CitiFinancial Credit to pay DOJ $907K for SCRA violations during repossessions


A suit involving vehicle repossessions and members of the military came to a close Monday.

The Justice Department announced that CitiFinancial Credit Co., as successor to CitiFinancial Auto Corp., has agreed to pay $907,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by repossessing 164 vehicle owned by SCRA-protected servicemembers without first obtaining the required court orders.

During the investigation, DOJ officials said they learned that CitiFinancial conducted repossessions without court orders even when CitiFinancial had evidence in its own records suggesting that a borrower could be a protected servicemember. In several cases, loan servicing notes indicated that CitiFinancial was informed that the borrower was in military service or had received orders to report for military service.

The Justice Department said that CitiFinancial, nevertheless, continued repossession efforts and eventually succeeded in repossessing the servicemembers’ vehicles.

This settlement resolves a suit filed by the department in the Northern District of Texas and covers vehicle repossessions that occurred between 2007 and 2010. CitiFinancial Auto Corp. originated and serviced these vehicle installment contracts until 2010, when operations and assets were sold to Santander Consumer USA.

In February 2015, the Justice Department entered a settlement with Santander that provides servicemembers with more than $10.5 million in compensation for repossessions that violated the SCRA. As part of the investigation of Santander’s repossession practices, officials learned that CitiFinancial sold Santander the right to collect debts owed by servicemembers after their vehicles had been repossessed by CitiFinancial in violation of the SCRA.

The SCRA protects servicemembers against certain civil proceedings, including vehicle repossessions, affecting their legal rights during active military service. The SCRA requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service.

The court may then delay the repossession or require the finance company to refund prior payments before repossessing. The court may also appoint an attorney to represent the servicemember, require the finance company to post a bond with the court and issue any other orders it deems necessary to protect the servicemember.

By failing to obtain court orders before repossessing vehicles owned by protected servicemembers, the DOJ asserted that CitiFinancial prevented servicemembers from obtaining a court review of whether these repossessions should be delayed or adjusted to account for their military service.

Officials went on to mention this agreement further compensates servicemembers for their losses by requiring CitiFinancial to pay $5,000 to each impacted servicemember, in addition to the Santander settlement.

CitiFinancial must also pay $10,000 to one affected servicemember who did not receive partial compensation through the Santander settlement.

In addition, CitiFinancial will pay $500 per account to compensate borrowers for any lost equity, with interest, and must take steps to repair the credit of all affected servicemembers. An independent settlement administrator will contact servicemembers in the coming months to finalize individual settlements at no cost to the servicemembers.

“Members of our armed forces make extraordinary sacrifices in order to protect and defend our nation, and they should be able to serve actively without fear that their legal rights will be violated,” said Associate Attorney General Rachel  Brand. “This settlement provides financial relief and credit repair assistance to the servicemembers whose vehicles were repossessed by CitiFinancial.

“The enforcement of federal laws protecting current members of the Armed Services, veterans, and their families continues to be an important priority for this Department of Justice,” Brand continued.

“The men and women who serve in the armed forces deserve to have us protect their backs while they selflessly protect us,” U.S. Attorney John Parker added. “This conduct clearly fell short of that and I'm grateful we were able to repair some of that harm.”

DIMONT launches complimentary claims consulting service for storm recovery


DIMONT is deploying DANA to help the auto-finance industry handle the ramifications of Hurricanes Harvey and Irma.

DANA — which is DIMONT Associates Nationwide Adjusters — now is available with a team ready to provide claims management guidance to finance companies and servicers in the aftermath of these storms and beyond.

DIMONT explained DANA is a virtual resource center that can allow finance companies and service providers the ability to email questions or schedule a live chat with a licensed adjuster. The tool is available indefinitely and is not limited to DIMONT clients.

DIMONT’s adjusters will, at a minimum, help servicers evaluate whether properties are in flood zones, what types of coverages apply and, most critically, how to navigate the exclusions, endorsements and exceptions in the applicable policy.

