L.i. Auto Dealerships Cited For Tricking Consumers Into Paying For Unwanted "extras"
Attorney General Spitzer today announced a settlement with the owners of two Long Island auto dealerships over allegations of unscrupulous sales practices.
Westbury Nissan and Smithtown Nissan, Inc. and their owners, Thomas Rubio, Gary Rubio and Joseph Oscar Rubio agreed to pay over $41,000 to settle allegations of deceptive business practices and fraud.
"Auto dealerships cannot be permitted to engage in illegal sales practices that dupe consumers into paying for unwanted and unordered add-on' features in order to increase the company's bottom line," Spitzer said. "My office will continue its efforts to clean-up the advertising and sales practices of auto dealers across the state to protect consumers' rights and promote fair competition."
Specifically, at least 14 consumers have filed complaints with Spitzer's office since 2002 related to fraudulent business practices. They have complained that the auto dealerships:
- Increased the agreed upon sale price by adding unwanted options - such as Vehicle Identification Number ("VIN") etching and extended service contracts - without disclosing it to consumers. Some consumers first learned about the "extras" after leaving a deposit on a car. Others only learned about the add-ons after taking possession of the vehicle;
- Refused to return deposits to consumers who exercised their rights to cancel an order;
- Misrepresented the coverage of extended service contracts;
- Duped consumers into buying extended warranties by misrepresenting that its purchase was required in order to obtain financing; and
- Engaged in deceptive practices in relation to the sale of VIN etching by misrepresenting its benefits and repeatedly omitting important facts regarding the terms and conditions of VIN etching policies.
In settling the investigation, the Rubios agreed to reform the business practices of their two auto dealerships. Specifically, Westbury Nissan and Smithtown Nissan will provide "after-sale" written contracts for ordered add-ons which set forth the price and provide that if a consumer cancels the underlying sale or lease agreement for the vehicle, the add-on contract would be deemed cancelled. In addition, the auto dealerships will be required to provide consumers with written documentation explaining the coverage of extended service contracts, extended warranties and VIN etching.
Westbury Nissan and Smithtown Nissan also are required to provide refunds within seven business days to consumers who cancel service contracts within the ten days provided by law.
In settling the investigation, the Rubios and their auto dealerships will pay over $27,000 in restitution for consumers and $14,000 in civil penalties and costs. In addition, consumers have until October 5th to file complaints with the Attorney General's office to become eligible for restitution.
Earlier this year, Westbury Nissan LLC settled a separate investigation into false and misleading advertising practices and paid $10,000 in civil penalties.
This case is the latest in an ongoing effort by Spitzer's office to monitor auto advertising and sales practices throughout the state. Since 1999, Spitzer's office has commenced nearly 200 enforcement actions against auto dealers and their advertising associations across the state, ranging from deceptive advertising campaigns to fraudulent sales practices and questionable "kickbacks" in arranging financing for consumers that result in racial disparities.
Individuals with complaints against auto dealerships are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.
For tips on purchasing cars and for avoiding auto advertising hype, consumers are encouraged to visit the Attorney General's web site at www.ag.ny.gov.
This case is being handled by Assistant Attorney General Juan M. Merchan of the Nassau Regional Office.