Tag Archive | "lawsuit"

New York AG Settles Two Payment Packing Suits for $1.6 Million


NEW YORK — Attorney General Eric T. Schneiderman’s crackdown on payment packing continues. On Dec. 8, the regulator announced settlements with SG Hylan Motors Corp. of Staten Island and Best Auto Outlet of Floral Park, which will collectively pay $1.6 million in restitution to more than 2,300 victims of their alleged deceptive sales tactics.

Since 2015, Schneiderman has obtained more than $17 million in restitution and penalties as part of his office’s crackdown on the practice of “jamming,” or payment packing. SG Hylan will pay $1.5 million in restitution to more than 2,200 consumers for the unlawful sales of “after-sale” products, while Best Auto will return $115,000 to more than 200 consumers.

“When consumers shop for a car, they deserve an honest and fair negotiation — and not to be misled by deceptive dealerships looking to saddle customers with hidden costs,” Schneiderman stated in his office’s announcement. “My office will continue to investigate and hold accountable any auto dealers trying to pad their pockets by charging fees for undisclosed products and services that consumers do not need and did not ask for.”

The SG Hylan settlement resolves a lawsuit filed by the attorney general this past July. The regulator alleged that the group’s two dealerships, Staten Island Honda and Staten Island Nissan, charged consumers for an illegal credit repair and identity theft protection services — the cost sometimes exceeding $2,000 — without their knowledge. The agreement with Best Auto concludes an investigation into the dealership for similar misconduct, according to the regulator.

In 2015, Attorney General Schneiderman announced a settlement with the now-defunct Credit Forget Inc., the company that purported to provide the credit repair and identity theft protection services. The company was ordered to pay $2 million in fines, however, those charges were suspended on the condition that the company cease operations and notify all dealers with which it had contracts. Since then, the regulator has settled with 11 dealerships who sold the unlawful product.

According to the attorney general’s office, charging upfront fees for services that promise to help consumers restore or improve their credit is a violation of state and federal law, and any contracts that violate those laws are considered void.

In the attorney general’s lawsuit against SG Hylan, Schneiderman alleged that Staten Island Honda and Staten Island Nissan had been unlawfully selling the credit repair and identity theft protection services for three years starting in 2011. The suit alleged the two dealerships collected more than $2 million using the alleged sales tactics. Aside from paying into a restitution fund, SG Hylan will pay $100,000 in penalties.

As part of the Best Auto settlement, the dealership will pay $10,000 in penalties.

Additionally, the dealerships will no longer be allowed to sell, offer to sell or market credit repair and identity theft services in connection with the sale or lease of a vehicle. The dealers are also prohibited from selling, offering for sale or providing consumers any after-sale product or service unless, prior to the sale, certain material terms of the products are disclosed verbally and in writing.

Additionally, the dealerships are now unable to misrepresent the price of the a vehicle in a final lease or sales contract or to fail to provide consumers with sales or lease agreements that clearly and conspicuously itemize each after-sale product or service and its price.

Schneiderman’s has also reached settlements with the following dealerships and groups:

  • Paragon Auto Dealership: A group of automobile dealers in Queens and Westchester counties, including Paragon Honda, Paragon Acura, and White Plains Honda
  • Plaza Auto Dealership: A group of dealers located on Nostrand Avenue, Brooklyn, including, Plaza Toyota-Plaza Scion, Plaza Hyundai, Plaza Honda and Acura of Brooklyn
  • Manfredi Auto Dealership: A group of dealers located on Hylan Blvd, Staten Island, including Manfredi Fiat and Fiat of SI, Manfredi Mitsubishi, Manfredi Kia, Manfredi Hyundai, Manfredi Cadillac, Manfredi Chrysler Jeep & Dodge, Manfredi Fiat Inc., S.I. Toyota, Manfredi Toyota and Manfredi Scion, Manfredi Subaru, Manfredi Mazda and Staten Island Subaru
  • Koeppel Auto Dealership: A group of dealers located in Jackson Heights, Long Island City and Woodside, Queens, including Koeppel Nissan, Inc.; LK Automotive Enterprises, LLC. d/b/a Koeppel Subaru, KL Auto Enterprises LLC. d/b/a Koeppel Mazda and Koeppel Volkswagen Inc.
  • I. Autoworld Inc. d/b/a Generation Kia: located in Bohemia, Long Island
  • Nissan 112: Located in Patchogue, Long Island
  • Huntington Honda, Honda of New Rochelle and New Rochelle Toyota: located on Long Island and in Westchester counties
  • Westbury Jeep Dodge and Fiat of Westbury: Located in Westbury, Long Island
  • Security Auto Sales, Inc. d/b/a Security Dodge: Located in Amityville, Long Island

