FTC Targets Asbury Automotive for Deceptive Sales Tactics and Racial Discrimination in Texas Dealerships

Last updated 08/26/2024 by

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Summary:

The FTC has taken legal action against Asbury Automotive, accusing the group of systematically charging Black and Latino consumers for unwanted add-ons and engaging in discriminatory practices. The complaint focuses on three Texas dealerships that allegedly added expensive products to sales contracts without consent and charged minority consumers more for these add-ons. This case highlights the FTC’s ongoing commitment to combating hidden fees and ensuring fairness in the auto sales industry.

The Federal Trade Commission (FTC) has recently initiated legal proceedings against Asbury Automotive, a major automotive dealer group. The complaint focuses on deceptive practices at three of its Texas dealerships, where customers were charged for costly add-ons without their consent. The FTC’s action also targets discriminatory practices that resulted in Black and Latino consumers paying more for these unwanted add-ons compared to non-Latino White consumers.

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Understanding the issue: what is ‘payment packing’?

One of the central allegations against Asbury Automotive is the use of a deceptive practice known as “payment packing.”

Payment packing: A tactic where a dealer inflates the monthly payment quote to consumers beyond what is necessary for the agreed-upon price. The dealer then uses the extra amount to include additional products or services in the sales contract without the buyer’s informed consent.

In this case, the FTC alleges that Asbury dealers convinced customers to agree to monthly payments that were higher than needed. The extra funds were used to cover unwanted add-ons, such as service contracts or insurance policies, which were “packed” into the final sales contract. Many consumers only discovered these charges after signing, often on electronic devices that obscured the full details of the contract.

Discriminatory practices against Black and Latino consumers

The FTC’s complaint also highlights discriminatory practices that unfairly targeted Black and Latino consumers. According to the commission, these consumers were systematically charged higher prices for add-ons compared to non-Latino White consumers, with no justifiable reason for the disparity.

For example, Black consumers were charged an average of $298 more, and Latino consumers $214 more, for the same unwanted add-ons. The FTC’s findings suggest that these practices were not isolated incidents but part of a broader, discriminatory pattern within the dealerships.

The FTC’s commitment to consumer protection

This action against Asbury Automotive is part of the FTC’s broader mission to protect consumers and ensure fair treatment in the marketplace. The complaint alleges that the dealerships violated both the FTC Act and the Equal Credit Opportunity Act (ECOA), laws designed to prevent unfair business practices and discrimination.

FTC Act: A federal law that prohibits unfair or deceptive business practices in commerce. It gives the FTC authority to investigate and take action against companies that violate consumer rights.

Equal Credit Opportunity Act (ECOA): A federal law that ensures all consumers are given an equal opportunity to obtain credit, regardless of race, color, religion, national origin, sex, marital status, or age.

The FTC’s move to issue an administrative complaint marks the start of a legal process where the allegations will be examined in a formal hearing before an administrative law judge.

Frequenly asked questions

What are add-ons in car sales?

Add-ons refer to extra products or services that dealerships offer during a car sale, such as extended warranties, service contracts, or insurance policies. These can add significant costs to the purchase if included without the buyer’s consent.

How can I avoid being charged for unwanted add-ons?

To avoid unwanted add-ons, always carefully review the sales contract before signing. Insist on seeing the full document, not just the signature lines, and question any additional items you did not agree to purchase.

What should I do if I suspect discriminatory practices at a dealership?

If you believe you have been discriminated against, you can file a complaint with the FTC or your local consumer protection agency. Document all interactions with the dealership and keep copies of your sales contract and any related correspondence.

Key takeaways

The FTC is taking action against Asbury Automotive for deceptive and discriminatory practices at three Texas dealerships.
Consumers were allegedly charged for unwanted add-ons through a tactic known as “payment packing.”
Black and Latino consumers were unfairly charged more for these add-ons than non-Latino White consumers.
The FTC’s action underscores its commitment to protecting consumers and ensuring fairness in auto sales.

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