

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According to the Federal Trade Commission, the agency is “sending refunds totaling nearly $1.5 million to individuals who were affected by allegedly unlawful financing and sales practices by Bronx Honda.

According to the FTC, Bronx Honda and its general manager told sales employees to charge higher financing markups and fees to African-American and Hispanic customers. The defendants told employees that these groups should be targeted due to their limited education, and not to attempt the same practices with non-Hispanic white consumers.

The FTC further alleged that Bronx Honda failed to honor advertised sale prices, changed the sales price on paperwork in the middle of the sale without telling the consumer, double-charged consumers for taxes and fees, and misrepresented to consumers that they were required to pay extra reconditioning and warranty fees to purchase ‘certified’ vehicles.

The FTC is providing refunds, averaging about $371 each, to 3,977 victims of Bronx Honda’s practices. Those who receive checks should deposit or cash their checks within 60 days, as indicated on the check. The FTC never requires people to pay money or provide account information to cash a refund check.

Recipients who have questions about the refunds, or consumers who financed a car purchase from Bronx Honda in 2016 through 2018 and have not previously requested a refund, should contact JND Legal Administration at 888-921-0727.”

Unfortunately, such practices are all too common at auto dealerships across the nation. How can you avoid giving your business to a crooked car dealer who is ripping people off, based on their race?

If you’re looking for a new car, your options are extremely limited. That’s because corrupt legislators have granted car dealers a special monopoly on new car sales, insulating them from competition and drastically increasing prices and harmful practices. Just about the only exception is Tesla, and car dealers have been battling against Tesla for years, in many states, to keep them from being allowed to sell new vehicles without car dealers getting to make a killing.

“Adam Ruins Everything” slams the car dealer monopoly in  “The real reason car dealerships are the worst” — viewed over 7 million times on YouTube.

But if you are looking for a used car, you have the choice of buying a car directly from another consumer, eliminating the middleman, saving money, and reducing the risk of being cheated by a professional crook.

You still need to be careful, but if you do your research, find your own financing in advance, and insist on a thorough inspection, you can get a great deal on a safe, reliable used car. Check out CARS’ tips on how to avoid car dealers’ tricks and traps.

It IS against the law for car dealers to sell used cars with unrepaired safety recalls

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Contrary to the spin from unscrupulous car dealers, and erroneous reports in the news, it is illegal for car dealers to sell dangerous used cars with unrepaired safety recalls. Injured or misled consumers and their surviving family members who sue dealers that engage in such reckless practices usually win confidential settlements. The dealers insist on confidentiality to cover up their illegal activity.The legal settlements also are a telltale sign that the dealers know perfectly well what they are doing is illegal.

So if you discover that a crooked car dealer sold you an unrepaired recalled used car, you should get expert legal advice and fight back.

Here’s the scoop: There is a FEDERAL law against car dealers selling recalled NEW cars. There is a FEDERAL law against car dealers with fleets of 35 or more rental cars from renting, selling, or loaning recalled rental cars.  But — while there is no FEDERAL law against car dealers selling recalled USED cars, if they do, they risk being held accountable under various STATE laws.

No less an authority than the U.S. Federal Trade Commission has noted:

“…state product safety, tort, and other consumer protection laws, provide important safeguards to consumers affected by defective cars.”

An attorney who advises auto dealers has also warned them that if they sell used recalled cars, they face serious sanctions under state laws. According to a report in Automotive News:

“There are theories of liability that plaintiff attorneys may attempt to attach to these vehicles, even if dealers are using good-faith efforts to identify potential open recalls,” says Shawn Mercer, a partner at Bass Sox Mercer, a Tallahassee, Fla., law firm that specializes in dealership franchise law. There is no federal law against selling a vehicle with an open recall. But “depending on the jurisdiction,” Mercer says, “potential liability can stem from violations of state laws or common law tort claims.”  (Emphasis added)

The article also cautions car dealers:

“Selling a vehicle with an undisclosed safety problem makes for dissatisfied customers and can have legal repercussions, even if the dealership was unaware of the recall.” (Emphasis added)

One legal case that stands out, making the point that state law prohibits dealers and other businesses from failing to exercise due care, or acting with negligence, is Houck vs. Enterprise.  Sisters Raechel and Jacqueline Houck were ages 20 and 24 when they visited their parents in Ojai, California.  On their way back home to Santa Cruz, they were killed by an unrepaired recalled rental car — a Chrysler PT Cruiser that caught on fire, and also lost steering.  They ended up colliding with an 18-wheeler semi-trailer truck.