Posted in Auto Industry NewsComments (0)

Dealer Group Files Class Action Lawsuit Against Volkswagen


CHICAGO — On Wednesday, Ed Napleton, president of the Napleton Auto Group, filed a class action lawsuit against Volkswagen in the U.S. District Court for the Northern District of Illinois on behalf of three of his Volkswagen dealerships. The lawsuit stated that the manufacturer intentionally defrauded dealers by installing “defeat devices” in its diesel cars.

In addition, the lawsuit further claims that Volkswagen separately carried out a systematic, illegal pricing and allocation scheme that favored some dealers over others and illegally channeled financing business to one of its affiliates, Volkswagen Credit Inc., according to Hagens Berman, a consumer-rights law firm.

“What is really discouraging and led me to file this lawsuit is that Volkswagen has wholly failed to respond to dealer concerns in a substantive manner. It has talked for months about multiple plans, but done nothing and left us dealers in the red, and in limbo,” Napleton said.

The suit also accuses Volkswagen of engaging in a criminal racketeering enterprise, violating federal law designed to protect car dealers from unfair practices by vehicle manufacturers, breaching state franchisee protection laws, and breaching its franchise dealer agreements.

The manufacturer’s deception, the suit charged, has resulted in a drop in the value of the Volkswagen brand. The damage the scandal has caused to the brand, as well as the cease of diesel-vehicle sales, has both negatively hurt dealer profits and the value of their franchises, the suit alleges.

“Plaintiffs and the Franchise Dealer Class have invested millions, collectively hundreds of millions of dollars in the Volkswagen brand,” the suit states. “But now the brand value has plummeted, sales of VW diesels have completely halted, and sales of all VW cars have plummeted.”

Additionally, the complaint states that Volkswagen “purposely and fraudulently induced its dealers to continue to invest in their dealership facilities and to otherwise benefit VW.” It also told dealers that it would replace stair-step programs it had abandoned with new programs with equal or greater financial benefit to dealers.

This move, the suit claims, “was calculated to quell poor publicity as well as dealer outrage at VGoA’s (Volkswagen Group of America) conduct and was otherwise calculated to fraudulently induce its dealers and prospective dealers to continue to invest in the Volkswagen brand.”

As a result, according to the complaint, franchised dealers built new showrooms and purchased new facilities and also heavily stocked their lots with CleanDiesel vehicles, based on the manufacturer’s false marketing.

“Franchise owners are now left with lots full of CleanDiesel vehicles they are unable to sell, and these cars have suffered tremendous loss of value and take up inventory space and carrying costs,” Steve Berman, managing partner of Hagens Berman added. “VW dealerships large and small have been at the mercy of an unethical corporation, much like the hundreds of thousands of owners across the country, and we believe it’s time to take a stand for their rights.

“In a sickening display of VW’s disregard for its dealer franchisees, Napleton Automotive of Urbana was purchased after VW admitted its fraud to regulators, just three days before the Dieselgate scandal made headlines. Yet Volkswagen withheld the truth and pushed the sale through, knowing well that Ed Napleton was purchasing a dealership that would almost immediately plummet in value,” Berman said.

According to the suit, Volkswagen’s U.S. affiliate in charge of its dealer network was aware of the emissions-cheating software since as early as 2014 but withheld information from current and prospective dealers. Volkswagen has admitted that during that time, it installed emissions cheating software in more than 550,000 U.S. diesel vehicles.

