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A.G. Schneiderman Announces $1.6 Million Settlements with Auto Dealerships that Illegally Charged Thousands of Customers for Hidden Purchases

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A.G. Schneiderman Announces $1.6 Million Settlements with Auto Dealerships that Illegally Charged Thousands of Customers for Hidden Purchases

November 11, 2017 - 11:49

Schneiderman

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NEW YORK, NY -- Attorney General Eric T. Schneiderman today announced the settlement of a lawsuit against SG Hylan Motors Corp., a Staten Island dealership doing business as Staten Island Honda and Staten Island Nissan (collectively “SG Hylan”) and a separate settlement with Best Auto Outlet, Inc. (“Best Auto”) located in Floral Park.  The SG Hylan settlement resolves a lawsuit filed by the Attorney General in July 2016, which alleged that these auto dealerships unlawfully sold “after-sale” products and services, including credit repair and identity theft protection services, to over 2,300 consumers, sometimes exceeding a cost of $2,000 per consumer.  The settlement requires SG Hylan to pay $1.5 million in restitution to these consumers. The agreement with Best Auto, which returns $115,000 in restitution to consumers, concludes an investigation into this dealership for similar misconduct – alleged unlawful sale of credit repair and identity theft prevention services, and other “after-sale” items to over 200 consumers.

“When consumers shop for a car, they deserve an honest and fair negotiation – and not to be misled by deceptive dealerships looking to saddle customers with hidden costs,” Attorney General Schneiderman said. “My office will continue to investigate and hold accountable any auto dealers trying to pad their pockets by charging fees for undisclosed products and services that consumers do not need and did not ask for.” 

Each agreement requires payment into a restitution fund to be distributed to consumers with CFI contracts. SG Hylan must also pay $100,000 in penalties, and Best Auto must pay $10,000 in penalties.

Under the settlements, the dealerships are prohibited from:

  • Selling, offering to sell or marketing credit repair and identity theft services in connection with the sale or lease of a vehicle;
  • Selling, offering for sale, or providing to consumers any after-sale product or service unless, prior to such sale, certain material terms, including price, are disclosed verbally and in writing;
  • Misrepresenting the price of the vehicle in final lease or sale contracts;
  • Failing to provide consumers with sales or lease agreements that clearly and conspicuously itemize each after-sale product or service and its price.

These 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. Since 2015, the Attorney General has settled with 11 dealerships for amounts totaling over $17 million in restitution and penalties. Over 22,000 consumers have been eligible for restitution under these settlements. 

The settlements include the following dealerships:

  • Paragon Auto Dealership:  a group of automobile dealers in Queens and Westchester counties, including Paragon Honda, Paragon Acura, and White Plains Honda
  • Plaza Auto Dealership: a group of dealers located on Nostrand Avenue, Brooklyn, including, Plaza Toyota-Plaza Scion, Plaza Hyundai, Plaza Honda and Acura of Brooklyn
  • Manfredi Auto Dealership:  a group of dealers located on Hylan Blvd, Staten Island, including Manfredi Fiat and Fiat of SI, Manfredi Mitsubishi, Manfredi  Kia, Manfredi Hyundai, Manfredi Cadillac, Manfredi Chrysler Jeep & Dodge, Manfredi Fiat Inc., S.I. Toyota, Manfredi Toyota and Manfredi Scion, Manfredi Subaru, Manfredi Mazda and Staten Island Subaru
  • Koeppel Auto Dealership: a group of dealers located in Jackson Heights, Long Island City and Woodside, Queens, including Koeppel Nissan, Inc.; LK Automotive Enterprises, LLC. d/b/a Koeppel Subaru, KL Auto Enterprises LLC. d/b/a Koeppel Mazda and Koeppel Volkswagen, Inc.
  • I. Autoworld, Inc. d/b/a Generation Kia: located in Bohemia, Long Island
  • Nissan 112:   located in Patchogue, Long Island
  • Huntington Honda, Honda of New Rochelle and New Rochelle Toyota: located on Long Island and in Westchester counties
  • Westbury Jeep Dodge and Fiat of Westbury: located in Westbury, Long Island
  • Security Auto Sales, Inc. d/b/a Security Dodge: located in Amityville, Long Island

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. 

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 case against SG Hylan is being handled by Assistant Attorneys General Elena González and Noah Popp. The case against Best Auto is being handled by Assistant Attorney General Herbert Israel and Elena González. Both cases are supervised by 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 Manisha M. Sheth.