“People often assume that coverage automatically applies, but that is not the case,” DIMONT chief executive officer Denis Brosnan said. “The terms and conditions of policies vary greatly by the carrier and, as such must be carefully scrutinized.

“We wanted to provide the auto and mortgage industries a simple resource to get their questions answered on filing claims, addressing refuted claims, claim type, customer service — basically anything they need,” Brosnan continued.

“DANA offers a complimentary phone consultation with our expert licensed public adjusters, who can help navigate claims processing during this uncertain time,” he went on to say.

DANA is available now at DIMONT also is set to be one of the exhibitors during Used Car Week, which begins Nov. 13 in Palm Springs. Calif.

NADA offers strategy to handle Equifax concerns

TYSONS, Va. - 

The National Automobile Dealers Association cautioned store managers and personnel that they’re likely to see two trends surface with regard to the Equifax security breach as customers arrive in the showroom or service drive.

Mark Scarpelli, who is the 2017 NADA chairman, specified the two probable scenarios in a blog post the association shared last Friday. Scarpelli mentioned dealerships are likely to get questions from customers about the breach itself as well as a potential increase in credit freezes and fraud alerts on credit applicants’ credit reports.

“Equifax has stated that information from as many as 143 million people in the United States was compromised,” wrote Scarpelli, who is president of Raymond Chevrolet and Raymond Kia in Antioch, Ill., and co-owner of Ray Chevrolet and Ray Chrysler-Jeep-Dodge-Ram in Fox Lake, Ill.

“Given the number of people affected and the sensitive type of information exposed, dealers should understand the basics of the breach and what it means for their customers,” he continued.

“If dealership personnel do get questions, it is important to first explain that the reported breach occurred at Equifax, and does not involve the dealership, data stored at the dealership or dealership processes,” Scarpelli went on to state.

Scarpelli suggested that dealerships should review guidance provided by the Federal Trade Commission regarding the Equifax matter. He also recommended that the FTC’s guidance can be even more help if F&I office personnel spot a fraud alert or encounter a frozen credit report.

“Dealers and their employees should also be aware that there are already scammers trying to take further advantage of the Equifax breach by calling consumers and trying to obtain personal information through false pretenses,” Scarpelli wrote.

The NADA chairman closed by touching on one other compliance element the Equifax incident might give dealerships a chance to re-examine.

“Lastly, this is a good reminder for dealers to revisit their Red Flags program to ensure that they are taking the required steps to detect and prevent scammers from opening a line of credit using someone else’s information,” he wrote in the blog post here.

CoreLane debuts cloud-based tool to connect DMS and LOS systems

ORANGE, Calif. - 

CoreLane Technologies, a provider of innovative transactional connectivity solutions for automotive dealers and finance companies, on Monday announced the launch of CreditLane, a low-cost, scalable cloud-based platform for delivering data between dealers and finance companies.

CoreLane will debut the new platform this week at the defi SOLUTIONS Annual Client Summit in Las Colinas, Texas.

CoreLane explained the CreditLane platform can integrate with the dealer management system (DMS) and the finance company’s loan origination system (LOS), enabling the implementation of the system without the need for extensive training.

CreditLane receives contract information directly from the dealer’s DMS and transmits it to finance company, eliminating the possibility of keystroke errors caused by entering information multiple times. The finance company instantly receives the application through its LOS and responds with a decision that generates an alert and messages on the dealer’s DMS. 

The final deal structure is pushed back into the dealer’s DMS, reducing errors and streamlining funding.

CreditLane also enables finance companies to grow their portfolios by providing them visibility to a broad array of dealers. The CreditLane Lender Directory can provide marketing information to prospective dealers so finance companies can easily identify, connect and submit applications to CreditLane providers.

 “Since transitioning to the CreditLane platform, we have seen a positive impact on our ability to streamline our process and improve communication. The functionality of having real time updates between dealers and our origination departments has significantly reduced the time between receiving an application and being able to approve and fund the deal,” said Vic Amin, senior vice president of sales and marketing at Veros Credit. 

