Asbury vows 'vigorous defense' against FTC complaint alleging consumer deception, discriminatory pricing

An earlier version of this story relied on an incorrect FTC count of the number of individuals named in the Asbury administrative complaint. Only one person has been accused in the case, the FTC confirmed Aug. 19. The second person’s name posted on the FTC’s online case description Aug. 16 was removed by the agency Aug. 19.

Asbury Automotive Group Inc. vowed to mount a "vigorous defense" against Federal Trade Commission charges alleging payment packing, adding finance and insurance products to deals without consumer knowledge and charging Black and Latino customers more than white ones. 

“We will not allow the FTC to coerce fines from us or subject us to onerous requirements that negatively impact the car-buying experience for our customers, would not apply to others, and would place us at a competitive disadvantage in the industry," Asbury CEO David Hult said in a statement released late on Aug. 16. "We are confident that we will prevail in the litigation.”

The FTC on Aug. 16 said the violations occurred at three David McDavid stores in Texas: David McDavid Ford in Ft. Worth, David McDavid Honda of Frisco, and David McDavid Honda of Irving. The agency named one Asbury employee in the complaint — Ali Benli.

Benli was general manager of the stores, according to the FTC; Asbury said he remains an employee of the group. 

“The FTC will continue to crack down on illegal hidden fees and discrimination, which have no place at car dealerships,” Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in its statement. “Like the Combating Auto Retail Scams (CARS) Rule, today’s action underscores our commitment to protecting consumers shopping for cars and leveling the playing field for honest dealers.”

In its response, Asbury said it “rejected false and unfounded allegations” the three David McDavid dealerships sold F&I products without customer authorization and discriminated against minorities. It vowed to “contest the FTC’s lawsuit alleging violations related to the sale of what the FTC calls ‘add-on products and will defend the dealerships’ sales practices.”

In a quarterly filing, Asbury reported it had received an FTC civil investigative demand in August 2022 and sent the agency records from Aug. 1, 2019, to April 24, 2023.

"On February 8, 2024, the FTC staff counsel sent to us a proposed consent order and draft complaint, alleging that the Company and three of our dealerships had violated [the FTC Act and Equal Credit Opportunity Act] in connection with the sale of add-on products (e.g., vehicle service contracts, maintenance plans, etc.), and advising that it would recommend the filing of an enforcement action if the Company did not settle the FTC’s claims," Asbury wrote Aug. 9. 

"The Company disputes the FTC’s allegations that it violated the FTC Act and the ECOA, and is currently involved in discussions with the FTC staff regarding the matter."

Asbury said it had verified through a Freedom of Information Act request no consumers had filed complaints with the FTC about the McDavid dealerships from 2019 through late spring.

The FTC hasn't yet provided a copy of its administrative complaint, but it accused Asbury, the three dealerships and Benli in a news release of violating the Federal Trade Commission Act and Equal Credit Opportunity Act.

The release accused the dealerships of charging Black customers $298 more than white customers and charging Latinos $214 more than white consumers for the same items added to auto deals.

Dan Clara, Asbury senior vice president of operations, disputed minorities were charged more. 

“Asbury is committed to non-discrimination and has implemented policies, training, and monitoring to ensure that our dealerships comply with standards on fair lending and equal credit opportunity,” Clara said in a statement.

“I am proud that Asbury is one of the few companies in the industry that has a Chief Diversity, Equity, and Inclusion Officer. In addition, the three dealerships in question are highly diverse, from the highest level of leadership to front-line staff workers, and in that way reflect the demographics of the guests they serve.”

The agency also accused the stores of payment packing — when the consumer agrees to a larger monthly payment than what's needed to buy the car and the dealership fills up the difference with charges like F&I products.

Finally, the FTC said the dealerships also added F&I products without customer knowledge, pretended optional "add-on charges" were mandatory, and inserted products the customer had declined.

"Numerous consumers complained about Asbury’s practices," the FTC wrote in a news release. "Consumers reported being charged thousands of dollars without their knowledge for add-ons that range from supposedly protective chemical coatings and service contracts to life and disability insurance policies, according to the complaint."

