A Minnesota dealership has paid $250,000 to settle a complaint by that state's attorney general's office alleging that it misused the credit information of 12,000 consumers.
The state said Brookdale Buick-Pontiac-GMC of Brooklyn Park, Minn., used data about people who had filed for bankruptcy to develop sales leads, without first getting their permission.
The store mailed ads to those people that resembled checks. The documents, which promised credit for a vehicle purchase, were designed to look as if they had come from U.S. Bankruptcy Court and were guaranteed by the state of Minnesota.
One lawyer who specializes in auto finance says dealerships should not rely on marketing firms to ensure that such advertising is proper. "The dealer needs to remember that he is responsible for what gets mailed," says attorney Tom Hudson of Linthicum, Md.
"Every dealer advertisement needs a legal review by the dealer's lawyer," Hudson says. "In my experience, very few mail houses do any level of legal review."
The dealership says a sales manager hired a marketing company, On-Target Direct, to target consumers with credit scores in a certain range who had filed for bankruptcy. Officials of the Foothill Ranch, Calif., company did not respond to a request for comment.
"We relied upon a third-party vendor that represented to us that the mailer did meet with all the applicable statutes and regulations," says Charles Maier, a lawyer who represents the dealership, which is in a suburb of Minneapolis.
The state said Brookdale's unauthorized use of consumers' credit information violated the federal Fair Credit Reporting Act and Minnesota's consumer fraud laws.
In addition to the $250,000 fine, the settlement requires the dealership to: