New York AG Settles Two Payment Packing Suits for $1.6 Million
December 08, 2016
NEW YORK — Attorney General Eric T. Schneiderman’s crackdown on payment packing continues. On Dec. 8, the regulator announced settlements with SG Hylan Motors Corp. of Staten Island and Best Auto Outlet of Floral Park, which will collectively pay $1.6 million in restitution to more than 2,300 victims of their alleged deceptive sales tactics.
Since 2015, Schneiderman has obtained more than $17 million in restitution and penalties as part of his office’s crackdown on the practice of “jamming,” or payment packing. SG Hylan will pay $1.5 million in restitution to more than 2,200 consumers for the unlawful sales of “after-sale” products, while Best Auto will return $115,000 to more than 200 consumers.
“When consumers shop for a car, they deserve an honest and fair negotiation — and not to be misled by deceptive dealerships looking to saddle customers with hidden costs,” Schneiderman stated in his office’s announcement. “My office will continue to investigate and hold accountable any auto dealers trying to pad their pockets by charging fees for undisclosed products and services that consumers do not need and did not ask for.”
The SG Hylan settlement resolves a lawsuit filed by the attorney general this past July. The regulator alleged that the group’s two dealerships, Staten Island Honda and Staten Island Nissan, charged consumers for an illegal credit repair and identity theft protection services — the cost sometimes exceeding $2,000 — without their knowledge. The agreement with Best Auto concludes an investigation into the dealership for similar misconduct, according to the regulator.
In 2015, Attorney General Schneiderman announced a settlement with the now-defunct Credit Forget Inc., the company that purported to provide the credit repair and identity theft protection services. The company was ordered to pay $2 million in fines, however, those charges were suspended on the condition that the company cease operations and notify all dealers with which it had contracts. Since then, the regulator has settled with 11 dealerships who sold the unlawful product.
According to the attorney general’s office, charging upfront fees for services that promise to help consumers restore or improve their credit is a violation of state and federal law, and any contracts that violate those laws are considered void.
In the attorney general’s lawsuit against SG Hylan, Schneiderman alleged that Staten Island Honda and Staten Island Nissan had been unlawfully selling the credit repair and identity theft protection services for three years starting in 2011. The suit alleged the two dealerships collected more than $2 million using the alleged sales tactics. Aside from paying into a restitution fund, SG Hylan will pay $100,000 in penalties.
As part of the Best Auto settlement, the dealership will pay $10,000 in penalties.
Additionally, the dealerships will no longer be allowed to sell, offer to sell or market credit repair and identity theft services in connection with the sale or lease of a vehicle. The dealers are also prohibited from selling, offering for sale or providing consumers any after-sale product or service unless, prior to the sale, certain material terms of the products are disclosed verbally and in writing.
Additionally, the dealerships are now unable to misrepresent the price of the a vehicle in a final lease or sales contract or to fail to provide consumers with sales or lease agreements that clearly and conspicuously itemize each after-sale product or service and its price.
Schneiderman’s has also reached settlements with the following dealerships and groups:
- Paragon Auto Dealership: A group of automobile dealers in Queens and Westchester counties, including Paragon Honda, Paragon Acura, and White Plains Honda
- Plaza Auto Dealership: A group of dealers located on Nostrand Avenue, Brooklyn, including, Plaza Toyota-Plaza Scion, Plaza Hyundai, Plaza Honda and Acura of Brooklyn
- Manfredi Auto Dealership: A group of dealers located on Hylan Blvd, Staten Island, including Manfredi Fiat and Fiat of SI, Manfredi Mitsubishi, Manfredi Kia, Manfredi Hyundai, Manfredi Cadillac, Manfredi Chrysler Jeep & Dodge, Manfredi Fiat Inc., S.I. Toyota, Manfredi Toyota and Manfredi Scion, Manfredi Subaru, Manfredi Mazda and Staten Island Subaru
- Koeppel Auto Dealership: A group of dealers located in Jackson Heights, Long Island City and Woodside, Queens, including Koeppel Nissan, Inc.; LK Automotive Enterprises, LLC. d/b/a Koeppel Subaru, KL Auto Enterprises LLC. d/b/a Koeppel Mazda and Koeppel Volkswagen Inc.
- I. Autoworld Inc. d/b/a Generation Kia: located in Bohemia, Long Island
- Nissan 112: Located in Patchogue, Long Island
- Huntington Honda, Honda of New Rochelle and New Rochelle Toyota: located on Long Island and in Westchester counties
- Westbury Jeep Dodge and Fiat of Westbury: Located in Westbury, Long Island
- Security Auto Sales, Inc. d/b/a Security Dodge: Located in Amityville, Long Island