“The efficiencies we’ve gained make every interaction faster and easier, which in turn, has helped to reduce our overall operating costs,” Amin continued.

 “We also wanted a solution that could accommodate our continued growth, and the CreditLane platform gives us the necessary customization and scalability to maximize productivity at a pace that we set,” Amin went on to say.

Bill Medved, senior vice president of technology and operations of CoreLane, is confident other finance companies can achieve the same benefit as what Veros Credit has experienced.

“We’ve spent over a year researching how dealers and lenders currently submit and process applications,” Medved said. “Based on the result of that research, we’ve partnered with multiple DMS providers and integrated with defi SOLUTIONS to develop CreditLane. 

“We look to partner with all key industry stakeholders to provide solutions that are ‘one-click simple,’” he went on to say.

As mentioned, CoreLane will be pushing out its new tool during defi SOLUTIONS’ event — defi FEST — at the NYLO hotel in Las Colinas, Texas, beginning on Tuesday.

During the event, defi SOLUTIONS will share company and product insights and information, and encourage collaboration through discussions and idea-sharing. The defi SOLUTIONS business model centers around collaboration, and this annual round-up of clients, partners and company team members is an opportunity to make certain everyone is benefitting from defi relationships and the defi lending platform of services.

 “This year we’re offering more sessions and topics of interest to our clients,” said Kartheek Veeravalli, defi’s chief product officer. “We’ve grown quickly, so we’ll also take this opportunity to make sure our clients are aware of the latest and greatest services our auto lending platform has to offer, such as Auto Structuring.”

An entire session will be devoted to the defi auto loan origination system (LOS) Auto Structuring capability, which automatically structures counter-offers according to a client’s individually customized credit policy rules. Other defi SOLUTIONS sessions include the Q&A company and product roadmap with chief executive officer Stephanie Alsbrooks and others from the defi executive team, two-way texting in loan management and servicing, the need for speed in current systems and architecture, as well as a presentation from defi chief operating officer Georgine Muntz on the use of technology in competitive strategy.

Additionally, defi partners will be presenting ‘bottom-line’ benefits case studies.

“Our sponsors are an integral part of this event,” said Patty Jefferson, defi SOLUTIONS vendor relationship manager. “defi clients won’t want to miss out on their interactive roundtable sessions.”

Digital Matrix System (DMS) is the event’s Big Kahuna sponsor. Other partners include AUL, Black Book, Cedar Document Technologies, Clarity Services, Corelane Technologies, Dealertrack, eOriginal, Equifax, FactorTrust, Hatteras, Kelley Blue Book, LexisNexis Risk Solutions, Open Lending, REPAY, RouteOne, Solutions by Text and TransUnion.

ARA and RDN partner to bolster finance companies and repo agencies

IRVING, Texas - 

The American Recovery Association (ARA) announced a new partnership on Friday with Recovery Database Network (RDN), a business unit of KAR Auction Services.

The organizations highlighted the agreement will help finance companies manage and monitor vendor compliance by integrating ARA’s Compliance Monitoring System and compliance metrics with the various software solutions offered by RDN.

RDN VendorVision is a secure, web-based compliance management platform that connects companies with their vendors.

“This partnership will make RDN VendorVision a central component of the ARA’s broad portfolio of exclusive member benefits,” ARA president Dave Kennedy said.

“By integrating RDN’s Recovery Solution and VendorVision products with ARA’s Compliance Monitoring System, clients will now have the ability to set standards and verify the necessary compliance training required for their recovery vendor network — creating a ‘culture of compliance’ within the American Recovery Association,” Kennedy continued.

There are currently nearly 150 finance companies already utilizing both the RDN and the ARA systems. Both organizations stressed that these providers as well as repossession agents within the industry can benefit from this partnership.

“RDN is committed to supporting our lending partners with simplified, integrated and efficient products and services,” said Michael Briggs, president and chief executive officer of CarsArrive and RDN. “By working with ARA, we can help promote, monitor and manage compliance and meet the shared needs of repossession agents and lenders.”

