In a groundbreaking legal resolution, the Illinois Attorney General Kwame Raoul and the Federal Trade Commission (FTC) revealed a $20 million proposed settlement agreement on Friday with Leader Automotive Group and AutoCanada. This settlement, aimed at reimbursing affected consumers, resolves allegations of deceptive practices and fraudulent activities in car sales.
The FTC stated that this is the largest settlement ever reached with a car dealership group. AutoCanada, the parent company of Leader Automotive Group, operates several dealerships across Illinois, including Autohaus Motors in Peoria, which houses Mercedes-Benz of Peoria, Porsche Peoria, Volkswagen of Peoria, and Audi Peoria.
Allegations of Bait-and-Switch Tactics and Unauthorized Add-Ons
According to the lawsuit filed jointly by the Illinois Attorney General and the FTC, Leader Automotive Group engaged in deceptive practices such as bait-and-switch tactics. The dealerships allegedly lured consumers with low car prices only to require the purchase of costly pre-installed add-ons or charged customers for these add-ons without their consent.
“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 Attorney General Raoul in a statement.
The lawsuit further accused the companies and their former U.S. Vice President of Operations, James Douvas, of additional violations, including tacking on junk fees, posting fake online reviews, and failing to disclose that some vehicles sold in the U.S. were imported from Canada.
New Requirements for Illinois Dealerships
As part of the settlement, Leader Automotive dealerships in Illinois must now comply with strict guidelines to prevent further consumer deception. The terms mandate transparent disclosure of a vehicle’s offering price, excluding only government-mandated charges. Additionally, dealerships must obtain explicit consent from buyers for any charges related to add-on products.
“This agreement ensures that bad actors are held accountable and that our consumers are protected from deceptive business practices,” Raoul added.
Despite the settlement, AutoCanada has neither admitted nor denied the allegations outlined in the lawsuit. In a statement, the company emphasized that the agreement contains no admission of wrongdoing. “This agreement contains no admission of wrongdoing by the company, brings the FTC’s investigation to a close, and puts this matter behind the company,” the release stated.
The company has agreed to pay $20 million to the FTC and Illinois without incurring civil penalties.
Consumer Protection Takes Center Stage
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, underscored the importance of holding deceptive dealerships accountable. “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,” Levine said. “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.”
Peoria Dealerships Among Those Affected
Autohaus Motors in Peoria, which includes prominent brands like Mercedes-Benz, Porsche, Volkswagen, and Audi, is among the ten Illinois dealerships implicated in the settlement. Local consumers are expected to benefit from the restitution fund established by the agreement.
This settlement marks a significant victory for consumer rights and reinforces the importance of transparency and ethical practices in the automotive industry.
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