Just months after the Federal Trade Commission (FTC) took legal action against Koons Kia and Napleton dealerships, the FTC has reached a high-dollar settlement with the DC-area’s Passport Automotive Group. The FTC found evidence that Passport Auto Group dealerships were routinely deceiving consumers by forcing thousands of dollars in illegal junk fees onto car prices and for discriminating against Black and Latino consumers with higher financing costs and fees.
Passport, its president, Everett Hellmuth, and its vice president, Jay Klein, will pay more than $3.3 million to settle the FTC’s lawsuit. The settlement money will be used to refund impacted consumers.
Passport Automotive Group operates nine dealerships in 2022:
- Passport Toyota
- MINI of Alexandria
- Passport Nissan of Alexandria
- Passport INFINITI of Alexandria
- MINI of Montgomery County
- Passport BMW
- Passport INFINITI of Suitland
- Passport Mazda
- Passport Nissan
“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,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “As families struggle with rising prices, companies that think they can hit consumers with hidden fees should think again.”
The FTC has been on a roll in 2022. This summer, the FTC proposed a new set of rules that would ban specific anti-consumer sales practices that are commonly employed at car dealerships. Dealer lobbies were furious.
Evidence of Discriminatory Practices
The FTC’s investigation found that at Passport dealerships, Black and Latino consumers paid on average $235 to $291 more in interest than non-Latino white consumers did. It also alleges that Black and Latino consumers were charged an extra fee 42 percent more often.
The FTC announced that it is taking the following enforcement actions:
- Fining Passport Automotive Group $3.3 million
- Prohibiting Passport from charging different groups different markups
- Prohibiting them from deceiving consumers about prices and fees
The Commission vote to file the complaint was 4-1. Interestingly, one Commission member, Noah Joshua Phillips, voted no on the motion.
Passport Auto Group In Trouble Again
In 2018, the FTC alleged that Passport Auto Group issued fake “urgent recall” notices to consumers to lure them to visit dealerships. According to the FTC, the vast majority of the vehicles covered by the notices did not have open recalls.
Will Passport Auto Group’s second run-in with the FTC be enough to put an end to deceptive, anti-consumer practices? $3.3 million is quite the hefty fine.