The RDN partnership is just one of the many benefits offered to ARA members. Some of ARA’s other partnerships and member benefits include AW Direct, Experian Auto-check, Goodyear Tires, Direct Connect, Cruise One, Harding Brooks Insurance, National Independent Auto Dealers Association and PRIOS.

For more information about ARA, its partnerships and its member benefits, visit

Hudson Cook broadens footprint into Texas


Hudson Cook now has a legal team in the Lone Star State.

This week, Hudson Cook expanded its nationwide footprint by adding a new office in the Dallas/Fort Worth metroplex. The office in downtown Fort Worth opened on Aug. 16. This location is the firm’s first office in Texas and 13th office nationwide.

Partner Hurshell Brown and of counsel Curtis Linscott will anchor the office along with associate Andrea Cottrell. Before joining Hudson Cook, Brown and Cottrell had their own firm of Brown & Cottrell, while Linscott most recently worked at Cash America.

“We are excited to be moving into the thriving Texas legal market,” Hudson Cook chairman Michael Benoit said. “The DFW office will help us better serve our existing clients, as well as bring new opportunities to the firm.”

Brown began practicing law in the consumer finance industry in 2007 as an in-house attorney for Cash America. Most recently, he served as a managing member of Brown & Cottrell, representing clients operating in the consumer financial services and FinTech industries, including installment lenders, retail installment lenders, payday lenders, pawnbrokers and service providers.

Brown assists clients in complying with state and federal consumer financial laws and represents lenders and consumer finance companies with regulatory compliance, due diligence, and developing compliance-focused solutions to business operations for both storefront and online operations.

Linscott joined Cash America in 1995 as director, associate general counsel, and served as lead counsel for the company and its subsidiaries in real estate acquisition, disposition and leasing transactions, construction matters, franchising, intellectual property and general corporate matters.

Linscott was named general counsel in 2005 and appointed executive vice president in 2006. He established the company’s first formal compliance department and built out a robust compliance management program, including developing staff, formal policies and procedures, monitoring and testing programs, and board reporting, all geared toward the complex regulatory compliance environment for the financial services industry.

Cottrell began her legal career with Brackett & Ellis where she worked in civil litigation and insurance defense. In 2010, she joined Cash America as director, corporate counsel. She was actively involved in the CFPB’s regulatory exams and supported the compliance function by counseling on exam responses, completing law reviews, revising loan documents and consulting with IT on system changes.

Cottrell has substantial knowledge of marketing and advertising law in both the traditional and digital spaces, and serves clients in those areas.  After the Cash America merger, Cottrell joined Brown & Cottrell, assisting clients in the creation, implementation and management of compliance management systems and counseled clients on responding to MRAs from the Consumer Financial Protection Bureau. She drafted original and revised existing policies/procedures and guided clients through implementation.

Hudson Cook’s Dallas/Fort Worth office is located at 500 Main Street, Suite 310 in Fort Worth.

Free webinar on CFPB’s new arbitration rule

In other firm news, Hudson Cook is hosting a free webinar on Sept. 21, beginning at noon ET to discuss the CFPB’s new arbitration rule.

Benoit along with two other Hudson Cook partners, Eric Johnson and Nikki Munro, will use the hour-long session to highlight scope, requirements and substance of the rule, political and legal challenges to the rule, and the potential impact of the rule on the automotive finance industry.

Participants will have an opportunity to ask questions and will receive a copy of the presentation materials following the live event.

Registration for the webinar can be completed here.

Early fallout of Equifax breach that might impact 143 million consumers

CARY, N.C. - 

From lawmakers to law firms, Equifax now is in the middle of a financial hurricane as the credit bureau announced late on Thursday that a cybersecurity incident potentially impacted approximately 143 million U.S. consumers.

In its announcement, Equifax said criminals exploited a U.S. website application vulnerability to gain access to certain files. Based on the company’s investigation, the unauthorized access occurred from mid-May through July. 

