Late last week, New York City Mayor Eric Adams and New York City Department of Consumer and Worker Protection Commissioner Vilda Vera Mayuga announced that the City had reached a settlement with a group of car dealers, resolving allegations that they misled consumers in connection with the advertising and sale of used cars. In what must be one of the largest-ever settlements reached by the DCWP, Kings Autoshow, Kings Autoshow II, and Grand Auto Group agreed to pay more than $800,000 in restitution and civil penalties.
In its lawsuit against the dealers, the City charged them with committing more than 7,000 violations of the City's rules. The City alleged that they used deceptive advertising to lure customers to the dealers, and then sold customers cars at prices "well above the advertised prices." The City also alleged the dealers also falsely advertised cars by making claims such as, "the price you see is the price you pay" and "no dealer fees." In addition, the City charged the dealers with falsely promising "guaranteed approval" for financing and with falsely advertising accessories, warranties, and other add-on products.
As part of the Consent Order, Kings Autoshow and Kings Autoshow II agreed to a brief license suspension. In addition to requiring the defendants to comply with all applicable laws, the Consent Order also requires them to comply with specific city rules, as well as additional restrictions, including prohibitions on:
- Selling a car for more than the advertised price;
- Adding any dealer fees (other than the $175 documentation fee) to the advertised price;
- Using terms such as "no dealer fee" and "no dealer fee pricing" if the dealer charges a documentation fee;
- Using fake reference prices, such as "Brooklyn MSRP" or "retail price";
- Advertising "guaranteed approval" for financing; and
- Advertising accessories unless they are they are actually the accessories included with the advertised car.
In announcing the settlement, Mayor Adams said, "We're not going to allow anyone to pick New Yorkers' pockets on the street or in a used car lot." DCWP Commissioner Mayuga added that, with this settlement, the City is "sending a clear message to the used car industry that DCWP has zero tolerance for businesses that seek to prey on unsuspecting consumers with predatory financing and sales practices."
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