Massachusetts-based Colonial Automotive Group has agreed to pay $1 million in penalties to settle claims that it took advantage of state unemployment benefits during the COVID-19 pandemic. Following the state’s mandated closure of car dealership showrooms during the public health crisis, the company encouraged furloughed employees to apply for benefits through the state Department of Unemployment Assistance (DUA), and then requested that those employees continue to work without pay.

“Colonial Automotive planned and carried out an illegal scheme to cheat our unemployment system and avoid paying its workers in order to maximize its profits during the COVID-19 crisis,” Attorney General Maura Healey said. “This is a brazen attempt at exploiting workers and the state’s unemployment system, and we will take action against those who defraud our state agencies and try to steal taxpayer dollars.”

The assurance of discontinuance, filed recently in Suffolk Superior Court, settles allegations that Colonial violated the Massachusetts False Claims Act when it furloughed the majority of its sales employees at its 16 car dealerships throughout the state, encouraged them to apply for unemployment benefits, and then asked them to perform certain aspects of their jobs despite being furloughed and despite collecting state benefits from DUA. The AG’s Office alleges the company directed its furloughed employees to perform various jobs including calling prospective sales leads, setting appointments with prospective customers, delivering cars to customers, and finalizing sales, and it did not pay these employees’ salaries for the work they performed during this period. 

The AG’s Office alleges that in the months following the state ordered closure of the dealership’s showrooms, the company sold approximately 366 cars in April and approximately 455 cars in May that were attributed to employees who were on furlough and collecting unemployment benefits at the time of the sales.

Under the terms of the assurance of discontinuance, Colonial will pay $1 million that will go to the state’s general fund. The company will also enact policies and procedures to ensure that furloughed employees do not perform any functions related to their job or Colonial’s business and, in any instance where furloughed employees do perform these duties, the company will compensate them in accordance with state employment regulations. Colonial is also required to amend any prior inaccuracies in its Employment and Wage Detail Reports filed with DUA.

Attorney General Mark Brnovich announced that his office obtained a judgment against Santiago Ramirez Montelon, owner of Pacific Auto Sales in Mesa, related to violations of the Arizona Consumer Fraud Act. The judgment bars Montelon from engaging in the business of selling or financing used motor vehicles or owning a used car dealership.

The state’s lawsuit alleged that Montelon altered odometers of approximately 23 vehicles from April 2014 to December 2017. Montelon purportedly advertised the vehicles using false mileage figures on Craigslist and then sold those to unsuspecting Arizona buyers. The state alleged that Montelon failed to honor the statutorily mandated implied warranty of merchantability for used motor vehicles (also commonly known as the Used Car Lemon Law) and failed to disclose the finance terms for vehicles his dealership financed, including the interest rate and the number of required payments. Additionally, the state asserted that Montelon’s sales contracts included impermissible late fee amounts and time limits.

The state’s settlement provides $30,000 of restitution for consumers harmed by Montelon’s deceptive practices and up to $80,000 in civil penalties. The Attorney General's Office has been in contact with eligible consumers.

 

The Minnesota Automobile Dealers Association (MADA) filed a federal lawsuit alleging the state of Minnesota lacks the authority under the Federal Clean Air Act to regulate motor vehicle emissions and is preempted under federal law from moving forward with its rules to adopt California vehicle emissions standards.

 “For over a year now,” stated MADA President Scott Lambert, “we have requested that the Walz Administration and the Minnesota Pollution Control Agency (MPCA) abandon their plans to follow California rules and instead pursue homegrown initiatives that benefit both the environment and Minnesota consumers.

 Scott Lambert

 “Instead, the agency has chosen to move forward with a plan that abdicates control to California and is harmful to Minnesota consumers and Main Street businesses across the state.”

In its complaint, MADA alleges that since the federal government revoked California’s waiver to create its own emissions standards, Minnesota therefore has no legal authority to impose those mothballed standards onto its citizens and businesses.

 “From the beginning, the MPCA has shown little understanding of how our industry operates and dismissed our concerns and good faith efforts to discuss other options,” Lambert said.

 “Instead, the MPCA is hellbent on adopting California’s mandates, which will result in higher costs for consumers and fewer choices of product that consumers want to purchase. It threatens the ability of many dealers to stay in business. We were left with no choice but to bring our grievances to court. 

“We will continue to ask the Walz Administration to seek compromise instead of regulation and discussion instead of confrontation on this issue. 

“MADA remains committed to working on the emerging electric car market and will pursue legislation in the 2021 legislative session that promotes demand, more infrastructure, and education around these vehicles.”

The National Highway Traffic Safety Administration announced a consent order with Daimler Trucks North America following an investigation that found the company failed to recall vehicles in a timely fashion and to comply with other reporting requirements. The consent order includes a total civil penalty of $30 million.

The consent order includes both monetary and non-monetary provisions designed to improve Daimler Trucks’ compliance with the law and to improve the company’s safety practices. The company will develop and implement an advanced data analytics program to enhance its ability to detect and to investigate potential safety defects. The company will also improve its IT systems to collect potential safety information from its business units more effectively, and to report that information accurately to NHTSA. 

The company will also develop written procedures and conduct training for its employees on the recall and reporting requirements of the Vehicle Safety Act, take actions to ensure that its reporting to NHTSA is complete, and meet regularly with NHTSA to discuss potential safety issues.

 “Safety is NHTSA’s top priority,” said NHTSA Deputy Administrator James Owens.  “It’s critical that manufacturers appropriately recognize the urgency of their safety recall responsibilities and provide timely and candid information to the agency about all safety issues.”

Daimler Trucks’ consent order with NHTSA is for two years, which NHTSA may extend for an additional year if warranted. The consent order requires the company to make an upfront payment of $10 million, to spend an additional $5 million on specific projects to enhance safety and an additional $15 million deferred penalty that may become payable under specified circumstances.

The Consumer Financial Protection Bureau issued a consent order against Santander Consumer USA Inc. to address the Bureau’s finding that it violated the Fair Credit Reporting Act (FCRA). The consent order was issued in connection with Santander providing erroneous consumer loan data to consumer reporting agencies (CRAs). Santander, a subsidiary of Banco Santander S.A., is a leading originator and servicer of nonprime auto loans and leases. Santander furnishes credit information on the auto loans it services by sending monthly data files to CRAs. The Bureau found that the consumer loan data Santander furnished to CRAs between January 2016 and August 2019 contained many systemic errors that in many instances, could have negatively impacted consumers’ credit scores and access to credit. The consent order requires Santander to take certain steps to prevent future violations and imposes a $4,750,000 civil money penalty.

The Bureau found that Santander furnished consumer loan information to CRAs that it knew or reasonably should have known was inaccurate, including failing to furnish accurate information regarding whether accounts were open or closed and whether consumers were carrying a balance or obligated to make future payments. The Bureau found that Santander failed to promptly update and correct information it furnished to CRAs that it later determined was incomplete and failed to provide the date of first delinquency on certain delinquent or charged-off accounts. The Bureau further found that Santander failed to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information provided to CRAs.

Under the terms of the consent order, Santander must correct all inaccuracies and errors that the Bureau identified and take certain steps to improve and ensure the accuracy of the consumer information it provides to CRAs. These steps include conducting monthly reviews of account information to assess the accuracy and integrity of information Santander furnishes.

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