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New York AG Suing Staten Island Dealer Group for Payment Packing

July 28, 2016

NEW YORK — New York Attorney General Eric T. Schneiderman's crackdown on payment packing continues. Today, he announced a lawsuit against two Staten Island dealerships owned by SG Hylan Motors Corp.: Staten Island Honda and Staten Island Nissan.

The lawsuit alleges that SG Hylan Motors unlawfully sold “after-sale” products and services, including credit repair and identity theft protection services, to more than 2,300 consumers without their consent. The price for these services, the suit alleged, would at times exceed $2,000 per consumer.

Schneiderman is now seeking a court order to prohibit the dealerships from engaging in such practices in the future and for the dealerships to refund all illegally obtained overcharges to consumers.

According to the suit, SG Hylan Motors dealerships began using deceptive sales tactics back in 2011 and continued up until 2014. In that timeframe, SG Hylan Motors dealerships collected more than $2 million from consumers using its alleged deceptive sales tactics, court documents stated.

The dealerships, the suit alleges, would oftentimes misrepresent that certain services — like security systems and special tire protection services —  would be free or would charge consumers for services and then conceal the charges from them. On some occasions, the suit charges, the dealerships charged consumers for services, hid the charges and then never provided any of the services for which customers were charged. This was often done by bundling the price of the services with the price of the vehicle, the suit alleged.

Additionally, the suit charges the dealerships with selling customers credit repair and identity theft protection services through an arrangement with an independent company called Credit Forget it Inc. 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 2015, Schneiderman announced a settlement with the now-defunct Credit Forget it. 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.

This lawsuit, according to the attorney general’s office, is part of the attorney general’s initiative to end the practice often referred to as “jamming,” or payment packing. Since 2015, Schneiderman has settled with nine dealership groups for a total of nearly $16 million in restitutions and penalties.

Comments

  1. 1. Ed Miller [ July 28, 2016 @ 01:20PM ]

    Talk about you most basic "double edged sword."

    On one hand, the NY AG is buying into the "nanny state" philosophy hook, line and sinker.

    What ever happened to consumers looking out for their own affairs and reading loan documents before they sign them? There are no rules against asking questions if said documents aren't clear.

    Signing a loan agreement is a binding action. Consumers need to treat it as such and not rely on government to have your backs.

    Have your own backs.

    On the other hand, we have modern dealerships embodying the very sort of business perversion that perpetuates a stigma of misrepresentation in the industry.

    This story's got it all.

  2. 2. Alan [ July 28, 2016 @ 01:52PM ]

    Some things never change. No wonder people hate buying cars

  3. 3. Todd [ July 28, 2016 @ 02:06PM ]

    Sadly Alan, your generalization is also wrong. There are thousands of people like me that own dealerships and operate them honestly, and take care of our customers and their best interests. We operate legally and above board, all the while supporting our communities with charitable donations of time and money. There are bad actors in any business or industry, but painting them all with the same brush is not only unfair, but wrong.

  4. 4. Jorge [ July 28, 2016 @ 06:39PM ]

    All comments state good points. All I want to know is if the dealers in such cases are either idiots or immoral. Charging people upfront for credit repair is well known to be a federal crime... It all catches up eventually, you'll end up losing more in penalties..

  5. 5. Joe Welnack [ August 31, 2016 @ 08:00PM ]

    I have been in this business for 47 years and the "nanny state" comment I feel is really off base! Sure, I get ticked off by well meaning but naive bureaucrats that want to help the "poor and down trodden". Having said that, the sales of after market products are setting up the honest consumer for failure... We have one mega dealer down my way who really works "strong" telling customers that without this or that they won't be able to get their credit approved. A lot of these folks are desperate to get something "reliable", get four squared into a car they can never afford. I run a BHPH which is a family owned operation and I am starting to get back customers who believed they could buy a car for $99.00 down and $99.00 a month walking out with a $600. per month payment.

    I have maintained for many years that the repo always happens in the F&I Dept. Frankly, the manufacturers owned finance arms need to tighten up and give these loaded potato deals more scrutiny. Dealers who engage in these tactics generally only care about the monthly P&I instead of the long viewpoint. Lawyers these days are just looking to skin dealers who engage in these tactics and it is expensive!

 

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