Illinois car dealership to pay $10 million to settle "illegal junk fees" case
A multistate chain of car dealerships based in Illinois will pay $10 million to settle a lawsuit accusing the company of illegally charging customers hundreds of dollars in extra fees without their consent.
The Federal Trade Commission filed a deceptive practices complaint against Napleton Automotive Group of Oakbrook Terrace, Illinois, last month. In the complaint, federal officials accuse Napleton of adding products and services such as GAP (guaranteed asset protection) insurance, or paint protection to customers' car purchase, oftentimes without their knowledge or consent. The cost of such add-on services ranges from hundreds of dollars to "well over a thousand dollars," according to the complaint.
Samuel Levine, the FTC's consumer protection director, said the $10 million will hold Napleton accountable for "sneaking junk fees onto people's bills."
"Especially as families struggle with rising car prices, dealerships that cheat their customers can expect to hear from us," Levine said in a statement Friday.
Napleton's $10 million settlement marks the highest amount a car dealership has paid in fines to the FTC, the agency reported. Most of that money — $9.9 million — will help "provide monetary relief to consumers," the FTC said.
Napleton Automotive agreed to pay the $10 million in order "to avoid the disruption of an ongoing dispute," and has denied any wrongdoing, a spokesman for the dealership told a Chicago-area newspaper.
"Most of its (the complaint's) claims were based on interpretations of statistical data and there was no actual finding of intentional wrongdoing," Tilden Katz told the Arlington Daily Herald.
In the complaint, FTC officials said Napleton staff often waited until the end of a lengthy negotiation process to sneak in add-ons at the end of the purchase contract — which itself was 60 pages long. Napleton owns 51 dealerships in eight states, including Florida, Missouri and Pennsylvania. The complaint didn't specify how many customers were victims of Napleton's practices.
Napleton also has a history of charging Black customers $99 more on average for such add-ons than their non-Latino White counterparts, as well as an additional $198 more a month in interest for an auto loan, the FTC alleged. The agency referenced one unnamed customer from Arlington Heights who said he paid nearly $4,000 in add-on fees at Napleton.
Dealerships may find it difficult these days to attract customers as prices for both new and used cars have skyrocketed in recent months. The average price of a new car is up 12% from a year ago, the U.S. Labor Department reports. A typical new car now costs $46,404, according to Kelley Blue Book. The average price of a used car, meanwhile, has increased a stunning 41% in the past year, and now averages roughly $29,000, Edmunds data shows.
