A multimillion-dollar settlement has been reached in the Federal Trade Commission’s multi-state action against an Illinois-based auto dealer for adding illegal junk fees onto bills and discriminating against Black customers.
The company, North American Automotive Services, also known as Ed Napleton Automotive Group, will pay $10 million to settle the case, which was filed jointly with the state of Illinois, according to a press release from the FTC, the federal agency tasked with educating and protecting American consumers.
Napleton is accused of putting unwanted “add-ons” onto bills and charging Black customers more for auto financing. Several of the add-on products included things like payment insurance and paint protection. The charges cost customers hundreds of dollars in some cases, thousands in others.
Additionally, Black customers at Napleton were charged at least $190 more in interest and paid $99 more for add-ons than white customers.
The FTC writes that Napleton employees would wait until the end of the lengthy negotiation process and charge customers the add-on fees, then overwhelm them with a 60-page purchase agreement. The add-ons were often included even after customers declined them, the staffers telling customers that they were a “requirement.”
Two Illinois dealerships and their general manager, plus four dealerships in Florida, one in Pennsylvania, and another in Missouri were all defendants in the lawsuit, which claimed that 83% of customers had add-on fees placed on their accounts — most gained through deception.
“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,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Especially as families struggle with rising car prices, dealerships that cheat their customers can expect to hear from us.”
The settlement will be used for customer reimbursements, and $50,000 will be paid to the Illinois Attorney General Court Ordered and Voluntary Compliance Payment Projects Fund.
Napleton will also be required to establish a comprehensive fair lending program that, among other components, will cap the additional interest markup they can charge consumers. They will also be prohibited from misrepresenting the cost or terms to buy, lease or finance a car, or whether a fee or charge is optional.
In a statement to WRTV Friday, Napleton officials write, in part, “While we vehemently deny any wrongdoing, the Ed Napleton Dealership Group has resolved disputed claims made by the Federal Trade Commission and the Illinois Attorney General’s office. 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.”
”We have taken steps to implement additional safeguards to ensure full transparency to our customers,” they added. “We intend to continue to build on the trust we have worked so hard to create with the consuming public and look forward to establishing new relationships with generations of satisfied customers to come.”
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