In August 2024, Asbury Automotive Group rejected “false and unfounded” allegations by the Federal Trade Commission (FTC) of “payment packing” at three of its dealerships in the Dallas-Fort Worth area.

On Monday, the FTC dismissed the complaint that sought permanent injunctive relief.

Through its order, the FTC explained how Asbury’s defense strategy resulted in Monday’s development.

“On Aug. 16, 2024, the Federal Trade Commission issued an administrative complaint against (Asbury), seeking permanent injunctive relief. Shortly thereafter, Asbury initiated a lawsuit in the United States District Court for the Northern District of Texas, seeking a preliminary injunction and asserting constitutional claims regarding the Commission’s structure and administrative procedures.  The administrative proceeding was subsequently stayed to permit resolution of the collateral issues in the federal court action, and has remained stayed, without the opportunity for substantial prosecution, ever since,” the FTC wrote in its order.

“More than two years after the administrative complaint was first issued, and though the federal district has denied a preliminary injunction and dismissed several of Asbury’s constitutional claims, the federal district court lawsuit remains pending—currently awaiting resolution of an interlocutory appeal of the denial of preliminary relief.  Upon resolution of the appeal, the matter would then be remanded to federal district court for any remaining issues to be decided on the merits. The Commission anticipates this could result in years of additional federal court litigation before any administrative adjudication could then commence in earnest and ultimately reach the merits of the administrative complaint,” the regulator continued.

Then the FTC referenced its ongoing efforts to regulate dealership advertising and other business practices.

“As the Commission has made clear in recent remarks, warning letters, and federal district court actions, the FTC remains committed to pursuing price transparency in the appropriate forum, including for automobile dealers,” the FTC wrote. “As it does with any enforcement action, however, the Commission must constantly evaluate the deployment of its limited agency resources to ensure maximal efficacy and utility.

“Here, there are a variety of factors we must consider in pursuit of those priorities, including the increasingly unlikely possibility of reaching a timely resolution of the merits that led to the filing of the administrative complaint in the first place. Based on the totality of the circumstances, we have come to the difficult conclusion that the public interest requires that this litigation no longer be continued,” the regulator went on to say.

SubPrime Auto Finance News contacted Asbury to get its reaction to the FTC decision, but the dealer group has yet to reply.

In an administrative complaint, the FTC alleged that three Texas dealerships owned by Asbury that operate as David McDavid Ford Fort Worth, David McDavid Honda Frisco, and David McDavid Honda Irving, along with Ali Benli, who acted as general manager of those dealerships, engaged in a variety of practices to sneak hidden fees for unwanted add-ons past consumers.

The FTC alleged that those Asbury stores in Texas systematically charged consumers for costly add-on items they did not agree to or were falsely told were required as part of their purchase.

The FTC also alleged that Asbury discriminates against Black and Latino consumers, targeting them with unwanted and higher-priced add-ons.

FTC officials explained these tactics included a practice called “payment packing,” where the dealerships convinced consumers to agree to monthly payments that were larger than needed to pay for the agreed-upon price of the car, and then “packed” add-on items to the sales contract to make up that difference.

Through a news release distributed at the time, Asbury immediately defended itself.

Consistent with company policy, Asbury said customers who purchased protection products received full disclosure about the products’ costs, impact on payments, and other important terms. Customers signed for the protection products, which were itemized separately on paperwork provided to the customers, according to Asbury.

In its news release, Asbury pointed out that prior to finalizing sales, the dealerships take the additional, “extraordinary” step of requiring a compliance review by an independent deal clerk to ensure that protection products are sold with the buyer’s signed consent.

Asbury said its dealerships’ policies and training forbid the sale of protection products such as service contracts, maintenance plans, and interior-exterior protection without explicit, written approval from customers.

If Asbury team members are found to have engaged in the sort of conduct alleged by the FTC, they are subject to disciplinary action, including termination, according to the dealer group news release.

The dealer group said FTC officials refused to provide the methodology they employed in making their allegations even though Asbury requested such information for several months.

Asbury said it had verified through a Freedom of Information Act request that the FTC received no consumer complaints about the McDavid dealerships from 2019, the start of the period covered by the lawsuit, through late spring of 2024.

David Hult, who was Asbury CEO at the time the FTC made the allegations, said in August 2024, “We will not allow the FTC to coerce fines from us or subject us to onerous requirements that negatively impact the car-buying experience for our customers, would not apply to others, and would place us at a competitive disadvantage in the industry. We are confident that we will prevail in the litigation.”