“For VW dealers  — many of which are small, family-owned franchises  — Dieselgate amounts to a classic ‘pump and dump’ operation, in which VW exploited the CleanDiesel eco-friendly market that it helped create, boosting the price of entry and continuation in the market for VW franchises,” Berman said. “All the while, VW withheld information about the impending Dieselgate fiasco, and left dealers to fend for themselves as the scandal unfolded.”

Napleton and his family have been in the automotive dealership business in the Chicago area for three generations. Today, the Napleton family operates more than 50 dealerships in five states.

Posted in Auto Industry NewsComments (0)

VW Faces Billions in Fines as U.S. Sues for Environmental Violations


The U.S. Justice Department has sued Volkswagen for up to $48 billion for allegedly violating environmental laws – a reminder of the carmaker’s problems nearly four months after its emissions scandal broke.

Although such U.S. lawsuits are typically settled at a fraction of the theoretical maximum penalty, analysts said the size of the claim meant Volkswagen (VW) could face a larger bill than previously anticipated.

“The announcement serves as a reminder/reality check of VW’s still unresolved emissions issues,” Goldman Sachs analysts wrote in a note, maintaining their “sell” recommendation on the stock.

VW shares fell as much as 6 percent to a six-week low on Tuesday, the biggest drop on Germany’s blue-chip DAX index.

The civil lawsuit, announced on Monday, reflects the growing number of allegations against VW since the German company admitted in September to installing devices to cheat emissions tests in several 2.0 liter diesel vehicle models.

According to a Reuters review of the U.S. complaint, VW could in theory face fines of as much as $37,500 per vehicle for each of two violations of the law; up to $3,750 per “defeat device”; and another $37,500 for each day of violation.

The complaint says illegal devices to impair emission control systems were installed in nearly 600,000 vehicles in the United States.

In September, U.S. regulators initially said Europe’s biggest carmaker could face fines in excess of $18 billion.

The lawsuit had been expected, and analysts believe any fine will be far below the theoretical maximum. Although U.S. authorities sued Toyota for up to $58 billion for environmental violations around the turn of the century, they agreed a settlement that cost the Japanese carmaker about $34 million.

“We have not enumerated a maximum possible penalty, and will decline to speculate on what the court may ultimately choose to do,” said U.S. Justice Department spokesman Wyn Hornbuckle.

Equinet analyst Holger Schmidt cut his rating on VW shares to “reduce” from “neutral”.

“We continue to believe that no one is able to make anything else than a wild guess on potential fines,” he said.

During December, VW’s shares had been recovering as the carmaker announced incrementally positive news such as simple fixes for about 8.5 million affected cars in Europe.

The stock fell on Tuesday 22 percent below pre-scandal levels, with analysts particularly concerned about the impact on VW in the United States, where the firm has long struggled to make inroads and tougher regulations mean it faces bigger potential fines.

The lawsuit, filed on behalf of the U.S. Environmental Protection Agency (EPA), accuses VW of four counts of violating the U.S. Clean Air Act, including tampering with the emissions control system and failing to report violations.

“The United States will pursue all appropriate remedies against Volkswagen to redress the violations of our nation’s clean air laws,” said Assistant Attorney General John Cruden, head of the Justice Department’s environment and natural resources division.

The lawsuit is being filed in the Eastern District of Michigan and then transferred to northern California, where class-action lawsuits against VW are pending.

“We’re alleging that they knew what they were doing, they intentionally violated the law and that the consequences were significant to health,” said a senior Justice Department official.

VW’s cheating of diesel emissions tests allowed it to avoid a costly revamp of engines to meet new U.S. standards.

The Justice Department has also been investigating criminal fraud allegations against VW for misleading U.S. consumers and regulators. Criminal charges would require a higher burden of proof than the civil lawsuit.

The U.S. lawsuit also alleges VW gamed emissions controls in many of its 3.0 liter diesel models, including the Audi Q7, and the Porsche Cayenne.

VW’s earlier admissions eliminate almost any possibility that the automaker could defend itself in court, Daniel Riesel of Sive, Paget & Riesel P.C, who defends companies accused of environmental crimes, said.

To win the civil case, the government does not need to prove the degree of intentional deception at VW – just that the cheating occurred, Riesel said. “I don’t think there is any defense in a civil suit,” he said.

