Drivers who purchased vehicles from a group of Illinois dealerships could qualify for a chunk of a proposed $20 million settlement.
The Federal Trade Commission and Illinois Attorney General Kwame Raoul's Office reached a settlement, the offices announced Thursday, to resolve allegations Leader Automotive Group and its parent company, AutoCanada, "systematically defrauded consumers."
Leader frequently advertised new and used cars online with low prices designed to entice consumers into their dealerships, but those prices were often false, according to a court complaint filed by the FTC and the Illinois Attorney General.
Raoul stated that when consumers arrived at a Leader dealership, salespeople would often say the car came with preinstalled add-ons like protective coatings and theft protection that cost thousands of dollars. The lawsuit alleged salespeople told customers the add-ons were required, despite not being included in the advertised price of the car.
A survey of Leader customers showed that nearly 80% of them were charged for at least one add-on without authorization or because they were falsely told the add-on was required, according to a FTC news release.
“This dealership network engaged in bait-and-switch tactics by luring consumers into their dealerships with lower prices only to either require consumers to purchase allegedly pre-installed add-on products or charge consumers for those products without their knowledge or permission,” Raoul said, in part.
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According to the court complaint, the add-ons were wildly profitable for Leader, with dealerships at one point reporting more than 99% profit on them. Leader salespeople have been paid a commission for these add-on products, as well, in many cases making more from the sale of the add-ons than the commission they are paid for selling the car itself, the allegations stated.
Furthermore, in many cases, Leader advertised cars that had already been sold, court documents revealed. When consumers arrived at the dealership, they were directed to more expensive cars, often ones with junk fees and surprise “market adjustments” added to the price.
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Leader also regularly advertised cars as being “certified pre-owned,” and available at a specific price but then charged consumers hundreds or even thousands of dollars in additional “certification fees," according to the court filing.
In addition to paying $20 million to defrauded customers, the proposed settlement also requires the companies to make clear disclosures of a car’s offering price—the actual price any consumer can pay to get the car, excluding only required government charges—and get consent from buyers for any charges, according to the FTC.
Leader operates the following dealerships in Illinois:
- North City Honda - Chicago
- Crystal Lake Chrysler Dodge Jeep Ram
- Hyundai of Lincolnwood
- Kia of Lincolnwood
- Bloomington Normal Auto Mall, which includes Mercedes-Benz of Bloomington, Lincoln of Normal, Volkswagen of Bloomington Normal, Volvo Cars Normal, Subaru of Bloomington Normal, and Audi Bloomington Normal
- Autohaus Motors, which includes Mercedes-Benz of Peoria, Porsche Peoria, Volkswagen of Peoria, and Audi Peoria
- Chevrolet of Palatine
- Hyundai of Palatine
- Toyota of Lincoln Park
- Toyota of Lincolnwood
