Buying a car from an auto dealership is stressful, but some consumers who were ripped off fought back recently and took matters to the Federal Trade Commission.
The Federal Trade Commission charged nine Los Angeles auto dealerships for duping consumers using sleazeball tactics when they purchased a car.
The FTC cited the auto dealerships for a range of violations such as deceptive and unfair sales and financing practices. Now the businesses are being told to return money to customers and stop using financing and sales tactics that rip them off.
The FTC filed a complaint in the U.S. District Court for the Central District of California.
The dealerships are being accused of “yo-yo” financing, a term used to describe the deceptive and unlawful practices used to coercing customers into deals that harm themselves. Specifically, the dealerships get customers to sign a contact, but after they drive off the lot they get them to come back and accept a more expensive different contract.
Additionally, the FTC accuses the dealerships of padding finance contracts with unauthorized charges for extra services and products. The extra items were typically extended warranties, maintenance plans and guaranteed auto protection (GAP). Many of the customers did not consent to these products or the dealers told them they were free or were required as part of the sale.
The targets were typically consumers with limited English or who were coping with financial difficulties. The customers responded to misleading dealership advertisements in newspapers, on the internet, as well as radio and television commercials. The buyers were tricked into coming to the dealerships to buy vehicles for very low prices, using financing that promised low monthly payments or little down.
Some of the car buyers thought they were purchasing vehicles, but they were actually in a lease. The dealerships also made it appear to customers that they were going to pay off their trade-in vehicle as part of a deal, but that was not the case. Consumers later found out they were responsible for payments on their trade-in cars.
Other deceptions involved fake 5-star online reviews about the dealerships as well as attempts to coverup negative reviews that reported their unlawful actions. The reviews were reportedly made by employees or agents that represented the dealers.
The dealers are also accused of having customers sign new contracts with different terms than what was initially agreed upon during the sale. Some consumers were also told by dealerships that their finance contract was canceled and that they could keep their down payment or trade in which is false and unlawful.
Some of these dealerships actually threatened the customers with legal action and criminal arrest if they refused to comply with their demands and hand over their vehicle or payments. The defendants threatened to repossess vehicles or told they might be arrested for a stolen vehicle.
These dealerships violated the Truth In Lending Act, Regulation Z, the Consumer Leasing Act and Regulation M because they allegedly failed to clearly disclose in their advertising required credit and lease information.
The following Los Angeles area dealerships were named in the complaint:
- Universal City Nissan, Inc., also d/b/a Universal Nissan
- Sage Downtown, Inc., also d/b/a Kia of Downtown Los Angeles
- Glendale Nissan/Infiniti, Inc., also d/b/a Glendale Infiniti and Glendale Nissan
- Valencia Holding Co., LLC, also d/b/a Mercedes-Benz of Valencia
- West Covina Auto Group, LLC, also d/b/a West Covina Toyota and West Covina Toyota/Scion
- West Covina Nissan, LLC
- Covina MJL, LLC, also d/b/a Sage Covina Chevrolet
- Sage North Hollywood, LLC, also d/b/a Sage Pre-Owned
- Sage Vermont, LLC, also d/b/a Sage Hyundai
- Joseph Schrage, a/k/a Joseph Sage; Leonard Schrage, a/k/a Leonard Sage
- Michael Schrage, a/k/a Michael Sage
- Sage Holding Company Inc.
- Sage Management Company Inc..
The Commission only files complaints such as this when it believes the law has been broken and it’s in the public’s best interest. The court, however, will make final decisions on what will happen to these defendants.
Lemon Lawyer Helps Consumers 800-235-6801
Consumers who are duped out of money or their vehicle by dealerships who used deceptive or unlawful practices, may have grounds for a lawsuit.
Also, if you have been sold a defective vehicle, you may have a lemon lawsuit. Under California lemon laws and federal warranties, owners of vehicles who attempt to fix their car more than three times for the same problem or over an extended period of time, may be entitled to compensation if their vehicle is under the manufacturer’s warranty.
You don’t need to guess whether or not you have a valid claim, Johnson Attorneys Group provides a free no risk consultation at 800-235-6801.
If your vehicle or situation qualifies, you could get a full refund, a new vehicle or get compensation and keep your vehicle.
There’s no need to worry about having to pay attorneys fees out of your compensation because those costs are paid by the auto manufacturer as required under California lemon laws. The only thing you could potentially lose is your clunker.
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I would like to know what you think about this experience I had in April 2021 at Airport Marina Honda in Los Angeles…it is regarding a Karr Security system – I was strong-armed into buying the additional security system for almost $1,000 – the sales manager Mark, did everything he could to put fear into a new younger driver about all the boogie men out there waiting to steal the car, or worse. We wanted the car, so I did negotiate a lower price on that security system which I was assured was “not an option” but was “required” and that it was “already installed” on “all their cars” because their “owner doesn’t want his cars stolen” — only to discover that it was NOT pre installed – after finally agreeing on a price for that security system, they actually went to a vending machine, typed in a code, pulled out a small plastic pouch and THEN plugged a computer chip into the car — nothing else! And to add insult to injury when I got home and read the paperwork on this extra security system, three times (3 times!!), once in BOLD LETTERS, it actually states on the official paperwork “THE KARR SECURITY EX-1 IS NOT A REQUIREMENT FOR THE PURCHASE OF THE VEHICLE” – would this be something you have an interest in?
Please contact me at the law firm at 800-235-6801 for answers to this question.