FTC & Connecticut AG charge Nissan dealer with using ‘junk fees’ & other prohibited tactics involving certified vehicles
Regulators are targeting another dealership over what they dub to be “junk fees,” among other allegations.
According to a news release distributed on Thursday, the Federal Trade Commission and the Connecticut attorney general are taking action against Manchester City Nissan (MCN), along with its owner and a number of key employees, for “systematically deceiving” consumers about the price of certified used vehicles, add-ons and government fees.
The complaint alleges that the dealership, in addition to deceiving consumers, regularly charged them “junk fees” for certification, add-on products and government charges without the consumers’ consent, “sometimes costing them thousands of dollars in unwanted and unauthorized charges.”
Connecticut also alleges that all these practices are deceptive or unfair under Connecticut law.
According to the complaint, MCN advertises numerous vehicles, including Nissan vehicles, as being “certified pre-owned.” The regulators said Nissan’s rules prohibit dealers from charging a fee for certification beyond the price of the vehicle.
However, the complaint alleges the dealership and its employees regularly tack on a certification charge for these vehicles when consumers arrive looking to buy the advertised vehicle.
One example cited in the complaint describes a consumer that came in looking to buy a certified pre-owned vehicle advertised for $15,700, but then the dealer added a $5,295.65 “inspection fee” for a vehicle it had already inspected.
In addition, the complaint alleges that MCN often charged consumers extra for an inspection or repair that has already occurred, but then fails to report to Nissan that the certified vehicle was sold, leaving consumers without the additional warranty that was promised in MCN’s advertising.
The complaint also alleges that MCN and its employees frequently charge consumers for “bogus” add-ons they did not agree to pay.
Authorities said the operation often charged consumers for add-ons such as general asset protection (GAP), service contracts, maintenance contracts, and Total Loss Protection (TLP).
TLP appears in 90% of all sales by MCN, according to officials.
“One consumer, as described in the complaint, negotiated a price of $20,500 for a Nissan Rogue Sport, but when she went to sign the sales contracts, her promised monthly payment had increased, which she attributed to a credit issue,” officials said in the news release. “Instead, she found that MCN had tacked more than $7,000 in add-ons to the amount she financed for the car.”
Furthermore, authorities said MCN and its employees also regularly deceived consumers during the sales process about government-imposed taxes and fees, claiming that “junk fees” added by MCN are required by the government or deceptively inflating the actual government fees to register the vehicle and keeping the difference as profit.
An example cited in the complaint showed that MCN told one consumer that Connecticut registration and other state fees were $345. But Connecticut registration and other fees were only $208.20, according to the complaint.
The complaint charges Chase Nissan (which does business as MCN) along with its principals Patrick Dibre and Refaat (Brian) Soboh, general manager Michael Hamadi, finance manager Aiham Alkhatib, and sales managers Matthew Chmielinksi and Fred (Freddy) Mojica with violating the FTC Act and the Connecticut Unfair Trade Practices Act.
“With this action against Manchester City Nissan, its top executives, and its managers, the Commission and its partner, the State of Connecticut, continue to crack down on deceit and unfairness in the auto industry,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “This action follows on the heels of the commission’s announcement of the Combating Auto Retail Scams (CARS) Rule, and once again makes clear that bait-and-switch tactics and hidden junk fees have no role in honest dealmaking.”
The FTC vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the District of Connecticut.
“Today’s action sends a strong warning to any dealership engaging in these types of deceptive practices that misconduct will not be tolerated,” Connecticut attorney general William Tong said. “Manchester City Nissan’s egregious business practices appear to have violated multiple laws, and we’re going to hold them accountable on behalf of all the consumers they deceived.”
The FTC collaborating with a state attorney general in a similar case happened three months ago.
The FTC and the Wisconsin attorney general said in October they were taking action against Rhinelander Auto Center, its current and former owners, and general manager Daniel Towne for deceiving consumers “by tacking hundreds or even thousands of dollars in illegal junk fees” onto vehicle prices.
The FTC and Wisconsin AG also said the dealer was being penalized for discriminating against American Indian customers by charging them higher financing costs and fees.
Furthermore, the FTC said in November it began to send a second round of payments totaling more than $857,000 to consumers who were harmed by Illinois-based Napleton Automotive Group’s “junk fees” and discriminatory practices.