Two New Rochelle car dealers accused of “slamming” customers ”” charging for services without the buyers”™ consent or knowledge ”” have settled a state investigation.
State Attorney General Eric Schneiderman accused the dealers of deceptively selling credit repair and identity theft protection services. In many cases, customers paid for services they didn”™t know they had purchased.
Honda of New Rochelle, 25 East Main St., and New Rochelle Toyota, 47 Cedar St., along with a related company, Huntington Honda in Westbury, agreed to pay $270,950 to 475 customers and $30,000 to the state to settle the case.
Don Lia, who is based at the Westbury location in Nassau County, is president of all three companies. In signing the April 20 agreement he neither admitted nor denied the attorney general”™s findings.
Lia and his attorney, Steve Blatt of Bellavia Blatt & Crossett in Mineola did not respond to requests for comment.
The attorney general”™s consumer fraud and protection bureau investigated suspicious sales from 2011 to 2014. Typically, after customers agreed to buy or lease vehicles they were steered to a manager who would try to sell additional products and services, like a security system or extended service contract.
In this case, dealers sold credit repair and identify theft services from Credit Forget It Inc.
Customers were charged upfront fees that were concealed in sales and lease contracts.
In almost every instance, according to the agreement, Credit Forget It contracts did not include a price. Often, the charges were bundled unitemized into the vehicle sale. In some instances customers were tricked into believing the services were free or included with the vehicle.
State and federal laws prohibit charging advance fees for credit repair services, “to protect consumers from the worst abuses of the credit repair industry,” according to the settlement.
Credit Forget It”™s marketing materials said a certified credit consultant would be assigned to work with car buyers to restore and optimize their credit, and it claimed that it reviewed credit bureau reports for suspicious activities.
But Credit Forget It was not authorized to sell credit repair services and did not have the capability of providing the services, the settlement says. The company employed seven people in Brooklyn who were hired with no previous experience in credit repair. Training consisted of observing a more senior account manager for a few days.
Most of the customers never received the services. Credit Forget It never contacted many of the customers, and among those who were contacted many believed they were receiving a sales solicitation and asked not to be contacted again.
The attorney general shut down Credit Forget It last year. The company was based in Brooklyn and run by Damien Bullard and Michael E. Morgan.
The after-sale services were lucrative.
The car dealers paid Credit Forget It $200 for each contract and collected an average of $770 per customer. The charges totaled $365,950, for an estimated profit of $270,950.
Customers who unwittingly bought the services were not treated equally. Their fees ranged from $200 to $2,645.
The investigation did not focus on why some customers were charged more than others, a spokeswoman said.
Lia agreed to pay each customer $570.42, or $200 less than the customers typically paid for the service.
Even after deducting the restitution and penalty, Lia”™s companies made a $65,000 profit on gross revenue, or $137 per customer. Adding $200 per contract paid to Credit Forget It, the investigation cost Lia $63 per customer.
The attorney general did not explain how the restitution and penalty were determined, but a spokeswoman who insisted on anonymity described the settlement as a good deal.
“Consumers are getting substantial amounts of money back without waiting through protracted litigation,” she said.
Lia also agreed to stop selling credit repair and identity theft services. The price of other after-sale products or services must be disclosed prior to sale. Every product and service must be itemized in the sales and lease agreements.
The car dealers must file compliance reports for three years and to cooperate with the attorney general in any investigations of other persons or entities.
The agreement does not name anyone specifically involved in the scheme.
“We do not know exactly how many people were involved,” the attorney general”™s spokeswoman said. “At the very least it involved some of the finance managers.”
The New Rochelle dealerships are also known as Westchester Autoplex Inc. (Honda) and N.R. Automotive Inc. (Toyota).
The investigation was part of a wider case against 19 more car dealers, including Koeppel Auto Group in Queens, Manfredi Auto Group in Staten Island and Plaza Dealerships in Brooklyn.
Overall, the four groups of dealers took advantage of 4,933 customers. They agreed to pay $1,995,950 in restitution and $174,000 in penalties.
The attorney general made similar settlements last year against several auto dealerships, including White Plains Honda.
Consumers who believe car dealers have “jammed” them with unwanted products or services can call the attorney general at 800-771-7755 or file a complaint online at forms.ag.ny.gov/CIS/consumer-complaints.jsp.