Their parents sued Chrysler and Enterprise under state laws, for failing to exercise the common law duty of care, and for negligence, resulting in wrongful death.  Eventually, on the eve of trial, Enterprise admitted 100% liability — under state laws.  A jury awarded the Houcks $15 million in compensatory damages.

Years later, the President of the California New Car Dealers Association made the false claim that it wasn’t illegal for dealers to sell unrepaired recalled used cars. The Houcks’ attorneys wrote a scathing letter pointing out that violating state civil laws is illegal. The attorneys cited the unanimous jury decision in the Houcks’ favor, and also cited state laws against negligence and common law torts.

CARS worked closely with Cally Houck, Raechel and Jacqueline’s mother, to get a new federal law enacted to prohibit rental car companies or car dealers from renting, loaning, or selling unrepaired recalled cars. The battle lasted for years, with auto manufacturers and dealers actively opposing the bill, even after the rental car industry had dropped its opposition.  But eventually we won.

That victory means that not only do rental car companies remain liable under state laws, but they also face enforcement by the National Highway Traffic Safety Administration (NHTSA), the nation’s premier auto safety agency.

Thanks to the passage of the Raechel and Jacqueline Houck Safe Rental Car Act, NHTSA now has the authority to issue fines or take other action if a rental car company with a fleet of 35 or more vehicles violates the law — even if no one is injured or killed as a result.  Thus, the federal law works to help prevent more tragedies from happening.

CARS supports the ongoing efforts of Senators Blumenthal and Markey, and U.S. Representative Jan Schakowsky, to enact federal legislation to make it a violation of federal law, enforceable by NHTSA, for car dealers to sell unrepaired recalled used cars.

Meanwhile, victims of crooked dealers who play “recalled used car roulette” with their customers’ lives, should get legal advice and fight back, using existing state laws. It’s also important for state attorneys general to enforce the existing state laws against fraud, violations of express and implied warranties, and other provisions of law.

CARS applauds the District Attorney in Sedgwick County Kansas — one of the few law enforcement officials in the nation who is standing up to the powerful car dealer lobby in order to protect car buyers and others who share the roads.

Read More: The Wichita Eagle:  Wichita car lot hit with $140,000 fine over business practices

 

CarMax – Too Risky for Wise Investors?

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Thinking of investing in CarMax? You may want to take a close look at their breathtakingly risky practice of selling unsafe, recalled cars to consumers.

CarMax is already under fire from consumer groups,  faces potential action by the Federal Trade Commission, and has been repeatedly exposed in undercover investigations by TV news organizations, including ABC’s 20/20, over its sales of unsafe, recalled cars to consumers.

Here’s the rub:  CarMax advertises that all their cars must pass a “rigorous 125+ point inspection” before they can be sold as “CarMax Quality Certified” cars.  But how can a car with a killer defect possibly pass a rigorous inspection and meet their standards?

Despite the mounting scrutiny, CarMax recklessly persists in selling “CarMax Quality Certified” unsafe, recalled cars at retail to consumers. Case in point:  Even when competitors like AutoNation have wisely announced their decision to cease selling used cars with unrepaired Takata air bags, CarMax continues to sell them anyway.

Defying common sense and responsible business practices, CarMax somehow seems unable to bring itself to stop selling consumers cars with the notoriously defective air bags, which can explode on impact, hurling shrapnel at the driver and front-seat passenger’s face and neck..  In cases that are making global headlines, the defective air bags have caused  serious injuries, including blindness, while other hapless victims have bled to death.

This particular defect  remains the focus of Congressional investigations in the U.S. Senate and House of Representatives. Takata also faces possible legal action by the National Highway Traffic Safety Administration, and by the US Department of Justice.

So — what does AutoNation know and take into account that CarMax doesn’t seem to grasp?

Is CarMax waiting for a total PR catastrophe, before they stop making that added bit of profit by selling lots of unsafe, defective, recalled cars to consumers, instead of having them repaired or selling them for a somewhat lower price, at wholesale?

Whatever CarMax’s motivation, wise investors may wish to rethink the company’s self-inflicted level of exposure.

