On Tuesday, a complaint was filed by the Federal Trade Commission (FTC) in the District of Maryland, alleging that automotive dealer Passport Automotive Group had violated the FTC Act and the Equal Credit Opportunity Act by overcharging customers who purchased vehicles from them. According to the complaint, the defendant was adding on illegal “junk fees,” which include certification, reconditioning, or inspection fees. The defendant is also accused of charging a higher rate to Black and Latino customers.
According to an FTC release, the defendant sent over 21,000 fake “urgent call” notices, which were sent to get customers to come into the dealership. It also states that Blacks and Latinos paid 291 and 235 more than white clients respectively, and that they paid 24 and 42 percent more in fees as well.
Alongside that filing, the FTC settled with the defendant and states that they will pay over $3.3 million, which will be redistributed to consumers who were affected by the contested activity.
This complaint and settlement marks a growing effort by the FTC to crack down on the exploitation of automotive consumers, according to the press release. In their release, the agency touts its actions to protect consumers across the automotive marketplace in recent years, most recently by announcing a proposed rule that would ban many of the junk add-on fees and bait-and-switch tactics plaguing car buyers.
“In the last ten years alone, the FTC has brought more than 50 law enforcement actions related to automobiles and helped lead two nationwide law enforcement sweeps that included 181 state-level enforcement actions in these areas.”
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection stated that “Our proposed rule would save consumers time and money and help ensure a level playing field for honest dealers”. With auto prices rising fast, the FTC hopes that this increased attention to the auto sales industry will help lessen the impact on consumers.
