The Federal Trade Commission Is Going After Dealer Junk Fees and Discriminatory Practices

April 4, 2022

November 2022 Update

In a huge win for consumers, the FTC announced that it is sending checks to 66,355 customers who were harmed by Napleton’s junk fees and discriminatory practices. The payments total $9.8 million. The FTC says that the payouts will average $147 each. Learn more about the FTC’s Napleton payments in the official announcement.

Original story:

The FTC and the State of Illinois have announced legal action against a large, multi-state dealer group. In a press release issued by the Federal Trade Commission on April 1, both the FTC and the Illinois Attorney General alleged that Napleton dealerships (also known as North American Automotive Services) stuffed junk fees and unwanted add-ons onto vehicle purchases in particularly misleading ways. The legal complaint also cites discriminatory practices against Black customers.

According to the complaint, Napleton’s eight dealerships in Illinois, Florida, Pennsylvania, and Missouri consistently engaged in deceptive practices. The complaint alleges that the eight dealerships would force car buyers to wait through an hours-long negotiation process, only to sneak junk fees for add-on products and services into consumers’ purchase contracts.

“These junk fees were often added despite consumers specifically declining the add-ons or having confirmed prices that did not include the add-ons. In other cases, the consumers were falsely told the add-ons were free or were a requirement to purchase or finance their vehicle,” the complaint states.

A survey found that 83% of buyers from the Napleton dealerships were charged junk fees for add-ons without authorization or as a result of deception. One consumer cited in the complaint reported that the dealership added nearly $4,000 in add-on fees, but only after he’d paid a similar amount in down payment.

FTC Alleges Discrimination

The complaint also alleges that the Napleton dealerships discriminated against Black consumers in connection with financing vehicle purchases. Napleton employees had wide latitude to increase the cost of a consumer’s loan by increasing the amount paid in interest or adding add-ons to the final contract.

The FTC complaint also alleges that Black customers at the Napleton dealerships were charged approximately $190 more in interest and paid $99 more for similar add-ons than similarly situated non-Latino White customers. Dealers typically have the ability to increase (or decrease) interest rates in a sale due to captive lending, however the discriminatory practices alleged at Napleton are revealing. 

Napleton Defendant Spans Four States

The Federal Trade Commission files a complaint when it has “reason to believe that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.”

The defendants in the case are:

  • North American Automotive Services, Inc., also doing business as Ed Napleton Automotive Group (Oak Brook, Ill.)
  • Ed Napleton Elmhurst Imports, Inc., also doing business as Napleton’s Kia of Elmhurst/Ed Napleton Acura (Elmhurst, Ill.)
  • Napleton’s Arlington Heights Motors, Inc., also doing business as Arlington Heights Chrysler Dodge Jeep Ram (Arlington Heights, Ill.)
  • 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, Fla.)
  • Napleton Enterprises, LLC, also doing business as Napleton’s South Orlando/Kissimmee Chrysler Dodge Jeep Ram (Kissimmee, Fla.)
  • Clermont Motors, LLC, also doing business as Napleton’s Clermont Chrysler Dodge Jeep Ram (Clermont, Fla.)
  • North Palm Motors, LLC, also doing business as Napleton’s Northlake Kia (North Palm Beach, Fla.)
  • Napleton’s Ellwood Motors, Inc., also doing business as Napleton’s Ellwood Chrysler Dodge Jeep Ram (Ellwood City, Pa.)
  • Napleton’s Mid Rivers Imports, Inc., also doing business as Napleton’s Mid Rivers Kia (St. Peters, Mo.)

Napleton FTC Settlement

Napleton Auto will pay $10 Million in damages and fines, a record amount for a dealership settlement.

Under the terms of the proposed settlement with the FTC and the State of Illinois, $9.95 million of the $10 million judgment will be used to provide relief to consumers, and $50,000 will be paid to the Illinois Attorney General Court Ordered and Voluntary Compliance Payment Projects Fund.

The settlement will also require Napleton to establish a fair lending program that will cap the additional interest markup they can charge consumers. The settlement also requires Napleton to charge consumers only with express, informed consent, and prohibits them from misrepresenting the cost or terms to buy, lease, or finance a car, or whether a fee or charge is optional.

CarEdge’s Take

This is why CarEdge exists, to return confident buying to the auto industry. It’s deceptive practices like what’s been alleged at Napleton that associate misery with car buying. It’s great to see one dealer group being held accountable, but how often does this happen without consequence? 

Our CarEdge members share countless stories of disappointing customer service experiences, and a few positive ones too. That’s why we recently launched CarEdge Dealer Reviews. With over 750 dealer reviews and more added every day, we’re putting the power back in the hands of the consumer. Getting ready to buy? See how dealers near you have been treating customers at CarEdge Dealer Reviews. When you make a vehicle purchase, don’t forget to share your experience with others. All submissions are vetted by the CarEdge team. Together, we can transform the car buying experience. 

Get the most when you sell your car.

Compare and choose multiple offers in minutes:

COVERAGE YOU CAN TRUST

CarEdge Extended Warranty

Peace of mind without the markup.
Flexible terms & pricing.
Coverage details

 

Discover the right insurance for you

Compare different providers with no spam phone calls:

Call us 855.786.1144

M-F: 8AM – 9PM EST
Sat: 10AM – 6PM EST

Save more with CarEdge+

CarEdge+ Membership pays for itself for all things auto.

Unlimited access to CarEdge car buying tools, our team of Auto Experts, savings on maintenance, and repairs, and more.

Join CarEdge+
Learn More

Join CarEdge for Free

Get instant access to members-only resources.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Consultations

$50 per 15-minute live session

Chat with a CarEdge Auto Expert to make sure you’re negotiating a fair deal.

  • Connect live on video or call.
  • Get live advice on any part of the buying process.
  • Ask us anything about your journey.

CarEdge Coach

$99 one-time

Partner with a dedicated coach to help you save thousands on your car deal.

  • Your coach will guide and assist through your journey.
  • Access to all premium resources, like Deal School 3.0, email templates and market pricing!
  • Learn how to buy a car with leverage and confidence.

CarEdge Concierge

$999 one-time

A dedicated concierge to handle all aspects of your car deal for you.

  • Concierge handles all communication with the dealer.
  • We negotiate the selling price, trade in, financing, warranties and insurance.
  • We listen, do the leg work and secure your deal.

Auto insights. Right in your inbox.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Get the latest trends and money-saving strategies, once a week.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Related articles

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Share This