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Post date: January 20 2016

A.G. Schneiderman Announces Lawsuit Against Auto Dealerships For Alleged Deceptive Practices That Illegally Inflated Car Prices

A.G. Investigation Uncovers Alleged Fraud At Koeppel Auto Dealerships In Queens; Office Also Announces Separate Settlements Reached With Nassau And Suffolk County Auto Dealerships

Court Papers Charge Dealerships With Selling Undisclosed Products To Consumers, Including Illegal Credit Repair And Identity Theft Protection Services

Schneiderman: When Consumers Shop For A Car, They Should Not Be Misled By Deceptive Dealerships Looking To Make A Quick Buck

NEW YORK – Attorney General Eric T. Schneiderman today announced a lawsuit against several Queens auto dealerships: Koeppel Nissan, Inc., Koeppel Cars Of Bayside, Inc. d/b/a Koeppel Subaru, Koeppel Mazda, Koeppel Auto Group, and Koeppel Volkswagen, Inc., (collectively, “Koeppel” or “Koeppel dealerships”).  The lawsuit, filed in New York Supreme Court, alleges that the Koeppel dealerships, all owned by the Koeppel family, unlawfully sold “after-sale” products and services, including credit repair and identity theft protection services to 1,426 consumers that sometimes exceeded a cost of $2,000 per consumer. The Attorney General also announced new settlements with dealerships in Nassau and Suffolk county for selling credit repair and identity theft protection services to consumers.

“When consumers shop for a car, they should not be misled by deceptive dealerships looking to make a quick buck off New Yorkers,” Attorney General Schneiderman said.  “Unfortunately, some dealers pad their pockets with fees for products and services that unaware consumers don’t need, and don’t want.” 

According to the lawsuit, the Koeppel dealerships used deceptive sales tactics, including charging consumers for services while concealing such charges from the consumers, or by misrepresenting that the services were free.  In fact, consumers did not receive the credit repair and identity theft protection services for which they were charged. 

The court papers also allege that the Koeppel dealerships collected more than $1 million from consumers between January 2013 and November 2014 for the credit repair and identity theft protection services alone using such deceptive tactics.  The suits seek a court order prohibiting the Koeppel dealerships from engaging in these kinds of practices in the future and directing them to refund all illegally obtained overcharges to consumers.

The Koeppel dealerships arranged with an independent company, Credit Forget It, Inc., to sell Credit Forget It’s credit repair and identity theft protection services beginning no later than early 2013.  It is a violation of state and federal law to charge upfront fees for services that promise to help consumers restore or improve their credit.  Contracts that violate the credit repair laws are void.

The court papers further allege that the Koeppel dealerships added on charges for other after-sale items like VIN etching and key replacement services, without clearly disclosing what they were charging for such services.  The costs of these services were often bundled into the vehicle sales price and not separately itemized.  As a result, unknown to the consumer, the price of the car stated on purchase and lease documents was inflated by the amount of these after-sale items.

In addition, the Koeppel complaint alleges that the dealerships sometimes negotiated purchase and lease terms with consumers in Spanish and then only provided contracts and documents in English.  New York City law requires that when the terms of an installment agreement are negotiated in Spanish, the seller must provide documents translated into Spanish. 

The Attorney General also entered into a separate settlement with Westbury Jeep Chrysler Dodge, Inc. and Fiat of Westbury LLC,  related car dealerships in Westbury, NY, that also sold CFI credit repair and identity theft services.  That settlement requires the dealerships to stop selling illegal credit repair products and using deceptive and misleading sales tactics.  It also requires the dealerships to itemize the cost of after-sale items in its sale and lease agreements. Westbury will refund over $100,000 to consumers, which represents the full profits it received from selling credit repair and identity protection.  It will also pay $5,000 in penalties and $5,000 in costs.

The Attorney General also settled with Security Auto Sales, Inc. d/b/a Security Dodge in Amityville, Suffolk County, for similar practices.   In addition to injunctive relief, Security Dodge will refund over $18,000 to consumers, which represents the full profits it received from selling credit repair and identity protection.  It will also pay $5,000 in penalties.  The office is continuing to investigate a number of other New York auto dealers that sold or sell after-sale services without the knowledge and consent of consumers. 

These lawsuits and settlements are part of the Attorney General’s initiative to end the practice that automobile dealers call “jamming,” or charging consumers for hidden purchases.  In 2015, Attorney General Schneiderman announced a settlement with Credit Forget, Inc., the company that purported to provide the credit repair and identity theft protection services.  In 2015, the Attorney General also settled with Paragon Motors of Woodside, Inc., d/b/a Paragon Honda, Worldwide Motors Ltd. d/b/a Paragon Acura, and Civic Center Motors Ltd. d/b/a White Plains Honda, a group of automobile dealers in Queens and Westchester Counties, that the Attorney General’s office determined had also fraudulently sold these same Credit Forget It contracts.  Paragon agreed to pay restitution potentially totaling nearly $14 million.    

Consumers who believe they have been jammed with unwanted products or services in connection with a vehicle lease or purchase or who were sold Credit Forget It’s credit repair or identity theft protection services are urged to file complaints online or call 1-800-771-7755.

The cases against the Koeppel dealerships and the settlement with the Westbury dealerships are being handled by Special Assistant Attorney General Stephen Mindell, Assistant Attorney General Herbert Israel, Assistant Attorney General Noah Popp, Deputy Bureau Chief Laura J. Levine, and Bureau Chief Jane M. Azia, all of the Consumer Frauds and Protection Bureau, and the Executive Deputy Attorney General for Economic Justice Karla G. Sanchez. Security Dodge was handled by Assistant Attorney General Rachael C. Anello of the Suffolk Regional Office, Kimberly Kinirons, Assistant Attorney General in Charge of the Suffolk Regional Office and Executive Deputy Attorney General for Regional Offices Marty Mack.