Asbury denies FTC allegations, outlines internal processes in new filing

Asbury Automotive Group Inc. described internal policies on payment quotes and auditing deals for compliance in its formal answer denying the Federal Trade Commission's allegations against the national dealership group.

"Respondents deny the Commission's allegations," Asbury wrote in its Sept. 3 answer to the FTC complaint filed in the agency's internal administrative law system.

Asbury called many of the FTC's allegations "general and unspecified," and it repeatedly pointed to situations where the agency refused to meet Asbury's requests for additional details about an accusation.

The FTC on Aug. 16 alleged Asbury included "add-ons" such as finance and insurance products within auto deals without consumer knowledge, charged Black and Latino customers more than white ones and engaged in payment packing. The agency's administrative complaint accused the group of violating the FTC Act with unfair or deceptive acts and of violating the discrimination prohibition of the Equal Credit Opportunity Act and the related Regulation B.

The agency noted Asbury pays employees more if F&I products are purchased, "including bonuses that managers earn when a certain percentage of the dealer's sales include an add-on." But Asbury called product sales one of multiple possible pay plan elements and said it had "policies that discourage the sale of products for the sole reason of increasing individual employees' compensation."

The FTC said the violations occurred at three David McDavid stores in Texas: David McDavid Ford in Fort Worth, David McDavid Honda of Frisco and David McDavid Honda of Irving. The agency named one Asbury employee in the complaint — Ali Benli, who Asbury said is the general manager of the McDavid Ford store and was previously general manager of the other two stores in back-to-back stints from 2019 to 2022.

The FTC's complaint said Asbury often charged customers for "add-ons" without their consent and "misled consumers into believing add-ons were required." The agency gave the example of a McDavid Honda Frisco customer who learned Asbury "had charged her on multiple occasions for add-ons that she did not know about and never would have agreed to purchase, including $3,000 for a service contract and over $4,700 for a life insurance policy, a disability insurance policy, a maintenance plan, and a service contract."

"Other consumers reported that they specifically declined add-on items only to discover that Respondents charged them anyway," according to the complaint.

Asbury said it "requires total transparency in the vehicle price negotiations," and its policy is for customers to see both the price of the vehicle with and without F&I products. It also said it identified product charges "at multiple times and at multiple times and in multiple documents throughout the purchasing process, including in the vehicle contracts."

Citing a survey of customers charged for at least one product, the FTC said 58 percent of customers at David McDavid Ford, 75 percent at David McDavid Honda of Frisco and 73 percent at David McDavid Honda of Irving were charged for at least one item described as mandatory or lacking consumer consent.

Asbury said finance companies and automakers do not require additional products to be sold, and its documents listing charges for F&I products "clearly state" this. It denied customers were told anything different.

The FTC said customers reported that Asbury "made it difficult for them to understand the terms of the transaction," giving the example of a woman who couldn't see the paperwork on a finance employee's computer.

"She reported that the representative briefly described the document, and then asked her to sign on an electronic signature pad without viewing the document itself," the FTC said.

The FTC said Asbury also sold F&I products using payment packing — when the consumer unwittingly agrees to a larger monthly payment than what's needed to buy the car, and the dealership fills up the difference with additional charges.

Asbury denied this allegation and also the FTC's definition of payment packing. The group said it held a "strict policy" prohibiting what Asbury defined as payment packing: whenever a salesperson during negotiations "presents the customer with monthly payments that are higher than the likely payments." If the dealership "presents payments higher than they should be, based on that likely credit score, or fails to update a payment quote once the likely credit score is known," an audit by Asbury might deem it packing, according to the group.

"According to the Respondents' internal audit standards, although 'payment packing' may be done unintentionally, such as in response to a specific guest request for a quote at a specific rate, trade-in value, or with additional products that deviate from policy, when done intentionally the motive of payment packing can be for the sales team to get the guest accustomed to a higher payment," Asbury's answer stated. "The hope is that the guest is then pleasantly surprised in the Finance Office with the good news that the dealership was able to get the base payment lowered. When happy with the savings, the guest may be more agreeable to purchasing add-on products, which the guest would still voluntarily purchase, by which time the guests will also have been presented with a written disclosure showing the true (lower) vehicle payment. ... Respondents further admit that they strictly prohibit and monitor for this sort of gamesmanship of inflating the vehicle payment in the showroom to set the finance office up for easier sales of additional products."

The FTC said Asbury's internal audits for misconduct "relies on what the dealerships document in writing; Asbury does not contact consumers during the audit process to ask what employees at the dealership told them or what consumers understood about add-ons," nor did it contact customers after audits even if deceptive practices were found.

Asbury said it audits dealerships "on an ongoing real-time and after-the-fact basis." The real-time audits involve an accounting clerk not employed by the dealership checking for all necessary paperwork and signatures — including signatures for F&I products, Asbury said. Compliance auditors check Asbury deals after they're completed, including doing a "forensic review of the entire purchase process," according to the group. It said it sometimes did contact customers following an audit, and it denied any internal audit had revealed consumer deception.

But the FTC said Asbury's audits found the three stores "have each failed multiple audits due to payment packing."

Asbury said it lacked specifics on which audits the FTC meant. It noted one audit had uncovered the possibility of "inconsistent payment" or payment packing but didn't confirm the existence of packing. And it said other deals might have been flagged along similar lines — they didn't comply with Asbury internal policies, but they weren't confirmed as packing.

"For example, a deal may be identified as being included in this category of audit findings if a payment quote was handwritten instead of being given through the Respondents' electronic compliance tool," Asbury wrote.

The FTC complaint accused David McDavid Ford of charging Latinos more for products than white customers. It also accused the other two stores of charging Black and Latino customers more than white buyers. That document redacted the alleged average upcharges, but an FTC news release accused the three dealerships of collectively charging Black customers $298 more than white customers and charging Latinos $214 more than white consumers.

"These disparities are statistically significant even when accounting for other factors that could affect the cost of add-ons," the FTC wrote in the complaint. It also accused Asbury of encouraging employees "to pack add-ons more often in contracts with Latino consumers and consumers who are non-native English speakers."

Asbury denied its "pricing and charges are based on the race or ethnicity of consumers, and deny that the FTC has any legitimate factual basis for determining the race or ethnicity of consumers who patronize their dealerships — much less for making the scurrilous and false accusation that Respondents charge certain consumers more based on their race or ethnicity." It also denied the idea of employees being encouraged to include more products in deals involving Latinos and people who aren't native English speakers.

Asbury said the FTC didn't provide it with the basis for its calculations determining discrimination and said the agency never asked for information that could have explained the cost of products. It said customers might have been charged more because of the vehicle or product involved, not their race.

The FTC also criticized Asbury for allowing employees "free rein to charge different prices for the same or similar add-ons, leading to statistically significant disparities. This practice is not justified by a business necessity that could not be met by a less discriminatory alternative." Asbury denied these assertions, too.