A.G. Underwood Announces Win In Lawsuit Against Car Dealerships For Illegally Overcharging Consumers For Bogus Theft Protection Product
New York, NY - August 15, 2018 - Attorney General Barbara D. Underwood today announced a court order that permanently enjoins Victory Motors, LLC (Victory Mitsubishi of Larchmont in Westchester) and Victory Auto Group, LLC (Victory Suzuki of the Bronx) from engaging in persistent fraudulent, deceptive, and illegal business practices in the sale of a passive security system and requires the dealerships to pay restitution, damages, and civil penalties. The court order is the result of a lawsuit filed by the Attorney General in December 2017, alleging that the car dealerships deceptively charged as many as 1,100 consumers for an unwanted and bogus anti-theft product that cost up to $4,000 per consumer. Known as an “after-sale” product, this item was often added onto the final cost of the vehicle without the consumer’s knowledge or consent – after the customer had agreed upon the purchase price of a vehicle but before the sale transaction was finalized.
Since 2015, the Attorney General’s Office has obtained approximately $19 million in restitution and penalties from auto dealers; nearly 29,000 consumers have been eligible for restitution under these settlements.
“This court order is a victory for New Yorkers who were ripped off by these car dealerships,” Attorney General Underwood said. “The dealerships’ deceptive conduct led consumers to sign contracts that did not reflect the negotiated sale terms, frequently including unwanted aftermarket add-ons that they did not agree to. My office will continue to protect New York’s consumers and ensure that car dealerships comply with state law.”
In April 2015, the Attorney General received a complaint from a consumer who, after purchasing a vehicle from Victory Mitsubishi in Larchmont, noticed that there was a puzzling charge of $1,995 labeled “Etch” on the bill of sale. When contacted by the Attorney General’s office, the dealership explained that the charge was for a glass etch product – a security add-on in which a serial number, often the vehicle identification number (“VIN”), is etched onto each of the vehicle’s windows. However, the consumer said that she had not been made aware by the dealership that she was purchasing the etch product, and that if she had been made aware, she would have declined to purchase it. After the Attorney General’s inquiry, the dealership made a full refund.
Concerned that other consumers could have been charged for the product without their knowledge or consent, the Attorney General’s office then launched an investigation that found both Victory Mitsubishi of Larchmont and Victory Suzuki of the Bronx – another dealership with common ownership – had charged as many as 1,100 consumers for a product called the Etch Guarantee.
Consumers were charged amounts ranging from $129 to $3,998. In many instances, the two Victory dealerships added this fee onto the final sales price without the knowledge or consent of the consumers. As a result, the final price paid by the consumers was inflated by the amount charged for the after-sale product.
The two Victory dealerships also failed to clearly disclose the nature of the after-sale product to their customers. The “Vehicle Replacement Discount Allowance,” also known as the “Etch Guarantee,” is supposed to include a permanent etch or engraving of the vehicle’s VIN on the windows of the vehicle – supposedly to deter theft. However, in many instances, the Victory dealerships did not actually etch the VIN onto the windows of the vehicles.
Consumers were also led to believe that there would be a guaranteed credit of up to either $2,500 or $5,000 towards the purchase of a new vehicle should their car be stolen. However, there were numerous conditions and limitations – such as that the credit would not be applied if it eliminated the dealership’s profit on the sale – which rendered the “credit” illusory.
In December 2017, the Attorney General’s office filed a lawsuit against both Victory dealerships because they failed to offer full refunds to the 1,100 consumers who had been charged.
As sought by the 2017 lawsuit, the court order permanently enjoins the Victory dealerships from engaging in fraudulent, deceptive, and illegal sales tactics, and other deceptive practices. Both dealerships are also directed to pay restitution to consumers, damages, and civil penalties after an accounting is provided.
This case is part of the Attorney General’s wider initiative to end the auto dealer practice of “jamming,” or unlawfully charging consumers for products and services without their knowledge or consent.
The case is handled by Assistant Attorney General Sandra Giorno-Tocco, with the assistance of Investigators Peter Schottenfeld and Michael Christian, and Senior Consumer Frauds Representative John Katzenstein, under the supervision of Gary Brown, Assistant Attorney General-in-Charge of the Westchester Regional Office and Acting Executive Deputy Attorney General for Regional Affairs.