The FTC alleged "Asbury’s sales and financing process made it difficult, if not impossible, for consumers to know they were being charged for these add-ons, with consumers being asked to sign documents on electronic devices that showed only the places where they should sign and not the full documents."

The FTC said it surveyed customers of the three Asbury dealerships and found "as many as 75 percent of consumers reported that they were charged for add-on products and services they did not authorize or were falsely told were required."

Asbury wrote in the news release the three dealerships “conducted a thorough internal review” and found no such deception.

“Consistent with company policy, customers who purchased protection products received full disclosure about the products’ costs, impact on payments, and other important terms. Customers signed for the protection products, which were itemized separately on paperwork provided to the customers,” Asbury wrote in the news release.

“Prior to finalizing sales, the dealerships take the additional, extraordinary step of requiring a compliance review by an independent deal clerk to ensure that protection products are sold with the buyer’s signed consent. The dealerships’ policies and training forbid the sale of protection products such as service contracts, maintenance plans, and interior-exterior protection without explicit, written approval from customers.”

According to Asbury, employees who behaved as the FTC alleged “are subject to disciplinary action, including termination.” 

Hult said Asbury “takes great pride” in its compliance and training processes.

Commissioners

All five FTC commissioners voted in favor of filing the administrative complaint.

FTC Commissioner Andrew Ferguson, one of two Republican FTC commissioners, called the case similar to one the FTC announced Aug. 15 had been settled against Coulter Motor Co. But he complained that the agency had used the settled case to classify discrimination as an unfair business practice under the FTC Act, which historically hasn't been used to handle discrimination.

FTC Chair Lina Khan and the other two Democratic commissioners said in the Coulter case exempting discriminatory conduct from unfair practices would give companies that discriminate a pass, and the Latino customers allegedly discriminated against in that matter met the three-part threshold for being victims of unfair business practices.

"Asbury intends to litigate against the Commission," Ferguson wrote. "Coulter, by contrast, settled with the Commission. That means that the claims against Coulter — including the majority’s novel discrimination theory — will not be subject to judicial review. The claims against Asbury, however, could wind up in front of the U.S. Court of Appeals of Asbury’s choosing.

"The reader can do the math. The majority has advanced its novel theory in a case no court will decide but omitted it from a proceeding that could very well go to court. The only inference to draw is that the majority does not want a court to look under the hood of its new Section 5 theory," Ferguson said.

Meanwhile, Commissioner Melissa Holyoak, the other Republican, encouraged the agency to think carefully about bringing a disparate impact Equal Credit Opportunity Act case against an individual.

She referenced comments from former FTC Commissioner Christine Wilson, a Republican, during the Passport Automotive Group case. Wilson supported most of the agency's case against Passport but opposed the agency taking action against individual Passport personnel. (Passport said in a statement at the time it refuted that case's discrimination allegations "in the strongest possible terms" but settled to save effort and money.)

"Importantly, to prove violations of ECOA, it is typically necessary to engage experts to conduct a complex and nuanced statistical analysis that draws on data from myriad sources, and that  builds in a variety of assumptions," Wilson wrote in 2022. "Interpreting those findings requires expertise and judgment. And even then, findings of discrimination may be rebutted in litigation. In other words, ascertaining the presence of discrimination may require extensive analysis and data not available to the executives of a company."

Asbury said in its news release the FTC would not explain the methodology behind its conclusions “even though Asbury requested such information for several months.” And in her statement regarding the Asbury action, Holyoak said the agency should be more transparent about how it determined Equal Credit Opportunity Act violations.

“In guidance to the public — and, when it would not compromise our enforcement, during pre-litigation discussions with potential defendants — the Commission and Commission staff should be clear about the methodology the Commission uses to assess liability under ECOA,” she wrote. “Lack of awareness of agency enforcement methodology can lead to significant backlash.”

Asbury, of Duluth, Ga., ranks No. 5 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 149,509 new vehicles in 2023.

Automotive News staff and Reuters contributed to this report.