Consumer and Worker Protection311Search all NYC.gov websites
FOR IMMEDIATE RELEASE:
Thursday, September 21, 2017
Thursday, September 21, 2017
MEDIA CONTACT:
Abigail Lootens / Christine Gianakis
Department of Consumer Affairs
(212) 436-0042
press@dca.nyc.gov
Abigail Lootens / Christine Gianakis
Department of Consumer Affairs
(212) 436-0042
press@dca.nyc.gov
Department of Consumer of Affairs and Credit Acceptance Agree on Restitution for Consumers Who Fell Victim to Predatory Financial Practices within the Used Car Industry
NEW YORK, NY–The Department of Consumer Affairs (DCA) Commissioner Lorelei Salas today announced a settlement agreement with Credit Acceptance Corp. The financing company has agreed to issue restitution to consumers affected by the predatory sales practices of several Brooklyn used car dealerships – USA 1 Auto Sales, Inc., Lenden Used Car Sales, Inc., D&A Guaranteed Auto Sales, Inc., and Linden Used Cars, Inc.– that DCA charged with deceptive and unlawful trade practices. DCA alleges that these dealerships concealed and misrepresented the terms of sale and financing, including the actual sale price, even refusing to give consumers copies of their sales documents until weeks after the sale so they can conceal the price and high interest rates from consumers. These dealerships used three finance companies—Credit Acceptance Corp., Clover Commercial Corp, and Westlake Financial Services—to complete these predacious sales. Credit Acceptance has agreed to pay restitution to the victims of these illegal practices as requested by DCA.
“The City will not tolerate predatory financing and sales practices in any industry,” said DCA Commissioner Lorelei Salas. “Credit Acceptance cooperated with DCA’s investigation and as a result, consumers will receive restitution for the loans they received through deceptive used car dealerships that peddled sky-high interest rates to unsuspecting customers. We expect that the other finance companies involved will follow suit. DCA will continue to monitor this industry to ensure a safe marketplace for New Yorkers.”
Credit Acceptance Corp. has agreed to:
- Reimburse $76,868.21 in restitution to 11 consumers who filed complaints with DCA based on their retail installment sales contracts with Credit Acceptance. Consumers who owe money to Credit Acceptance will receive the reimbursement as a credit to their account and any amount beyond what is owed will be paid the consumer via check. Consumers who no longer owe any money to Credit Acceptance will also receive a check;
- Provide restitution to eligible consumers who file new complaints about USA 1 Auto Sales, Inc., Lenden Used Car Sales, Inc., D&A Guaranteed Auto Sales, Inc., and Linden Used Cars, Inc. before March 11, 2018, allowing even more consumers the opportunity to benefit from this agreement;
- Safeguard consumers by requesting that consumer reporting agencies delete any negative credit information reported to them in an effort to help repair the consumers’ damaged credit.
In May 2017, DCA announced charges against multiple used car dealerships in Brooklyn, which are all under the same ownership, and their owners for engaging in deceptive and unlawful trade practices that preyed on New Yorkers. DCA alleges these dealerships mislead consumers about the price and safety of their cars, and failed to disclose financing terms. DCA also, for the first time, sought consumer restitution from finance companies— Credit Acceptance Corp., Clover Commercial Corp, and Westlake Financial Services—involved in subprime lending. The case is pending trial.
With auto loan debt being the fastest-growing household debt (Federal Reserve Bank of New York), DCA is now pursuing new approaches, like obtaining restitution from the financing companies involved in the used car lending, in order to make consumers whole. Seeking restitution from the financing companies, which, by contract, take on any consumer claims against the dealerships, helps to assure that consumers will be made whole after the losses they suffered from the dealerships’ deceptive practices. Deceptive and illegal practices by dealerships hurt both consumers and lenders, and lenders would be wise to scrutinize the dealerships with which they do business. DCA encourages any consumer who feels a used car dealership has misled them about the price of their car or sold them an unsafe automobile to contact the agency by calling 311, or by filing a complaint at nyc.gov/dca.
DCA currently licenses 650 used car dealerships and has received nearly 5,800 complaints from consumers about used car dealerships over the past four years. The complaints range from instances of forgery on contracts to a lack of material disclosures by dealership staff. As a result of the mediation of consumer complaints, investigations and settlements, DCA has secured more than $2.7 million in consumer restitution and assessed nearly $1.8 million in fines against used car dealerships over the past three years. In March 2017, DCA announced charges against Major World, one of the largest local used car dealerships in the city with multiple locations in Queens, for using deceptive financing and sales practices that resulted in predatory lending targeting immigrants and New Yorkers with low incomes. Enforcement is one prong of DCA’s efforts to combat these predatory practices, which also includes education and advocacy.
On the advocacy approach, in April 2017, DCA Commissioner Lorelei Salas, Council Member Rafael Espinal, Jr., Chair of the Council Committee on Consumer Affairs, Council Member Dan Garodnick, and Council Member Jumaane D. Williams announced a package of legislation to combat predatory financing practices in the used car industry. The legislation would require used car dealerships, which DCA licenses, to post a Consumer Bill of Rights, disclose important information about financing and pricing, provide all required notices and sales documents to the consumer in whatever language the dealerships and consumer used to negotiate the contract, and provide consumers with an option that allows them to cancel their contract within two days of the sale. Council held a hearing on the bills on April 26, 2017 and on September 14, 2017 the Committee for Consumer Affairs Council voted unanimously in favor.
DCA offers an online guide to Getting Your Finances in Gear to Buy a Used Car, which is available in English, Spanish, Arabic, Bengali, Chinese, Haitian Creole, Korean, and Russian. The guide informs New Yorkers of their rights when arranging financing for their used car purchase and provides general tips about used car dealerships. DCA also offers a comprehensive Used Car Buyer Guide with tips about shopping for a used car. Any New Yorker who is trying to get their finances in order before buying a car or who is struggling with debt, can make an appointment for free, one-on-one financial counseling at one of the City’s Financial Empowerment Centers by calling 311.
The NYC Department of Consumer Affairs (DCA) protects and enhances the daily economic lives of New Yorkers to create thriving communities. DCA licenses more than 81,000 businesses in more than 50 industries and enforces key consumer protection, licensing, and workplace laws that apply to countless more. By supporting businesses through equitable enforcement and access to resources and, by helping to resolve complaints, DCA protects the marketplace from predatory practices and strives to create a culture of compliance. Through its community outreach and the work of its offices of Financial Empowerment and Labor Policy & Standards, DCA empowers consumers and working families by providing the tools and resources they need to be educated consumers and to achieve financial health and work-life balance. DCA also conducts research and advocates for public policy that furthers its work to support New York City’s communities. For more information about DCA and its work, call 311 or visit DCA at nyc.gov/dca or on its social media sites, Twitter, Facebook, Instagram and YouTube.