A.G. Schneiderman Announces Over $1 Million In Settlements With Two Auto Dealer Groups For Deceptive Practices That Resulted In Inflated Car Prices

Auto-Dealerships In Long Island And Manhattan Will Pay Over $900,000 In Restitution To Nearly 6,400 Consumers Who Were Illegally Charged For After-Sale Items; $135,000 In Penalties And Costs To State.

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Photo by: ArtisticOperations

New York, NY - October 11, 2017 - Attorney General Eric T. Schneiderman today announced two separate settlements with auto dealerships that will return over $900,000 in restitution to nearly 6,400 consumers and $135,000 in penalties and costs to the state for the unlawful sale of credit repair and identity theft protection services to consumers who bought or leased vehicles. Garden City Nissan, Nissan of Huntington, and VW of Huntington, all related dealerships, are located on Long Island. Potamkin Hyundai and Potamkin Mitsubishi are located in Manhattan.
 
Attorney General Schneiderman charged the dealerships with the unlawful sale of “after-sale” credit repair and identity theft protection services that often added thousands of dollars to the purchase price of the vehicle. It is a violation of state and federal law to charge upfront fees for services that promise to help consumers restore or improve their credit, and contracts that violate the law are void.
 
“New Yorkers shouldn’t have to worry that they will be duped when they are shopping for a car,” said Attorney General Schneiderman. “We’ll continue to make sure dealerships are not illegally profiting by charging unsuspecting consumers thousands of dollars on unwanted items. I am pleased that we have now been able to return almost $19 million in restitution to those who have fallen victim to these unscrupulous tactics.”
 
Typically, after working with a salesperson to choose a car, consumers met with a “Finance & Insurance Manager” who would try to sell the consumer additional “after-sale” products such as extended service contracts, key replacement services, a security system, credit repair services, and identity theft protection services. Often, these after-sale items added hundreds or thousands of dollars in hidden charges to the sale or lease price of a vehicle. The costs of these items were often bundled into the vehicle sale price and not separately itemized.  The Attorney General’s investigation showed that for some dealers, consumers were totally unaware that they had received these services. In many other cases, consumers thought that the services were free. As a result, often unbeknownst to the consumer, the price of the car stated on purchase and lease documents was inflated by the amount of these after-sale items.
 
In addition to the over $1 million in restitution, penalties, and costs, the settlements prohibit the dealerships from:
 
  • Selling, offering for sale, or marketing credit repair and identity theft services in connection with the sale or lease of a vehicle;
  • Selling, offering for sale, or providing to consumers any after-sale product or service unless, prior to such sale, certain material terms, including price, are disclosed verbally and in writing;
  • Misrepresenting the price of the vehicle in final lease or sale contracts;
  • Failing to provide consumers with sales or lease agreements that clearly and conspicuously itemize each after-sale product or service and its price.
These settlements are part of the Attorney General’s broader initiative to end the practice engaged in by many dealers of “jamming,” or unlawfully charging consumers without their consent or knowledge for purchases.
 
In 2015, as part of the broader investigation, Attorney General Schneiderman obtained a consent order that shut down Credit Forget, Inc. (CFI), a New York company that sold the unlawful credit repair and identity theft protection services to these and other car dealerships. 
 
Today’s settlements bring the total number of auto dealership settlements obtained by Attorney General Schneiderman since 2015 to 13, including over $19 million in total restitution and penalties. Nearly 29,000 consumers were eligible for restitution under these settlements. 
 
The dealer groups included in today’s settlements are:
 
Long Island
 
  • Garden City Nissan located at 316 N. Franklin Street, Hempstead, NY 11550
  • Nissan of Huntington located at 850 E. Jericho Turnpike, Huntington Station, NY 11746
  • VW of Huntington located at 838 E. Jericho Turnpike, Huntington Station, NY 11746
Manhattan
 
  • Potamkin Mitsubishi and Potamkin Hyundai are located at 2495 2nd Avenue, New York, New York 10035
Consumers who believe they have been jammed with unwanted products or services in connection with a vehicle lease or purchase, or who were sold Credit Forget It’s credit repair or identity theft protection services, are urged to file complaints online or call 1-800-771-7755.
 
These cases were handled by Assistant Attorney General Elena González under the supervision of Deputy Bureau Chief Laura J. Levine, and Bureau Chief Jane M. Azia, all of the Consumer Frauds and Protection Bureau. The Consumer Frauds and Protection Bureau is overseen by Executive Deputy Attorney General for Economic Justice Manisha M. Sheth.