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Recent law enforcement and regulatory developments demonstrate the FTC’s efforts to put the brakes on deceptive add-ons in the car buying process. How pervasive has the problem been at three Texas dealerships owned by Asbury Automotive Group? According to an FTC complaint, of consumers who were charged for at least one add-on at Asbury’s McDavid Ford Ft. Worth, McDavid Honda Frisco, and McDavid Honda Irving, a study shows that between 58% and 75% of them were charged for at least one add-on they didn’t agree to buy or were falsely told was a required purchase. These unwanted add-ons, the complaint alleges, can cost consumers hundreds or even thousands of dollars per transaction. What’s more, the FTC says that the respondents discriminated against Black and Latino consumers by charging them more for those add-ons than other consumers.

The complaint, which names Asbury Automotive Group, the three Dallas-area dealerships, and General Manager Ali Benli, outlines the sales practices the FTC alleges violate the FTC Act and the Equal Credit Opportunity Act. According to the lawsuit, the respondents have tacked on an array of unauthorized add-ons – for example, charges for chemical coatings, maintenance plans, extended warranties, and dent protection – to the purchase price of vehicles. The FTC says that in many cases, the respondents simply sneak the add-ons past buyers without their consent.

You’ll want to read the complaint for details, but the FTC calls particular attention to a practice allegedly inflicted on unsuspecting car buyers called “payment packing.” Here’s how it works:

“One tactic Respondents use is getting a consumer to agree to a monthly payment that exceeds what they need to pay under the contract to purchase a vehicle, and then ‘packing’ the sales contract with add-on charges to make up the difference. For example, a salesperson might represent that a consumer qualifies for financing with a monthly payment of $400, when the monthly payment for the vehicle under the contract is actually $350. The salesperson then includes, or ‘packs,’ the contract with add-ons to make up some or all of the difference between the two monthly payments, so that it appears the consumer is receiving a similar or smaller monthly payment.”

The complaint also cites the example of a consumer who was reportedly shown on an electronic device only the places on the sales contract he needed to sign. It wasn’t until three weeks later that he learned the finance manager had added a $1,750 maintenance package and $609 key replacement package without his consent. Other consumers allege that sales people changed the terms of their loans from a 72-month to an 84-month term, masking hidden add-on charges and even increases in the sales price.

According to the FTC, in other instances, the respondents falsely represented optional add-ons as mandatory purchases. As the complaint alleges, one sales person told a consumer that to finance the purchase of a truck, “he had to purchase a bundle of add-ons – including a maintenance plan, chemical protection and warranty, windshield, extended vehicle warranty, and key replacement service” – add-ons that added up to more than $9,500.

Isolated episodes? No, says the FTC. According to the complaint, the misconduct was widespread: “Under the policies set by Asbury, employees receive additional compensation for add-on charges, including bonuses that managers earn when a certain percentage of the dealer’s sales include an add-on.”

The FTC also alleges the respondents have violated the Equal Credit Opportunity Act in their financing practices by discriminating against Black and Latino applicants and imposing higher costs on them than on similarly situated non-Latino White applicants. According to the complaint:

  • McDavid Fort Worth charges Latino consumers, on average, approximately $169 more for the same add-ons than non-Latino White consumers.
  • McDavid Honda Frisco charges Black consumers, on average, $298 more for the same add-ons, and charges Latino consumers, on average, $214 more for the same add-ons, than non-Latino White consumers.
  • McDavid Honda Irving charges Black consumers, on average, $268 more for the same add-ons, and charges Latino consumers, on average, $217 more for the same addons, than non-Latino White consumers.

The FTC says these disparities “are statistically significant even when accounting for other factors that could affect the cost of add-ons” and that “[n]o legitimate, nondiscriminatory reasons exist for the Respondents charging higher prices for the same or similar add-ons to Black and Latino consumers than to similarly situated non-Latino White consumers.”

The complaint alleges the respondents included charges on sales contracts that consumers didn’t authorize, made misrepresentations about add-ons, charged consumers without their express informed consent, and violated the Equal Credit Opportunity Act. The matter is pending before an Administrative Law Judge.

Even at this early stage, the case demonstrates the FTC’s commitment to protecting car buyers from paying for add-ons they didn’t want, challenging other deceptive and unfair conduct in the car buying process, and fighting back against discriminatory financing practices.

 

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Mary Selgado
August 21, 2024

What if a similar situation happened at a location in Seguin Texas, a few years ago the CHEVROLET Dealership did the same to me they added on the gap which they said was going to be one year of service and other add-ons that I didn’t even know I’m there until after I got the paperwork.

LaWanda Benson
August 21, 2024

Please look into these same practices occurring at McGrath Honda in Elgin. Add ons were placed on my mom's contract and then she was told they couldn't be removed because the chemical protection services had already been placed on the vehicle. They also overcharged her for maintenance and other add-ons.

Vlad Pierre
August 22, 2024

how to remove from contract

Berdj Rassam
August 26, 2024

Wow - if true, this should be fairly easy to prove.

Susan
August 29, 2024

Please check out Stonebriar Chevrolet in Frisco. We ended up with 1200$ in upgrades for a paint protection that we had to buy to purchase the truck. Little did we know you had to get the truck waxed and polished at the dealership or the warranty is voided! This practice is pretty common with every car dealer! You know they are screwing you when they won’t give you the total price of the car first. Dealers who talk payment amounts first are all scam artist! RUN. I always go in asking for cash price!! I never tell a salesman I am financing!! Then you can deal with payments from the cash price. It’s quicker and cheaper! You can see additional charges in the cash invoice easier than a finance agreement. Sales people hate it when you do this because there is no where to hide additional charges. Also delivery to a dealer is charged in the sticker price on the window, be sure you are not being charged twice.

Shira Nickerson
September 04, 2024

I really believe this was done to me at Town East Ford...I'm almost sure of it!!!

Matt Wilson
September 05, 2024

You should look into Grapevine Ford in Grapevine, Texas. They did the same thing to my wife and I. I called them out on it 2 days later when I discovered it and they took they’re car back and returned ours when I threatened to call the attorney general’s office.

Logan Wilson
September 11, 2024

In reply to by Matt Wilson

Berkshire Hathaway Automotive…. Not surprised. Just submitted my own comment. Don’t see it posted yet. That’s why I am also responding to this. Maybe the FTC will launch an even bigger investigation into BHA.

Logan Wilson
September 11, 2024

You should also investigate the Berkshire Hathaway Dealerships (Vandergriff Acura, Honda and Toyota) in Arlington, TX. These are operated under Charlie Evans. Everything that has been described in this lawsuit has been committed by this auto group. Not to mention they also broken FCC guidelines. Consistently harassing former customers who have explicitly told them to stop calling. If you want to get to the juicy details, they have also photoshopped Texas ID’s into Texas DL’s for bank approval. I hope the FTC digs a little harder because these dealerships operate on a complete unethical basis making millions they shouldn’t.

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