NY Honda dealers to pay $13.8M over credit-repair scam
New York officials have levied $13.8 million in penalties against a trio of auto dealer networks accused of defrauding customers.
Owners of Paragon Honda, Paragon Acura and White Plans Honda are accused of unlawfully selling a variety of “after-sale” items, such as credit repair and identity theft prevention services, to 15,000 customers. The add-ons are said to have added more than $2,000 in hidden costs and fees for certain buyers.
The dealers will have to pay $13.5 million in restitution, equating to $900 per scammed customer. Another $325,000 in penalties, fees and costs will be paid to New York State.
“When consumers shop for a car, they deserve to be dealt with honestly and fairly – and not to be misled by auto dealers who use deceptive tactics to fleece their own customers,” said NY Attorney General Eric T. Schneiderman. “New York consumers must beware: Car dealerships sometimes pad their pockets by charging for worthless after-sale items, which inflate the price of their car. These items are often ones that consumers don’t need, did not ask for and often are not even told about. Businesses need to make a profit to survive, but it’s illegal to do so by duping consumers.”
The settlement agreement represents just one piece in the state’s wider crackdown on “jamming,” described as unlawfully charging customers for hidden add-ons. Services that claim to restore or improve credit are said to run afoul of both state and federal laws.