Instead, the automaker will seek to negotiate a lower penalty by arguing that the maximum would be “crippling to the company and lead to massive layoffs”, Riesel said.

Even after VW first admitted to using cheat devices in certain models, the automaker “failed to come forward and reveal” that other vehicles contained such devices, the government said.

To cheat the emissions controls, VW installed software that allowed the vehicles to detect when they were being tested on a flatbed. When the vehicles detected they were actually on the road, the software caused the emissions control systems to underperform or shutdown, the government said, allowing the cars to emit dangerous levels of air pollution.

The civil lawsuit does not preclude the Justice Department from pursuing criminal charges against VW, said the Justice Department official.

VW said in a statement: “Volkswagen will continue to work cooperatively with the EPA on developing remedies.”

“We will continue to cooperate with all government agencies investigating these matters.”

Posted in Auto Industry NewsComments (0)

Santander Faces Class-Action Over ‘Worthless’ GAP Coverage


CHICAGO — A woman who claims she was duped into buying “void and worthless” GAP coverage on a used vehicle has filed a class-action lawsuit against the company that financed the transaction.

Joyce Pettye filed a lawsuit against Santander Consumer USA on Aug. 31, alleging the finance source violated the Illinois Motor Vehicle Retail Installment Sales Act and the federal Truth in Lending Act (TILA) when it purchased a retail installment sales contract associated with a 2012 Ford Focus she purchased from Al Piemonte Super Car Outlet in Northlake, Ill.

According to the lawsuit, Pettye was presented with a stack of documents related to her purchase and was instructed by dealership personnel to sign on the lines marked by the letter “X.” Among those documents was a contract for GAP coverage that cost $895, and was limited to purchases with a maximum APR of 24%. However, the APR on Pettye’s contract was 27.06%, rendering the GAP coverage “void and worthless, pursuant to its own terms,” according to the compliant.

Pettye also alleged that she was not presented with a copy of the disclosures required by the TILA “in a form she could keep” or told that she was making an additional purchase when she signed the GAP contract. In fact, according to the compliant, Pettye was “completely unaware that she had signed the [GAP contract], or that such signature represented an additional ‘non-required’ purchase.”

The lawsuit was filed as a class action on behalf of Illinois customers  who signed a similar GAP contract that was void because their APR was also in excess of the coverage’s maximum APR limit.

“…The ‘Maximum APR’ for the ‘GAP Program’ at issue is not determined on an applicant-specific basis,” the complaint read, in part. “And a form addendum for the purchase of GAP protection reflecting a maximum APR was used in most or all of the automobile purchases, on credit, that include the purchase of such GAP protection.”

The suit seeks damages in an amount to be determined at trial and the return of finance charges improperly collected by Santander.

Posted in Auto Industry NewsComments (0)

Firm Suing TrueCar Files Second Mass Action Lawsuit


MINEOLA, N.Y. — Bellavia Blatt & Crossett filed a second mass action lawsuit against TrueCar on July 30, this time representing 100 dealerships that are currently affiliated with the car-shopping site.

In March, the law firm filed a mass action lawsuit on behalf of 117 — now over 200 — non-affiliated dealerships, alleging that TrueCar’s business practices have injured its former dealer partners and dealers that do not subscribe to the service by “poaching” customers in their market area.

According to the lawsuit filed last week, TrueCar is violating California deceptive practices statutes by claiming to be “transparent” with “no hidden fees” and “no surprises” — when in fact it charges dealers a $299 new-car and $399 used-car transaction fee that gets passed along to the consumer in the price of the vehicle.

“We will be seeking a court order requiring TrueCar to openly disclose in its advertising and on the guaranteed savings certificate that there is a $299/$399 fee participating dealers pay that may affect the selling price of the vehicle,” said Leonard Bellavia, senior partner at Bellavia Blatt & Crossett. “We will also seek a declaration that TrueCar’s business model is illegal in most states, as it is not properly licensed.”

Bellavia added that dealers subscribing to TrueCar are damaged because they do not wish to be complicit in violating consumer fraud statutes. The lawsuit alleges that TrueCar is acting as a car dealer and broker without the proper licenses. And if consumers knew about the fees prior to their dealership visit, the dealer would then be protected from joint liability, Bellavia added.

