The US Federal Trade Commission (FTC) has is taking legal action against US dealer group Asbury Automotive Group over allegedly charging black and Latino customers more than others.
The allegations involve three dealerships in Texas. The FTC also alleges that these dealerships routinely added services to customers’ contracts without their consent.
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The FTC also alleges that Asbury discriminates against black and Latino consumers, targeting them with unwanted and higher-priced add-ons.
In an ‘administrative complaint’, the FTC alleges that three Texas dealerships owned by Asbury that operate as David McDavid Ford Ft. Worth, David McDavid Honda Frisco, and David McDavid Honda Irving, along with Ali Benli, who acted as general manager of those dealerships, engaged in a variety of practices to sneak hidden fees for unwanted add-ons past consumers.
According to the FTC, these tactics included a practice called “payment packing,” where the dealerships convinced consumers to agree to monthly payments that were larger than needed to pay for the agreed-upon price of the car, and then “packed” add-on items to the sales contract to make up that difference.
The dealerships on average charged black customers $298 more and Latino customers $214 more for the same add-on products than they did white customers who were not Latino, the FTC said.
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By GlobalDataThe FTC complaint alleges that there was no non-discriminatory reason for these higher costs.
Asbury said that after carefully reviewing the dealerships’ records, it will contest the FTC’s lawsuit and will defend the dealerships’ sales practices.
The FTC issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.
In a statement, Asbury CEO David Hult said: “We will not allow the FTC to coerce fines from us or subject us to onerous requirements that negatively impact the car-buying experience for our customers, would not apply to others, and would place us at a competitive disadvantage in the industry.”
Dan Clara, Senior Vice President of Operations at Asbury, rejected the FTC’s assertion that minority customers were charged more for protection products than other customers. “Asbury is committed to non-discrimination and has implemented policies, training, and monitoring to ensure that our dealerships comply with standards on fair lending and equal credit opportunity,” Clara said. “I am proud that Asbury is one of the few companies in the industry that has a Chief Diversity, Equity, and Inclusion Officer. In addition, the three dealerships in question are highly diverse, from the highest level of leadership to front-line staff workers, and in that way reflect the demographics of the guests they serve.”
Asbury operates more than 155 dealerships in more than a dozen US states.