The company added that has found no evidence of unauthorized activity on Equifax's core consumer or commercial credit reporting databases.

Equifax said the information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver's license numbers.  In addition, credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were accessed, according to the company’s announcement.

As part of its investigation of this application vulnerability, Equifax also identified unauthorized access to limited personal information for certain U.K. and Canadian residents. Equifax said it will work with U.K. and Canadian regulators to determine the appropriate next steps. 

The company also noted has found no evidence that personal information of consumers in any other country has been impacted. 

Equifax indicated that it discovered the unauthorized access on July 29 of and acted “immediately to stop the intrusion.” The company said it promptly engaged a leading, independent cybersecurity firm that has been conducting a comprehensive forensic review to determine the scope of the intrusion, including the specific data impacted.

Equifax also reported the criminal access to law enforcement and continues to work with authorities.  While the company’s investigation is substantially complete, it remains ongoing and is expected to be completed in the coming weeks.   

"This is clearly a disappointing event for our company, and one that strikes at the heart of who we are and what we do. I apologize to consumers and our business customers for the concern and frustration this causes,” Equifax chairman and chief executive officer Richard Smith said.

“We pride ourselves on being a leader in managing and protecting data, and we are conducting a thorough review of our overall security operations,” Smith continued. “We also are focused on consumer protection and have developed a comprehensive portfolio of services to support all U.S. consumers, regardless of whether they were impacted by this incident.”

By lunchtime on Friday, more than a half dozen shareholder rights law firms push out announcements regarding their own investigations. Attorney John Yanchunis of and Morgan & Morgan already had filed a class action lawsuit against Equifax in the Northern District of Georgia.

Part of what is intensifying plaintiff attorneys’ efforts is what San Diego-based firm Johnson Fistel highlighted. It’s what a pair of high-level Equifax executives did, according to regulatory filings.

“(These filings) show on Aug. 3, just days after the July 29 breach discovery, chief financial officer John Gamble sold shares worth $946,374 and Joseph Loughran, president of U.S. information solutions, exercised options to dispose of stock worth $584,099,” Johnson Fistel said in a news release.

On Capitol Hill, members of Congress want more answers, too. And not just from Equifax. Rep. Ted Lieu, a California Democrat, is seeking a U.S. House Judiciary Committee hearing.

“In light of recent events, I request the committee call upon representatives from the Big 3 credit reporting agencies — Experian, TransUnion and Equifax — to testify not only on the breach that occurred in May 2017, but also to identify how each company is taking proactive, defensive steps to prevent such breaches in the future,” Lieu said.

“Congress has a strong role to play in preventing such attacks on our financial and IT infrastructure, and must hold those entrusted with our most sensitive data to account,” he added.

Equifax went on to say that it has engaged a leading, independent cybersecurity firm to conduct an assessment and provide recommendations on steps that can be taken to help prevent this type of incident from happening again.

“I’ve told our entire team that our goal can’t be simply to fix the problem and move on. Confronting cybersecurity risks is a daily fight. While we’ve made significant investments in data security, we recognize we must do more. And we will," Smith said.

FCC to examine 11 recommendations for blocking phone calls


How collections departments can make contact with customers via phone might be impacted by what the Federal Communications Commission is currently reviewing.

The agency’s consumer advisory committee is expected to consider a recommendation from its robocalls working group on blocking unwanted calls during its meeting set for Sept. 18.

Back in May, policymakers created 11 suggestions with the aim of dramatically reducing the flood of unwanted robocalls to consumers, improving consumer education and simplifying the complaint filing process. Those 11 points included:

1. Initiate and prosecute enforcement actions against known robocallers who are violating the law.

2. Ensure a system of effective enforcement, with appropriately escalating penalties against repeat violators.

3. Enhance its current online Unwanted Calls Consumer Guide to consolidate best practices and tips currently shared by other government agencies, and to reflect new guidance and resources emerging from industry’s work on this issue. Currently a number of links are provided to external resources. These resources should be more fully integrated into the aforementioned consumer guide.