TrueCar has called the allegations “meritless.”

“In the first case, TrueCar recently filed a motion to dismiss — essentially arguing that all of its promises are simply ‘puffery,’” Bellavia said. “It went so far as to quote a case that held it could lie through its teeth with impunity, as consumers would not take any of the promises seriously.”

The lawsuit is similar to one filed in May by the California New Car Dealer Association, which alleges that TrueCar is not in compliance with certain sections of the California Vehicle Code pertaining to dealer licensing, brokering, advertising and disclosure.

Posted in Auto Industry NewsComments (0)

Chrysler Ordered to Pay $150M due to Jeep Fire


A Georgia jury on Thursday awarded $150 million to the family of a boy who burned to death in a 1999 Jeep Grand Cherokee after a rear-end collision, finding Fiat Chrysler LLC’s rear-positioned fuel tank in the Jeep posed a fire risk and killed the child, reported The Detroit Bureau.

The Decatur County, Georgia, jury reached the verdict just hours after closing arguments concluded the eight-day trial, granting the family’s request for $120 million for the full value of 4-year-old Remington Walden’s life. Jurors found that Fiat Chrysler knew of the potential danger and the jury said Chrysler, the maker of Jeeps, must pay.

The jury ruled that Chrysler acted with reckless disregard for human life in selling the family of Remington “Remi” Walden a 1999 Jeep with a gas tank mounted behind the rear axle.

Walden, of Bainbridge, Georgia, was killed when the Jeep driven by his aunt was hit from behind by a pickup truck in March 2012. The fuel tank leaked, engulfing the Jeep in flames and killing the boy.

The verdict comes nearly two years after Chrysler compromised with a federal safety agency and agreed to a scaled-down recall of some older-model Jeeps with the rear-mounted tanks. The tanks have little structure to protect them if struck from behind, making them susceptible to punctures and fires.

Federal documents show that at least 75 people have died in post-crash fires because of the rear-mounted fuel tanks.

The 11-woman, one-man jury ruled after a nine-day trial that Chrysler was 99% at fault for the crash and the pickup driver was 1% at fault. Jurors also determined that Chrysler failed to warn the family of the hazards of driving the Jeep. They ruled that the Waldens should get $30 million for Remi’s pain and suffering and $120 million for the full value of his life, according to a verdict form.

Mike Palese, spokesman for Chrysler parent company FCA US, said the company is disappointed with the verdict and would appeal. Chrysler, he said, was prevented from presenting data submitted to federal safety regulators showing that the vehicles did not pose an unreasonable safety risk.

“The vehicles are not defective,” Palese said.

During the trial Fiat Chrysler Chief executive officer Sergio Marchionne has defended the safety of Jeep products. He also denied trying to stop top federal regulators from finding a safety defect in older Jeeps with rear-positioned fuel tanks. Instead, he argued that the vehicles are safe, in a recorded deposition that was played for Georgia jurors in a wrongful death trial over a fuel tank fire that killed the boy.

The automaker firmly believes the older Jeep SUVs with gas tanks located behind the rear axle are no more susceptible to fires than other SUVs, Marchionne said.

“Our analysis of that data suggested these were defect-free vehicles, and that they performed exactly as the rest of the comparative class performed in the marketplace at the time. Our analysis suggests very clearly that this is not a defect,” Marchionne said in video-taped deposition.

Under government pressure, Fiat Chrysler recalled an estimated 1.56 million 2002-07 Jeep Liberty and 1993-2004 Jeep Grand Cherokee SUVs for the problem in June 2013, and agreed to install trailer hitches to protect the gas tanks. In an abundance of caution, it sent letters to 2.27 million owners, though it is not clear how many are still on the road.

Fiat Chrysler notes the vehicles met safety requirements at the time they were built, and insists they are not defective. The company also agreed to conduct a customer service campaign for another 1.2 million 1999-2004 Grand Cherokees.

Posted in Auto Industry NewsComments (0)

Page 1 of 712345...Last »
css.php