May 27, 2020
by Ari Lazarus
Consumer Education Specialist, FTC
The law is clear: it’s illegal for someone who lends money to charge people higher interest rates and fees based on their race. According to an FTC case announced today, a car dealer in the Bronx did it anyway.
The FTC alleges that Bronx Honda told their employees to charge African-American and Latino people higher interest rates and fees when they applied for dealer financing. Employees were told they could do this because the African-American and Latino customers had limited education. And the employees had every reason to go along with it: they got a share of the higher charges.
That’s not all, though. To get folks in the door, the FTC alleges the dealership targeted African-American and Latino communities with misleading ads. They advertised sale prices on their cars — and then claimed the sales listing was a mistake, and if someone still wanted that car, they’d need to pay extra fees or a higher, non-sale price. People who were shopping for a Certified Pre-Owned Honda were also told that “certification” and other fees (which often added up to $3000) were required. Despite the fact that the cars were Certified Pre-Owned before they arrived on the sales floor.
After all these fees were tacked on and the person agreed to a price, it was put into a contract. Another problem? That number was often higher when it got written on paper. The FTC alleges the dealership often added additional “fees,” in the form of a higher total sales price or monthly installments, without telling the buyer.
How can you avoid paying too much for your next car?
Shop around and compare offers from several dealers. Watch this video for more tips on deceptive car ads.
Look into financing options from banks or credit unions in addition to dealerships.
Make sure all promises and terms are in writing before you sign on any dotted lines.
Spot a car dealership like this? We want to hear about it: ftc.gov/complaint.
Tagged with: car, car financing, shopping
Money & Credit
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May 27, 2020