Thursday, July 20, 2017

Abigail Lootens / Christine Gianakis
Department of Consumer Affairs
(212) 436-0042

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City Hall in Your Borough: Department of Consumer of Affairs Announces Half of All Licensed Used Car Dealerships Receive at Least One Violation in Enforcement Sweep

NEW YORK, NY–The Department of Consumer Affairs (DCA) Commissioner Lorelei Salas today announced the results of an enforcement sweep of all licensed secondhand auto dealers, half of which received a violation. Over the past year, DCA conducted inspections of all licensed secondhand auto dealers and issued more than 750 violations. Nearly one in five dealerships received a violation for failing to properly display prices for automobiles and add-on products such as warranties and service agreements. Licensed dealerships were also frequently charged with parking vehicles on the public sidewalk, failing to properly disclose the dealership’s duty to certify the safe condition of every car, and failing to properly display warranty information on the vehicle buyer’s guide. With a total of 275 used car dealerships, Queens is home to the largest concentration of licensed used car dealerships in the city. Since 2016, nearly half of all complaints received about this industry have been about Queens based dealerships. This enforcement sweep comes as a result of DCA’s continued efforts to combat predatory practices in the used car industry.

DCA currently licenses 784 used car dealerships, and has received more than 1,200 complaints about the industry since July 2016. Over the past year, DCA secured more than $350,000 in consumer restitution, and assessed more than $277,000 in fines against used car dealerships. Enforcement is one prong of DCA’s efforts to combat these predatory practices, which also includes education and advocacy.

“Combating predatory practices in the used car industry is a top priority for DCA,” said DCA Commissioner Lorelei Salas. “This inspection data provides valuable insight into the ways used car dealerships are preying on unsuspecting consumers. We intend to use this information to target our future efforts of informing and regulating these businesses.”

In addition to its patrol inspections, DCA conducts audits into the practices of used car dealerships. For example, 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. 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 is also for the first time seeking consumer restitution from the financing companies—Credit Acceptance Corp., Clover Commercial Corp, and Westlake Financial Services—involved in the subprime lending.

Over the past four years, DCA received nearly 5,800 complaints from consumers about used car dealerships. 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 July 2017, DCA launched a public awareness campaign to educate current and prospective used car owners about predatory lending in the used car industry. These multilingual campaign ads were featured on targeted bus shelters, telephone kiosks, LinkNYC, as well as in community and ethnic newspapers, on radio, online, and in local businesses. Since April 2017, DCA has participated in 37 outreach events and predatory lending workshops with over 1,500 attendees to educate consumers on DCA initiatives and the protections available to them.

In addition to enforcement and education, advocacy is a key component of DCA’s efforts to combat predatory practices in the used car industry. 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 increase protections for consumers seeking to buy a used car. The legislation would require used car dealerships which DCA licenses to post a Consumer Bill of Rights and disclose information about financing and pricing in addition to other important notices. The City Council held a hearing on the bills on April 26, 2017.

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 or on its social media sites, Twitter, Facebook, Instagram and YouTube.