700Credit is pleased to present the ComplyNet Compliance Connection, a new bi-monthly newsletter, authored by our partner sharing the latest compliance news and announcements. In this ComplyNet Compliance Connection, we note some significant actions and trends that are impacting dealership compliance programs.
The contents herein are intended to convey general information only, and shall not be relied upon as legal advice. Your attorney should be contacted for advice on specific legal issues.
$3.38M Settlement for Dealership’s “Bogus Fees and Discriminatory Conduct”
No more wrist-slaps against motor vehicle dealers by the FTC. The FTC is making motor vehicle dealers pay significantly for unfair and deceptive acts and practices and holding executives personally liable.
In 2020, the FTC announced a $1.5 million settlement with a New York dealership and the dealership’s general manager related to the charging of higher interest rates to minority groups and the charging of other unfair fees to consumers. In April 2022, the FTC announced a $10 million settlement against an Illinois-based dealership group and a general manager for charging unfair fees to consumers and higher interest rates to minority groups. In October 2022, the FTC announced a $3.38 million settlement against a Maryland dealership and its President and Vice President for charging unfair fees to consumers and higher interest rates to minorities.
$20M Judgment Against Dealership for False Advertising, False Credit Applications, and Deceiving Customers into Purchasing Add-Ons
OAKLAND – California Attorney General Rob Bonta today announced a settlement with the now-defunct Paul Blanco’s Good Car Company, a network of auto dealerships, and its principal executives Paul Blanco and Putu Blanco. The settlement resolves allegations that the Blancos, who are a married couple, and their company engaged in unlawful business practices, including false advertising about credit and discount programs, making false statements on credit applications, and deceiving customers into purchasing add-on products.
FTC Extends Compliance Deadline for Certain Provisions of Revised FTC Safeguards Rule to June 9, 2023
On November 15, 2022 , the FTC voted 4-0 to extend the deadline to fully comply with the FTC Safeguards rule by 6 months. The new deadline for complete compliance is June 9, 2023. That is good news for dealerships that have been scrambling to come into compliance during a labor shortage, but there is still so much to do.
Additional Resources:
Recently Resolved Actions:
[$950K Penalty Against Lender for Failing to Monitor Discriminatory Dealer Mark-Ups]
[$1M Settlement with 36 States for Failure to Disclose Recalls on Used Vehicles][$14M Settlement Regarding Fail to Inspect and Repair Defective Tire]
[$62.5K to Settle EEOC Equal Pay and Retaliation Suit Against Dealership]
[$1.8M Jury Verdict for Hostile Work Environment and Discriminatory Practices at a Dealership]
[Discriminatory Pricing Action for Add-Ons Settles for $350K and Requires Dealerships Implement NADA’s VPP Policy]
[Dealership Pays $935K to Settle EEOC Gender Discrimination Claim]
Pending Actions:
[Dealership Service Provider Hit With Class Action for Consumer Data Breach]
[CFPB and NY Attorney General Sue Sub-Prime Auto Lender for Alleged Hidden Fees and Setting Borrowers Up to Fail]
Proposed Rules:
[FTC’s Proposes “Motor Vehicle Trade Regulation Rule” to Change Vehicle Pricing and Add-on Disclosures]
[New Jersey Proposes to Stop Vehicle Subscription Services for Components and Hardware Already Installed and Functional Without Ongoing Expense]
[FTC Seeking Input for Rules Regarding the Collection, Analysis, and Profiting from Consumer Information]
[FTC Seeking Input for Rules Targeting Fake and Deceptive Reviews and Endorsements]
[FTC Seeking Input for “Junk Fee” Rule]
Increased Penalties:
[FTC Increases Penalties by 7.745% for 2023]
[OSHA Increases Penalties by 7.745% for 2023]
[EPA Increases Penalties by 7.745% for 2023]