3 Long Island Car Dealerships Reach Settlements For Deceptive Practices

Five car dealerships in New York, including three on Long Island, will return nearly $1 million to customers who fell victim to the dealers' deceptive practices that caused inflated car prices, Attorney General Eric T. Schneiderman announced on Wednesday.

The two separate settlements require the dealerships to return over $900,000 in restitution to nearly 6,400 consumers who bought or leased vehicles and $135,000 in penalties and costs to the state. The AG says the car dealerships unlawfully sold credit repair and identity theft protection services to consumers.

The Long Island dealerships involved in the settlements include:

• Garden City Nissan, located at 316 N. Franklin Street in Hempstead
• Nissan of Huntington, located at 850 E. Jericho Turnpike in Huntington Station
• VW of Huntington, located at 838 E. Jericho Turnpike in Huntington Station

The two other dealerships were Potamkin Mitsubishi and Potamkin Hyundai, located at 2495 2nd Ave. in Manhattan.

“New Yorkers shouldn’t have to worry that they will be duped when they are shopping for a car,” Schneiderman said in a press release. “We’ll continue to make sure dealerships are not illegally profiting by charging unsuspecting consumers thousands of dollars on unwanted items."

According to the AG, after customers worked with a salesperson to choose a car, they would meet with a “Finance & Insurance Manager” who would try to sell the customer additional “after-sale” products, such as: extended service contracts, key replacement services, a security system, credit repair services and identity theft protection services.

These "after-sale" items would add hundreds or thousands of hidden charges to the sale or lease price of a vehicle. The costs of these items would be often hidden into the vehicle sale price and not itemized separately, causing many customers to be unaware they had received these services, according to an AG investigation. Some customers even thought these services were free, the report says.

In April 2016, Huntington Honda reached a settlement with the AG for similar practices. They were required to pay $270,950 in restitution to nearly 475 consumers and $30,000 in penalties.

In 2015, the AG says they shut down Credit Forget, Inc. (CFI), a New York company that sold unlawful credit repair and identity theft protection services to these car dealerships. It is against state and federal law to charge upfront fees for service that help consumers restore or improve their credit, and contracts that violate the law are void, according to the AG.

Wednesday's settlements bring the Schneiderman's total number of auto dealership settlements to 13, which includes over $19 million in total restitution and penalties. Nearly 29,000 consumers were eligible for restitution under these settlements, the AG says.

"I am pleased that we have now been able to return almost $19 million in restitution to those who have fallen victim to these unscrupulous tactics," Schneiderman said.

According to the AG, these settlements prohibit the dealerships 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.

Consumers who believe they have been jammed with unwanted products or services or who were sold CFI’s credit repair or identity theft protection services by a car dealership are urged to file complaints online or call 1-800-771-7755.

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