4. Ensure that the FCC’s educational resources and complaint forms are available in accessible formats, and languages other than English where appropriate, and encourage others that provide educational resources and the ability to make complaints about robocalls to also do so.

5. Develop educational materials specific to the impact of robocalls on consumers with disabilities. One area of focus should be the use of robocalls over all types of telecommunications relay services (TRS), including video relay services, Internet Protocol Relay, and captioned telephone relay services. Consumer protection tips and resources should be highlighted as well as best practices for relay service providers. A second area to highlight is information and resources about accessible caller id services and equipment usable by people who are blind or visually impaired.

6. Simplify the consumer complaint filing process for unwanted calls. Many consumers receive multiple unwanted calls each day, and would currently have to enter each complaint separately. Developing a form that allows for information to be entered about multiple unwanted calls at once would simplify the process.

7. Create a separate intake portal for unwanted-call complaints. This portal would have a unique icon on the Consumer Complaint Center landing page. With the goal of reducing the burden for consumers of entering a complaint, this dedicated intake form would allow for multiple unwanted calls to be reported and would require the minimum amount of information needed to make the complaint actionable, while allowing other entry fields to be optional.

8. Incorporate educational information into the response sent by the FCC to consumers who submit an unwanted-call complaint. This could be a link to the FCC’s enhanced consumer guide discussed above. The response should also explain how unwanted call complaint data is used.

9. Develop an app that can be used by consumers with mobile devices to quickly file complaints for unwanted calls received on their device. The app should be accessible to and usable by people with disabilities. As allowed by the consumer’s privacy permissions, this app would automate the entry of the above-mentioned actionable information, as well as additional details if available.

10. Build upon the existing Memorandum of Understanding with the Federal Trade Commission by exploring the value and feasibility of creating a co-hosted single education and complaint portal for the issue. Currently, each agency hosts separate education content and complaint filing portals, and many consumers are unsure of where to file their complaint.

11. Explore making complaint data available to third parties on a near-real time basis in order to maximize its usefulness for companies whose robocall analytics engines use the data to identify telephone numbers that may be candidates for blocking or providing alerts to consumers.

Specific details about the FCC’s upcoming meeting on this topic can be found here.

Finance regulators, providers offering help to Harvey victims

CARY, N.C. - 

As Texas continues to contend with the ongoing torrential rain and flooding, state and federal financial regulatory agencies along with finance providers are taking steps to offer assistance to customers who have been impacted.

Officials from the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp. and state bank regulators all said they recognize the serious impact of Hurricane Harvey on the customers and operations of many financial institutions. The agencies all insisted they will provide regulatory assistance to affected institutions subject to their supervision.

The agencies added that they are encouraging institutions in the affected areas to meet the financial services needs of their communities.

“Bankers should work constructively with borrowers in communities affected by Hurricane Harvey. The agencies realize that the effects of natural disasters on local businesses and individuals are often transitory, and prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism,” officials said.

“In supervising institutions affected by the hurricane, the agencies will consider the unusual circumstances they face,” they continued. “The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound banking practices as well as in the public interest.”

Like the regulators, American Bankers Association president and chief executive officer Rob Nichols echoed a similar sentiment about helping consumers and providers throughout Texas.

“Our thoughts and prayers are with all those caught in the path of Hurricane Harvey, including the first responders doing their best to save lives,” Nichols said in a statement. “We are reaching out to offer our support to banks affected by Harvey, and ABA stands ready to work with the Texas Bankers Association, regulators and local officials to ensure the banking system continues to serve and support communities hit by this devastating storm.”

Finance companies, including the captive for Toyota and Lexus are joining the assistance stream, too.

Toyota Financial Services (TFS) announced it is offering payment relief options to its customers affected by Hurricane Harvey. This broad outreach includes any TFS or Lexus Financial Services (LFS) customer in the designated disaster areas.

