The Federal Trade Commission and the Illinois Attorney General have secured a $20 million settlement with Leader Automotive Group and their Canadian parent company, AutoCanada. This settlement, announced by NBC Chicago and JD Supra, marks a significant penalty within the auto sales sector and seeks to actively refund customers who were the victims of said unfair practices.
Customers were reportedly enticed into dealerships with low advertised prices, only to quickly find that these prices were oftentimes false. Once inside the dealership, sales representatives would then claim that cars came with mandatory, pre-installed add-ons like protective coatings and theft protection, racking up thousands of dollars in additional charges. It was reported that almost 80% of customers ended up being charged for at least one add-on without authorization or because they were misled into thinking the add-on was required, as stated in a statement obtained by NBC Chicago.
This purported "bait-and-switch" operation was one part of a larger framework of deceptive practices. Illinois Attorney General Kwame Raoul described these tactics saying, “This dealership network engaged in bait-and-switch tactics by luring consumers into their dealerships with lower prices only to either require consumers to purchase allegedly pre-installed add-on products or charge consumers for those products without their knowledge or permission,” as relayed by NBC Chicago. Leader was also accused by the FTC of advertising cars as "certified pre-owned," inflating the actual cost with so-called "certification fees," and in some instances, failing to perform the required certification work. When the dust settled on the hearing, the settlement laid down the mandate for Leader Automotive and AutoCanada to forthrightly disclose all vehicle offering prices and to obtain explicit informed consent for any additional fees charged to the consumer.
As part of the agreement, Leader Automotive Group must now unambiguously present the true cost of vehicles in all advertising efforts and receive direct consent for any supplementary charges or add-ons, details which were confirmed through documents shared by JD Supra. Consumers who fell prey to these allegedly dishonest selling techniques should expect to see refunds from the settlement pool, marking a win for consumer protection efforts.