 

FTC takes action against 9 car dealers over “deceptive” ads

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In a rare move, the Federal Trade Commission (FTC) recently zeroed in on how auto dealers sell, finance, and lease both new and used motor vehicles. The agency called their nationwide sweep “Operation Steer Clear.”

As a result of the FTC’s taking action, nine auto dealers agreed to settle deceptive advertising charges.  The agency alleged that the dealers made a variety of false claims in print, Internet, and video advertisements that violated the FTC Act, deceiving the public about the actual costs of purchasing, leasing, or financing vehicles. One dealer even advertised that consumers had won prizes they could collect at the dealership — only to find, when they arrived on the lot, they had not won.

“Buying or leasing a car is a big deal, and car ads are an important source of information for serious shoppers,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Dealers’ ads need to spell out costs and other important terms customers can count on. If they don’t, dealers can count on the FTC to take action.”

According to the FTC, the agency’s ‘Operation Steer Clear’ led to settlements with these dealerships in California:

Casino Auto Sales of La Puente, CA and Rainbow Auto Sales of South Gate, CA. Both allegedly violated the FTC Act by “deceptively advertising that consumers could purchase vehicles at specific low prices when, in fact, the price was $5,000 higher. Both dealers’ ads involved a mix of English and Spanish.

Honda of Hollywood in Los Angeles, CA, and Norm Reeves Honda of Cerritos, CA, violated the FTC Act by deceptively advertising that consumers could pay $0 up-front to lease a vehicle when, in fact, the advertised amounts excluded substantial fees and other amounts. The ads also allegedly violated the Consumer Leasing Act (CLA) and Regulation M, by failing to disclose certain lease related terms. Norm Reeves Honda’s ads also allegedly violated the Truth in Lending Act (TILA) and Regulation Z, by failing to disclose certain credit related terms.

The FTC also settled similar cases with dealerships in Georgia, Illinois, North Carolina, Michigan, and Texas. The Los Angeles Department of Consumer Affairs and the Michigan Department of Attorney General assisted the agency by investigating dealers in those states.

The FTC deserves credit for focusing on harmful auto dealer practices, including at politically potent new car dealerships.  However, no dealer agreed to pay a fine or any restitution to victims. Instead, the dealers agreed to behave better in the future.

The public is invited to comment to the FTC about the settlements, until Feb. 10.

Read more:  FTC Announces settlements with auto dealers

 

 

Federal Trade Commission — private car sellers often give “more reliable information” than auto dealers

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We now have an official answer to the age-old question: Are you more likely to be misled if you buy a car from a private individual or from a used car dealer? Obviously, dealers want you to buy from them — and these days, they are boasting about their record profits.

But — auto sales remain the leading cause of consumer complaints to state and local consumer protection agencies. Year after year, new and used car dealers also rank #1 among the most-complained about businesses, in terms of consumer complaints to the Better Business Bureau.

To top it all off, the leading federal consumer protection agency for America’s car buyers recently stated flat-out that you’re more likely to get accurate information about a used car’s history when you buy a car from another consumer, rather than a used car dealer.

Here’s what the Federal Trade Commission stated:

“The Commission concluded that the [Used Car] Rule should not extend to private or casual sellers of used cars because the record failed to support a finding that deceptive sales practices were prevalent in private sales. The Commission noted that in private sales, prospective customers often receive more reliable information about mechanical condition than they do from dealers…” **

    ** Federal Register, Vol. 77, No. 242, Dec. 17, 2012, pages 74761-74762.

Of course, you still have to be on the lookout for “curbstoners” — dealers masquerading as consumers. Be sure to insist on seeing the title and registration, and past work orders from repairs, and make sure that the names on the documents match the seller’s name.

And ALWAYS, ALWAYS insist on getting the car inspected by an independent, reliable, trustworthy mechanic / body shop of YOUR choosing, before you buy. A good place to find an expert to perform the inspection? Car Talk’s Mechanics Files.

It’s a good idea to also check the National Motor Vehicle Title Information System and other vehicle history services before you buy. The more you know, the better. NEVER trust a car dealer to tell you the truth about a car.

Twelve tips for consumers on how to buy a safe, reliable used car — without being cheated by a shady car dealer:

CARS’ Twelve Tips for Used Car Buyers

Happy, safe car buying and Happy New Year!