Podcast - The FTC and Connecticut Join Forces for Action Against Nissan Dealer

Welcome to another podcast of Clearly Conspicuous. As we noted in previous sessions, our goal in these podcasts is to make you succeed in this very aggressive and progressive environment, make you aware of what's going on and give you practical tips for success. As always, it's a privilege to be with you today.

Connecticut Nissan Dealer Allegedly Deceives Consumers, Pushes Junk Fees

Today we discuss the action by the FTC and the state of Connecticut against Manchester City Nissan for deceiving consumers and forcing junk fees. The Federal Trade Commission and the state of Connecticut are taking action against an auto dealer, Manchester City Nissan, or what's called MCN, along with its owner and a number of key employees for systemically deceiving consumers about the price of certified used cars, add-ons and government fees. The complaint alleges that the dealership, in addition to deceiving consumers, regularly charges them junk fees for certification, add-on products and government charges without the consumers' consent, sometimes costing them thousands of dollars in unwanted and unauthorized charges. Connecticut also alleges that these practices are deceptive or unfair under Connecticut law.

Charges Against MCN

According to the complaint, MCN and advertises numerous cars, including Nissan vehicles, as being "certified pre-owned." This term refers to a used vehicle that has been inspected and repaired to the manufacturer's specifications, which comes with an extended warranty from a car maker. Nissan's rules prohibit dealers from charging the fee for certification beyond the price of the car. However, the complaint alleges that the dealership and its employees regularly tack on certification charges for these vehicles when consumers arrive looking to buy the vehicle. One example cited in the complaint describes a consumer that came in looking to buy a certified pre-owned car advertised for $15,700, but the dealer added a $5,295 junk "inspection fee" for a car that had already been inspected.

In addition, the complaint alleges that MCN often charges consumers extra for an inspection or repair that has already occurred, but then fails to report to Nissan that the certified car was sold, leaving consumers without the additional warranty that was promised in the advertising. The complaint also alleges that MCN and its employers frequently charge consumers for bogus add-ons that they didn't agree to pay. They often charge consumers for add-ons such as general asset protection or GAP, service contract, maintenance contract and total loss protection. Total loss protection, in particular, appears in 90 percent of all sales by MCN. One consumer, as described in the complaint, negotiated the price of $20,500 for a Nissan Rogue Sport. But when she went to sign the sales contract, her promised monthly payment had increased, which she attributed to a credit issue. Instead, she found that MCN had tacked on more than $7,000 in add-ons to the amount she financed for the car.

MCN and its employees also regularly deceived consumers during the sales process about government-imposed taxes and fees, claiming the junk fees added by year are required by the government, or deceptively inflating the actual governmental fee to register the car and keeping the difference as profit. An example cited in the complaint shows that MCN told one customer that Connecticut registration and other state fees were $345. In fact, Connecticut registration and other fees were only $208. The complaint charges Chase Nissan, which does business as MCN, along with its principals, general manager, finance manager and sales manager with violating the FTC Act and the CUTPA, Connecticut Unfair Trade Practices Act.

Concluding Thoughts

So here's the key takeaway: Look closely at the way you charge your customers. Are fees fully disclosed? Are they truly material or useful to the transaction at issue? Please know that junk fees are a key initiative of the FTC right now, and it has the political interests of the Biden Administration. Also, closely examine your sales practices, as well, in explaining pricing and fees. Fair and accurate pricing policies are also a concern of the government.

So please stay tuned to further programs as we identify and address the key issues and developments, and provide strategies for success. As always, I wish you continued success and a meaningful day. Thank you.