Car dealership agrees to $10M settlement for allegedly charging Black clients more

An Illinois-based car dealership on Friday agreed to a record $10 million settlement with the Federal Trade Commission and the state’s attorney general’s office for allegedly adding illegal fees and charging Black customers more for financing during purchases.

>> Read more trending news

Ed Napleton Automotive, headquartered in Oakbrook Terrace, agreed to a settlement on Friday after a complaint was filed against nine dealerships in Illinois, Florida, Pennsylvania and Missouri, the Chicago Tribune reported.

According to the newspaper, the settlement was filed jointly with a complaint in Chicago federal court. In a news release from the FTC, the complaint alleged that the dealership group charged thousands of customers “hundreds or thousands of dollars” for add-on products such as “payment insurance” and “paint protection” without informed consent.

The complaint also alleged that Black customers were charged approximately $190 more in interest and paid $99 more for similar add-ons than “similarly situated” non-Latino white customers, the FTC said in its release.

Napleton, founded in 1931, has 51 dealerships across eight states, the Tribune reported. States with dealerships that were not involved in the settlement were Georgia, Indiana, Minnesota and Wisconsin.

“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. “Especially as families struggle with rising car prices, dealerships that cheat their customers can expect to hear from us.”

The defendants in the case, according to the FTC, are:

• North American Automotive Services, Inc., also doing business as Ed Napleton Automotive Group (Oak Brook, Illinois).
• Ed Napleton Elmhurst Imports, Inc., also doing business as Napleton’s Kia of Elmhurst/Ed Napleton Acura (Elmhurst, Illinois).
• Napleton’s Arlington Heights Motors, Inc., also doing business as Arlington Heights Chrysler Dodge Jeep Ram (Arlington Heights, Illinois).
• Hitko Kadric, general manager of the two Illinois-based dealerships
• Napleton’s North Palm Auto Park, Inc., also doing business as Napleton’s Northlake Chrysler Dodge Jeep Ram (Lake Park, Florida).
• Napleton Enterprises, LLC, also doing business as Napleton’s South Orlando/Kissimmee Chrysler Dodge Jeep Ram (Kissimmee, Florida).
• Clermont Motors, LLC, also doing business as Napleton’s Clermont Chrysler Dodge Jeep Ram (Clermont, Florida).
• North Palm Motors, LLC, also doing business as Napleton’s Northlake Kia (North Palm Beach, Florida).
• Napleton’s Ellwood Motors, Inc., also doing business as Napleton’s Ellwood Chrysler Dodge Jeep Ram (Ellwood City, Pennsylvania).
• Napleton’s Mid Rivers Imports, Inc., also doing business as Napleton’s Mid Rivers Kia (St. Peters, Missouri).

In a statement issued Friday, a spokesperson for the Napleton group “vehemently” denied any wrongdoing, the Tribune reported.

“The Ed Napleton Dealership Group has resolved disputed claims made by the Federal Trade Commission and the Illinois Attorney General’s office,” spokesperson Tilden Katz said. “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.”

The FTC news release stated that the dealerships listed in the complaint “would often wait until the end of the hours-long negotiation process to sneak junk fees for add-on products and services into consumers’ purchase contracts.”

The contracts, which were as long as 60 pages, added the “junk fees” despite consumers declining the add-ons. In other cases, consumers were falsely told the add-ons were free or were a requirement to purchase or finance their vehicle, the FTC said.

A survey cited in the complaint showed that 83% of buyers from the dealerships were charged junk fees for add-ons “without authorization or as a result of deception,” the FTC said.

Katz said the settlement is the result of a three-year investigation and that there was “no actual finding of intentional wrongdoing,” the Tribune reported.

Napleton has taken steps to implement “additional safeguards to ensure full transparency to our customers,” Katz said.

©2022 Cox Media Group