WASHINGTON, D.C. – An automotive dealer has settled a complaint filed against them by the Federal Trade Commission (FTC) on Tuesday that alleged that they were adding illegal “junk fees” to the purchase prices of the vehicles they sold for “unnecessary” services such as certification, reconditioning, or inspections.
In addition to charging junk fees, the FTC also claimed that the dealer in question – Passport Automotive Group – was especially focused on price gouging Black and Latino customers, according to Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
With this action against Passport and its top executives, the Commission is continuing its crackdown on junk fees and discriminatory practices that harm Black and Latino consumers,” Levine said. “As families struggle with rising prices, companies that think they can hit consumers with hidden fees should think again.”
Passport, based in Maryland, owns car dealerships around the Washington, D.C. metropolitan area.
The FTC notes that junk fees are “unnecessary charges for worthless, free, or fake products or services.”
Junk fees are unnecessary, unavoidable, or surprise charges that inflate costs while adding little to no value,” The FTC said. “Consumers may be slammed with charges for products or services that cost companies nothing to provide, are available for free, or should be included as part of the purchase price. Companies might also upsell consumers on fake products or services that either have no value or never materialize.”
As part of the settlement, Passport Automotive Group has agreed to pay more than $3.3 million, which the FTC has stated will be distributed to the victims of the scam to cover their losses. The dealer is also prohibited from deceiving customers about fees and from discriminating against specific groups by charging them higher prices.
The FTC’s action against Passport initially began in 2018, when they alleged that the dealer had mailed more than 21,000 fake “urgent recall” notices to consumers in 2015 and 2017, to lure them to visit dealerships.
In addition, the FTC also claimed that Black and Latino consumers paid on average about $291 and $235, respectively, more than White consumers did, and that Black and Latino consumers paid on average an extra fee of 24 percent and 42 percent more often, respectively, than White consumers.
Joe Mcdermott is a journalist, reporter and writer for SEARCHEN NETWORKS® as well as other independent news and media organizations in the United States. Joe works on a wide variety of topics and fields, has been featured in print and online in a variety of publications, from local to national, and helps keep a keen-eye on what’s happening in the automotive world for Auto Buyers Market.