Raoul, FTC File Lawsuit Alleging Dealerships Overcharged, Deceived Consumers Through Add-Ons, Junk Fees
Chicago – Attorney General Kwame Raoul, in partnership with the Federal Trade Commission (FTC), announced a $20 million proposed settlement agreement with Leader Automotive Group (Leader) and its parent company, AutoCanada, to resolve allegations Leader defrauded consumers trying to buy vehicles.
In addition to paying $20 million, which will be used to refund harmed consumers, the proposed settlement would require all Leader dealerships in Illinois to make clear disclosures of a car’s offering price, which is the actual price any consumer can pay to buy the car, excluding only required government charges. The settlement also requires the companies to receive consent from buyers for add-on product charges.
“This dealership network engaged in bait-and-switch tactics by luring consumers into their dealerships with lower prices only to either require consumers to purchase allegedly pre-installed add-on products or charge consumers for those products without their knowledge or permission,” said Raoul. “I appreciate the collaboration with the Federal Trade Commission to ensure bad actors are held accountable and our consumers are protected from deceptive business practices.”
“Working closely with the Illinois Attorney General, we are holding these dealerships accountable for unlawfully extracting millions of dollars from consumers through a textbook bait-and-switch scheme, and bolstering their poor reputation with fake reviews,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue our work to ensure that consumers are not being overcharged for cars, and that honest dealers do not need to compete with firms that cheat.”
Raoul’s lawsuit, also filed in conjunction with the FTC, alleges the companies, along with former Vice President of U.S. Operations James Douvas, violated federal and state laws by deceiving consumers about the price and availability of vehicles, charging customers for expensive add-ons without their consent, tacking unwanted junk fees on to purchases, posting fake online reviews, failing to disclose that U.S. customers were buying cars imported from Canada, along with other unlawful conduct.
The lawsuit Raoul and the FTC filed further alleges Leader frequently advertised new and used cars online at low prices designed to entice consumers into dealerships, but those prices often ended up being false. Raoul alleges that when consumers arrived at a Leader dealership, salespeople would often say the car came with preinstalled add-ons like protective coatings and theft protection that cost thousands of dollars. The lawsuit alleges salespeople told customers the add-ons were required, despite not being included in the advertised price of the car. According to the complaint, Leader regularly failed to actually install or apply the add-on products – despite charging consumers without their consent.
Leader also regularly advertised cars as being “certified pre-owned,” and available at a specific price but then charged consumers hundreds or even thousands of dollars in additional “certification fees.” In many cases, despite advertising the cars as being certified and charging consumers undisclosed fees for that certification, the lawsuit alleges Leader failed to perform the certification work required by the manufacturer of the car, leaving consumers without the extended warranty that makes certified pre-owned cars attractive in the first place.
Additionally, Leader also has sold cars in its U.S. dealerships that were manufactured for the Canadian market without disclosing that information to consumers, according to the complaint. Even when done legally, importing these cars into the U.S. typically voids the manufacturer’s original warranty. Regardless, Leader deceptively advertised many of these cars as being covered by those warranties.
Leader operates the following Illinois car dealerships:
Bureau Chief Elizabeth Blackston, Deputy Bureau Chief Jacob Gilbert, Supervising Attorney Margaret McWhorter, and Assistant Attorneys General William Wingo and Christen Lee handled the settlement for Raoul’s Consumer Fraud Bureau.
