Dealer Groups Archives | Auto Remarketing

NJ AG & state agency penalize 3 dealer groups

A trio of dealership operations in the Garden State are set to pay hefty penalties for alleged violations of advertising, warranties and other financing and retailing matters.

Last week, New Jersey acting attorney general Matthew Platkin and the state’s Division of Consumer Affairs announced separate settlements totaling nearly $400,000 with the dealerships for alleged consumer protection violations.

According to a news release, the alleged violations involving Open Road Auto Group, Glen Motors and Lynnes Dealerships included:

— Failing to disclose prior accident history

— Deceptive advertising

— Failing to honor vehicle warranties

— Failing to list vehicle prices on sales documents

— Charging consumers for certain fees twice

— Failing to itemize aftermarket products or dealer-installed options

— Failing to obtain consumer signatures on all sales documents

— Accepting incomplete credit applications from prospective buyers

In addition to paying civil monetary penalties, state officials said the dealerships agreed to refrain from engaging in any unfair or deceptive acts or practices, comply with all applicable state and federal laws and resolve consumer complaints.

“Dodging illegal practices should be the last thing New Jerseyans have to worry about as they search for a vehicle in this challenging market,” Platkin said in the news release. “These settlements demonstrate our commitment to protect consumers and ensure transparency in the state’s auto market.”

Acting Director of the Division of Consumer Affairs Cari Fais added, “The Division has a duty to protect New Jersey consumers by ensuring dealerships live up to their promises. In addition to providing relief to affected consumers, these settlements make clear that we will not tolerate car dealerships that disregard our laws and regulations.”

Settlement involving Open Road

Officials said Open Road Auto Group, which operates 15 locations in New Jersey, agreed to a $300,000 settlement to resolve an investigation into allegations that included failing to disclose prior accident history, using deceptive advertising and failing to honor vehicle warranties.

Under the terms of the assurance of voluntary compliance entered with the division, Open Road Auto Group, among other things, agreed to:

— Disclose the total cost, the down payment, trade-in or rebate, if any, plus the total scheduled periodic payments in the advertisement of installment sales of vehicles

— Include a statement that “prices include all costs to be paid by consumer, except for licensing costs, registration fees, and taxes,” in the advertisement of new or used vehicles

— Disclose in the advertisement that a vehicle had been previously damaged and that substantial repair or body work has been performed on it when such prior repair or body work is known or should have been known

— Refrain from charging customers for work done or parts supplied in excess of any estimate, without oral or written consent from the customer

— Accurately disclose the purchase price of any dealer-installed options;

— Refrain from misrepresenting to consumers that aftermarket merchandise such as service contracts and window etch are mandatory

— Itemize all aftermarket merchandise on leases, sales documents and contracts;

— Refrain from charging consumers separately for a “destination charge” on any advertised vehicle when the cost is already included in the advertised price

— Provide consumers with an opportunity to review all lease documents prior to signing.

Official said Open Road Auto Group also agreed to provide a $100 service credit coupon toward service, maintenance, or repair for all consumers who purchased a vehicle in 2017 and were charged a wash and detail fee. 

Additionally, officials said the company will enter binding arbitration through the division’s Alternative Dispute Resolution (ADR) Unit to resolve all pending complaints from affected consumers and any additional consumer complaints received by the division for a period of three years.

Settlement with Glen Motors

Officials said Glen Motors Inc, located in Fair Lawn, agreed to a $90,000 settlement — which includes $66,088.98 in civil penalties — to resolve allegations that included failing to list the price of vehicles on its sales documents, failing to itemize aftermarket products or dealer-installed options and failing to obtain consumer signatures on all sales documents.

