Napleton Automotive Group, one of America’s largest dealership groups, will pay a record $10 million to settle a Federal Trade Commission auto loan case for allegedly throwing ‘junk fees’ and illegal add-ons into customer contracts and for charging more by funding black customers.
Napleton on Friday “vehemently” denied any wrongdoing.
The FTC, in a statement in its case with the State of Illinois, said eight Napleton dealerships in Illinois, Florida, Pennsylvania and Missouri and a general manager of two Illinois dealerships, allegedly illegally added unwanted charges and other add-ons. such as paint protection in contracts up to 60 pages.
The FTC and Illinois allege Napleton has charged customers more than $70 million in unwanted additional fees since 2017, according to their complaint.
The fees cost each customer hundreds or thousands of dollars, the FTC said. In many cases, add-ons were specifically declined by customers, while others were lied to, saying they were told the items were free or needed to purchase or finance a vehicle, according to the FTC. .
Complaint details
The government’s allegations included customer complaints such as:
- A salesman at a Napleton dealership told a customer that a finance company needed $3,400 in add-ons to get approved.
- A consumer said a Napleton dealership listed a final price on their website, but when the customer arrived they were told they would have to pay an additional $2,495 in an add-on package.
- A customer was told that two oil changes, tire rotation and windshield protection were free with the purchase of a vehicle; he later realized he had been billed $426 for the items.
The dealerships named in the complaint, which includes nine roofs, are: Napleton’s Kia of Elmhurst, Ed Napleton Acura in Elmhurst, and Napleton’s Arlington Heights Chrysler-Dodge-Jeep-Ram, all in Illinois; Northlake Chrysler-Dodge-Jeep-Ram of Napleton in Lake Park, Napleton Clermont Chrysler-Dodge-Jeep-Ram, Napleton Northlake Kia in Palm Beach Gardens and South Orlando Chrysler-Jeep-Dodge-Ram of Napleton in Kissimmee, all in Florida; Mid Rivers Kia of Napleton in St. Peters, Missouri, and Ellwood Chrysler-Dodge-Jeep-Ram of Napleton in Ellwood City, Pennsylvania.
Hitko Kadric, the general manager of two dealerships in Illinois according to the FTC, was also named in the complaint.
Complaints of discrimination
The Napleton Group has also allegedly discriminated against black customers in their vehicle financing since at least 2017. The FTC says Napleton employees would increase the cost of a customer’s loan by increasing the interest paid or adding add-ons.
Black dealership customers paid more than “similarly situated” non-Latino white customers, the FTC said. For example, black customers paid $99 more for similar add-ons and were charged about $190 more in interest than white customers, the FTC said.
These alleged discriminatory practices violated the Equal Credit Opportunity Act, according to the FTC.
The Napleton Group said that among the tens of thousands of people who received financing through the group, black borrowers paid an average of 18.4 basis percentage points more in interest, according to the company’s complaint. FTC and Illinois.
“The disparities in fees between black consumers and non-Latino white consumers are statistically significant and cannot be explained by factors related to underwriting risk or applicants’ credit characteristics,” according to the complaint.
“Working closely with the Illinois Attorney General, we hold these dealerships accountable for discriminating against minority consumers and adding unwanted charges to people’s bills,” said Samuel Levine, director of the FTC’s Consumer Protection Bureau, in a statement.
Denial of wrongdoing
The Napleton group, in a statement, said it “vehemently denied any wrongdoing”.
“The Ed Napleton Dealer Group has resolved the disputed claims from the Federal Trade Commission and the Illinois Attorney General’s Office,” Napleton spokesman Tilden Katz said in a statement emailed to Automotive News. “We made this decision to avoid disrupting an ongoing dispute with the government. As a result, we have reluctantly determined that it is in our best long-term business interests to resolve these issues.
“This settlement is the result of a three-year process during which we provided full transparency to the government. Most of its claims were based on interpretations of statistical data and there were no actual findings of intentional wrongdoing.”
The vast majority of the settlement — $9.95 million — will go to clients, while $50,000 will go into an Illinois attorney general’s fund.
The FTC’s previous record settlement with an auto dealership came in 2017, when Sage Automotive Group agreed to a more than $3.6 million settlement with the FTC for deceptive and unfair sales and financing practices, among other things. problems. More than 43,000 Sage customers participated in the settlement.
Napleton is also required to create a fair lending program that caps additional interest mark-ups that the group can pass on to customers and the group and its dealers have no right to misrepresent the cost or terms of purchase, leasing or financing vehicles, and whether a fee or charge is optional.
In addition, the group must also hire a Fair Lending officer and train employees on Fair Lending, report Fair Lending complaints to the FTC, and discipline employees who violate the Fair Lending program.
Napleton Automotive of Oakbrook Terrace, Illinois, ranked #13 on Automotive News‘ most recent list of the top 150 US-based dealer groups, selling 35,768 new vehicles in 2020.
Jack Walsworth contributed to this report.
