Passport Automotive Group agreed to pay $3.38 million to settle a Federal Trade Commission lawsuit filed against the dealership group for charging illegal fees and discriminating against Black and Latino customers.
The Maryland group, along with its president, Everett Hellmuth, and vice president, Jay Klein, together will pay this fine to refund the customers affected by these unlawful practices.
In its complaint, the FTC alleged Passport advertised certified, reconditioned or inspected cars at specific prices but added extra certification, reconditioning or inspection fees it falsely claimed customers were required to pay. For example, the FTC cited one case in which a vehicle advertised for $24,050 sold for $26,440 because of illegal add-on fees.
The FTC also said Passport charged Black customers about $291 more and Latino customers about $235 more in interest than white customers. The agency also alleged Black customers on average paid an extra fee 24 percent of the time while Latino customers paid an extra fee 42 percent of the time compared with white customers.
“The Commission is continuing its crackdown on junk fees and discriminatory practices that harm Black and Latino consumers,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement.
In addition to refunding nearly $3.4 million to customers, the FTC also is requiring Passport to establish a fair lending program to ensure it stops discriminating against certain consumers. The program will have a provision requiring each Passport dealership to either not include a financing markup or to charge the same markup rate to all customers. The FTC said Passport claimed it had a policy to prevent discrimination but did not monitor or enforce it.
The FTC said it would further prohibit Passport from misrepresenting the cost or terms to buy, lease or finance a car — or whether a fee or charge is optional. The agency also would require express, informed consent from customers before they are changed any fees.