Under the terms of the assurance of voluntary compliance entered with the division, Glen Motors Inc., among other things, agreed to:

— Itemize all aftermarket products on the leases, sales documents and aftermarket contracts

— Provide consumers an aftermarket contract containing a clear statement of the full total price for such aftermarket products, including an itemization of the aftermarket products

— Refrain from charging consumers for aftermarket products that are not reflected in the leases, sales documents or aftermarket contracts

— Provide consumers with a full and accurate copy of all leases, sales documents, and aftermarket contracts signed by the consumer

— Not misrepresent to consumers that dealer-installed options or aftermarket products are mandatory when such is not the case

— Itemize all pre-delivery services in writing on the sales document

— Refrain from adding or charging for aftermarket products or dealer-installed options without the consumers’ written authorization

— Honor all advertised vehicle prices, terms and conditions

— Obtain the consumers’ signatures on all aftermarket contracts, leases, retail buyer’s orders, sales documents and any other document that requires the consumers’ signatures.

Officials added Glen Motors also agreed to enter binding arbitration through the division’s ADR Unit to resolve all pending complaints from affected consumers and any additional consumer complaints received by the division for a period of two years.

A portion of the settlement amount will be suspended and automatically vacated provided the company complies with the terms of the agreement over a two-year period, according to the news release.

Settlement with Lynnes

Finally, the division also announced a settlement with several Lynnes dealerships — Lynnes Nissan City, Lynnes Nissan East, Lynnes Hyundai and Lynnes Subaru, all located in Bloomfield.

Officials said Lynnes agreed to a $46,381 settlement — which includes $33,500 in civil penalties to resolve allegations that included charging consumers for certain fees twice, accepting incomplete credit applications from prospective buyers, and failing to list vehicle prices on sales documents.

Under the terms of the consent order with the division, Lynnes, 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 and the Automotive Sales Practices Regulations

— Itemize all aftermarket merchandise and dealer-installed options in the sales documents and aftermarket contract

— Include the trade-in value of a vehicle on all sales documents

— Not engage in a “bait and switch” by refusing to show, display, sell, or lease vehicles at the advertised price, as required by the Consumer Fraud Act and the Motor Vehicle Advertising Regulations;

— Accurately disclose the sale price of vehicle on the sales documents; and

— Refrain from signing any aftermarket contract, lease, sales document or other document on behalf of a consumer or affixing a consumer’s signature to any document

Officials went on to mention Lynnes also agreed to enter binding arbitration through the division’s ADR Unit to resolve all pending complaints from affected consumers and to arbitrate, if necessary, any additional consumer complaints received by the division for a period of three years.

A portion of the settlement amount will be suspended and automatically vacated provided the company complies with the terms of the agreement, according to officials.

ANALYSIS: Lawsuits increase, alleging websites are not compliant with ADA

A new wave of lawsuits is being filed across the country under the Americans with Disabilities Act (ADA). The ADA is a federal law passed in 1990 requiring “reasonable accommodations” in “any place of public accommodation” to make them accessible to people with disabilities. Examples of ADA reasonable accommodations are wheelchair ramps and handrails.

The new lawsuits allege that the Internet is a place of public accommodation. Accordingly, companies like auto dealers that use websites in connection with their physical stores must provide reasonable modifications in their website technology for people who are blind, deaf, or suffering from another disability that precludes them from being able to use the websites.

In general, for a website to be reasonably accessible to disabled people, the hardware and content must be coded so that screen-reading software can convert the words to an audio translation. Video that appears on a website should include descriptions for the deaf. Also, all interactive functions must be operable through keyboard commands for people who can’t use a mouse. 

While there is no formal regulation on what these standards should consist of, there is a generally accepted industry standard series of guidelines developed by the World Wide Web Consortium.  These are known as the Web Content Accessibility Guidelines version 2.1 (WCAG), to make websites more accessible to disabled people, and they are fairly complicated. Government websites already follow the WCAG, but private business websites are typically loaded with images and video making them more difficult to restructure to meet these guidelines, according to industry experts.

The cost of making sites accessible ranges from several thousand dollars to a few million dollars, depending on the complexity of the site, according to trade groups and experts.  The costs of defending the lawsuits and paying the plaintiffs’ attorneys fees (the real reason for the lawsuits) are also expensive.

These lawsuits started over a decade ago but were temporarily stalled by the Obama administration’s Department of Justice, which was in the process of developing precise standards for making websites ADA-compliant. Four Advanced Notices of Proposed Rulemaking were issued on July 26, 2010.  Presumably, these standards would have been less costly and complex than the WCAG and would have set a standard for legal compliance.

On Dec. 10, 2017, the Trump administration withdrew all four Advanced Notices of Proposed Rulemaking stating “The Department (of Justice) is evaluating whether promulgating regulations about the accessibility of Web information and services is necessary and appropriate. Such an evaluation will be informed by additional review of data and further analysis. The Department will continue to assess whether specific technical standards are necessary and appropriate to assist covered entities with complying with the ADA.”

Since then, numerous new lawsuits have been filed against many major retailers, especially in California. That may be because a California law sets a minimum dollar amount for damages of $4,000 plus attorney’s fees for each ADA violation, a minimum not imposed in most other states. In many states and under the ADA, only equitable relief may be sought.  The minimum damages, according to lawyers who defend such lawsuits, makes suing in California more lucrative. 

More lawsuits were filed in federal court in the first six months of 2018 than in all of 2017.  With legal action skyrocketing, the number of cases filed in 2017 was more than four times the 262 filed in 2016 and nearly 20 times the 57 seen in 2015. Moreover, businesses located in all but 12 states have fallen victim to website-related lawsuits and threats of suits, paying anywhere from $10,000 to over $90,000 to resolve the claims. One plaintiff recently sued 50 colleges claiming he uses a screen reader and experienced barriers when trying to access the colleges’ websites.

Many lawyers specialize in bringing these suits against one specific industry like auto dealers. Filing large numbers of similarly worded ADA lawsuits against one type of business is sometimes referred to as “drive-by” litigation. This activity is widely seen as a means to get a quick settlement, rather than improve accessibility.

The political world has taken notice as well. By a 225-195 vote, the U.S. House of Representatives passed legislation in February 2018 that would have substantially amended the ADA to force prospective plaintiffs to first provide written notice of noncompliance to public accommodations before filing suit. The proposed amendments to the ADA would then provide the company 60 days to come up with a plan to address the plaintiff’s concerns. Disability advocates are worried that the ADA Education and Reform Act would essentially gut the public accommodation provisions of the ADA; they would prefer to see frivolous “surf-by” lawsuits handled by local bar associations or judges.  The legislation died in the U.S. Senate last term but is likely to be reintroduced.

What’s a dealer to do?

Unfortunately, there is no magic solution, and most fixes can be costly. The WCAG is not legislation, and it isn’t even a regulation issued by a government agency. It does seem to be the industry standard however, and most settlements of these cases have involved the defendant agreeing to reconfigure its website to comply with the WCAG.

WCAG’s underlying goal is to establish websites that “POUR” — that is, sites that are perceivable, operable, understandable, and robust. A company’s IT department or contractor can run basic applications like the Web Accessibility Evaluation Tool, but these online apps are not foolproof. Moreover, some web designers have suggested that the WCAG standards are too difficult and expensive to implement.

Many smaller website owners will prefer to try to fly under the radar until the federal government provides better guidance which may not be until the next administration. But more conservative businesses may find that retaining a reputable web designer to ensure full compliance with WCAG is the better way to go.

Ultimately, everyone agrees that making the Internet more accessible to persons with disabilities is a worthy goal. Most dealers would prefer to accomplish this goal by involving fewer lawyers however.

Randy Henrick is an auto dealer compliance expert who offers compliance consulting services to dealers at www.AutoDealerCompliance.net and can be reached at AutoDealerCompliance@gmail.com. He served for 12 years as Dealertrack’s lead regulatory and compliance attorney and wrote all of Dealertrack’s Compliance Guides. He has presented workshops at four NADA national conventions and speaks to dealer associations, 20 groups, and prepares training and other compliance materials for dealers. Because of the general nature of this article, it is not intended as legal or compliance advice to any person but raises issues you may want to discuss with your attorney or compliance professional. Contact him directly for advice on this or any other sales or F&I issue affecting your business.