“We at Toyota Financial Services care about the safety and well-being of our customers and want to help those impacted by the hurricane,” captive officials said. “Impacted lease and finance customers residing in the devastated areas may be eligible to take advantage of several payment relief options.”

Those options include:

—Extensions and lease deferred payments

—Redirecting billing statements

—Arranging phone or on-line payments

Toyota Financial Services insisted it will proactively attempt to contact customers in the affected areas to assess their needs and inform customers of the options available to them.

“We extend our heartfelt thoughts to those affected by the natural disaster,” captive officials added.

Meanwhile, Wells Fargo not only is looking to help its customers with payment options, but the bank also announced on Monday that it is donating $1 million to support those affected by Hurricane Harvey and the extensive flooding left in its wake.

Wells Fargo is donating $500,000 to the American Red Cross Disaster Relief Fund and an additional $500,000 to local nonprofits focused on recovery and relief efforts in Texas in the coming days and weeks.

“Wells Fargo is deeply concerned for all of those affected by the devastating flooding in Texas, and we’re committed to helping our customers, neighbors, team members and communities get through this,” said David Miree, lead region bank president. “With forecasts calling for more rain and potentially more flooding, we will continue to work with nonprofits and those focused on relief efforts, as we determine any additional assistance and support Wells Fargo may be able to provide.”

NJ Hyundai dealer agrees to 8 conditions in settlement with attorney general


What law enforcement determined to be deceptive practices associated with dealership advertising of financing options recently surfaced again — this time in New Jersey.

Garden State attorney general Christopher Porrino and the state’s Division of Consumer Affairs announced that a Middlesex County dealership has agreed to pay $136,000 and change the way it does business in order to resolve the division’s consumer fraud investigation of the dealership’s advertising, sales and leasing practices.

Officials said Sansone Hyundai, located on U.S. 1 in Avenel, entered into the settlement to end the division’s investigation of its alleged activities, including failing to disclose the total price for certain advertised vehicles and charging consumers for aftermarket merchandise that was listed at “no charge” on certain leases and sales contracts.

In a consent order with the division, Sansone Hyundai, among other things, agreed to:

—Comply with all applicable state and/or federal laws, rules and regulations, including the Consumer Fraud Act, the Motor Vehicle Advertising Regulations, the Automotive Sales Regulations and the Consumer Leasing Act

—Not misrepresent the terms and conditions of any financing or lease plan

—Not add and charge for aftermarket merchandise, such as window etch or service contracts, without consumers’ knowledge and/or authorization

—Not represent to consumers that certain dealer-installed options and/or aftermarket merchandise are mandatory when, in fact, they are not

—Not sell consumers aftermarket merchandise that overlaps or provides similar benefits in part to merchandise the consumer has already purchased through the lease or sale transaction

—Accurately reflect in leases the “gross capitalized cost” as required by the consumer leasing act

—Provide consumers with an opportunity to review all leases and/or sales documents and/or aftermarket contracts prior to signing

—Not identify the advertised prices of a motor vehicle by reference to the MSRP sticker, when the vehicle includes an addendum to the MSRP sticker that reflects a higher total price

 “Consumers should be able to purchase a new car without having to worry about misinformation and hidden costs,” Porrino said. “This settlement ensures that consumers will receive transparency and honesty from this dealership, as required by law.”

As previously mentioned, Sansone Hyundai also agreed to make a $136,250 settlement payment to the state.

“Dealerships must fully disclose all costs and fees associated with the purchase or lease of a vehicle before consumers sign on the dotted line,” said Steve Lee, director of the Division of Consumer Affairs. “We will continue to enforce the laws and regulations in place to ensure consumers have the facts they need to make informed decisions.”

The settlement Sansone Hyundai reached included a fine only a fraction of what’s been handed out earlier this year.

For example, the Federal Trade Commission announced back in March that the Sage Automotive Group — which includes nine Los Angeles-based dealerships, its holding and management companies and two individuals — agreed to pay more than $3.6 million in order to settle charges that it used deceptive and unfair sales and financing practices, deceptive advertising and deceptive online reviews.