Napleton Automotive Group, one of the largest U.S. dealership groups, will pay a record $10 million to settle a Federal Trade Commission auto lending case for allegedly throwing illegal “junk fees” and add-ons into customer contracts and for charging more in financing Black customers.
Napleton on Friday “vehemently” denied all wrongdoing.
The FTC, in a statement in its case with the state of Illinois, said eight Napleton dealerships in Illinois, Florida, Pennsylvania and Missouri and a general manager of two Illinois dealerships, were alleged to have illegally added junk fees and other add-on products such as paint protection in contracts as long as 60 pages.
The FTC and Illinois allege Napleton charged customers more than $70 million in unwanted add-on fees since 2017, according to their complaint.
The fees cost each customer hundreds or thousands of dollars, the FTC said. In many cases the add-ons were specifically declined by customers, while others were lied to, stating they were told the items were free or were required for them to buy or finance a vehicle, according to the FTC.
The Napleton group also is claimed to have discriminated against Black customers in their vehicle financing. The FTC claims Napleton employees would boost the cost of a customer’s loan by increasing interest paid or by putting in extra add-ons.
Black customers at the dealerships paid more than “similarly situated” non-Latino White customers, the FTC said. For example, Black customers paid $99 more for like add-ons and were charged about $190 more in interest than White customers, the FTC said.
“Working closely with the Illinois Attorney General, we are holding these dealerships accountable for discriminating against minority consumers and sneaking junk fees onto people’s bills,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.
The Napleton group, in a statement, said it “vehemently denied any wrongdoing.”
“The Ed Napleton Dealership Group has resolved disputed claims made by the Federal Trade Commission and the Illinois Attorney General’s office,” Napleton spokesman Tilden Katz said in an emailed statement to Automotive News. “We made this decision to avoid the disruption of an ongoing dispute with the government. As a result, we reluctantly determined that it was in our best long- term business interests to resolve these matters.
“This settlement is the result of a three-year process where we provided complete transparency to the government. Most of its claims were based on interpretations of statistical data and there was no actual finding of intentional wrongdoing.”
The vast majority of the settlement — $9.95 million — will go to customers, while $50,000 will go into a Illinois Attorney General fund.
Napleton also is required to create a fair lending program that caps extra interest markups the group can pass on to customers and the group and its dealerships are forbidden from misrepresenting the cost or terms to buy, lease or finance vehicles, and if a fee or charge is optional.
Napleton Automotive of Oakbrook Terrace, Ill., ranked No. 13 on Automotive News‘ most recent list of the top 150 dealership groups based in the U.S., retailing 35,768 new vehicles in 2020.
