Pennsylvania Attorney General Josh Shapiro announced a $50,892.29 settlement that allows restitution for consumer victims of a Mechanicsburg car dealership, New Kingstown Auto, LLC, the owner of the dealership, Harry D. Laughman, and an employee, Dana L. (Blosser) San.

The settlement, in the form of a petition requiring court approval, comes as a result of a lawsuit filed by the Office of Attorney General’s Bureau of Consumer protection alleging that the defendants: advertised used motor vehicles for sale without disclosing the business name and address of the advertiser or the word “dealer”; sold a used motorcycle as having 69,000 miles, when in fact the motorcycle had 153,000 miles; sold motor vehicles without a valid dealer or salesperson license; failed to forward to Penn DOT money and forms submitted by a consumer; engaged in lease transactions with consumers that did not include required disclosures and were not compliant with applicable laws; accepted installment payments from consumers on vehicles without holding the required installment seller license and provided a consumer an installment sale contract that did not comply with requirements.

“Unscrupulous business dealers can’t dodge our Bureau of Consumer Protection,” said Shapiro. “I’m grateful for their hard work to put a stop to the defendants’ shady practices and deliver results for the people of Pennsylvania.”

New York City car dealer Bronx Honda and its general manager, Carlo Fittanto, will pay $1.5 million to settle Federal Trade Commission charges they discriminated against black and Hispanic car buyers and engaged in numerous other illegal business practices.

Bronx Honda dealership to pay $1.5M
Bronx Honda dealership to pay $1.5M in fines.

According to the FTC complaint, the defendants told salespeople to charge higher financing markups and fees to black and Hispanic customers. The defendants told employees that these groups should be targeted due to their limited education, and not to attempt the same practices with non-Hispanic white consumers. The complaint alleges that black consumers were charged about $163 more in interest than similarly situated non-Hispanic white consumers, while Hispanic consumers were charged about $211 more in interest.

In addition to alleged racial discrimination, the defendants are charged with numerous illegal practices in the advertising and sales process that caused consumers to pay substantially more than they expect. The complaint alleges that the defendants violated the FTC Act, the Truth in Lending Act and the Equal Credit Opportunity Act. In addition to the $1.5 million payment that will be used to provide redress to consumers, the settlements also prohibit Bronx Honda and Fittanto from misrepresenting the cost or terms to buy, lease, or finance a car, or whether a fee or charge is optional. They will also be required to establish a fair lending program that will, among other components, cap the amount of additional interest markup they can charge consumers.

Hertz Global Holdings Inc. announced it and certain of its U.S. and Canadian subsidiaries have filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware.

Hertz reported the impact of COVID-19 on travel demand was “sudden and dramatic, causing an abrupt decline in the company’s revenue and future bookings. Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity.” Hertz added that “uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated the action. The financial reorganization will provide Hertz a path toward a more robust financial structure that best positions the company for the future as it navigates what could be a prolonged travel and overall global economic recovery.”

Hertz’s franchised locations, which are not owned by the company, also are not included in the Chapter 11 proceedings. All of Hertz’s businesses globally, including its Hertz, Dollar, Thrifty, Firefly, Hertz Car Sales, and Donlen subsidiaries, are open and serving customers. As of the filing date, the company had more than $1 billion in cash on hand to support its ongoing operations. Depending upon the length of the COVID-19 induced crisis and its impact on revenue, the company may seek access to additional cash, including through new borrowings, as the reorganization progresses.

Santander Consumer USA Holdings Inc. issued a statement regarding its voluntary settlement with 33 states and the District of Columbia, which alleged that auto loans that SC funded through certain automobile dealers dating back to 2010 violated consumer protection laws because of the high risk that certain borrowers would default.

The statement read: “SC’s voluntary agreement with the attorneys general resolves a legacy underwriting issue stemming from an investigation that commenced in 2014 and is another key milestone in addressing issues related to that time period. We are pleased to put this matter behind us. Santander Consumer is fully reserved for this matter, and no additional charges will be taken in connection with the settlement. SC has fully cooperated with the attorneys general throughout the investigation, and the settlement has no material impact on SC’s or Santander US’ operations or our ability to serve customers.

“SC is a responsible lender in a highly regulated environment. SC operates under large financial institution standards, which include rigorous risk, compliance and controls around lending and loan servicing. Over the last several years, we have strengthened our risk management across the board – improving our policies and procedures to identify and prevent dealer misconduct and tightening standards to ensure affordability. All of this important work helps SC remain competitive and well-positioned for future growth.”

The Independent Automobile Dealers Association Of California updated its members on new guidelines for brick-and-mortar dealers who would like to perform online sales and home delivery. The announcement came from DMV in VIN memo 2020-04. 

If California dealers are not signed up to view DMV VIN memos, they are encouraged to go to the state DMV website. IADAC first began discussion of this topic with DMV in 2014 and saw little movement until recently when the COVID-19 crisis halted person to person interaction. The online sales and home delivery model became recognized as a health compliance solution for auto sales, but various items required attention as California laws were being violated by dealers practicing online sales and home delivery. 

“IADAC thanks DMV, CalSTA, CNCDA and California NMVB for their diligent efforts in this task,” said IADA Executive director  Larry Laskowski.

IADAC recommends that dealers fully understand these new guidelines to make sure they are compliant should they choose to adopt this model.

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