Bryan Cohen Apr. 1, 2011, 2:00am
UTICA, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman announced on Thursday that his office will file a lawsuit against a used car loan broker for allegedly using deceptive business practices.
One Source Networking of Auburn, N.Y., and its owner, Sara Fagan, allegedly persistently and repeatedly deceived customers by requiring them to purchase an extended warranty to qualify for a vehicle loan.
"One Source Networking took advantage of desperate Mohawk Valley consumers who needed cars to get to and from work," Schneiderman said. "This company has taken customers for a ride, repeatedly deceiving them into paying more for loans than necessary. The message we are sending today is clear: If you're an unscrupulous business who preys on an unsuspecting public, this office will go after you."
The lawsuit alleges that dealerships in the Mohawk Valley and central New York regions would often refer customers with poor or limited credit history to one of multiple financing companies, including One Source Networking, a third-party car loan broker.
The suit claims that One Source told customers that loans could only be obtained if their clients purchased an extended warranty.
One Source offered extended warranties of $1,995 for non-four wheel drive vehicles or $2,495 extended warranties for four-wheel drive vehicles. The actual cost of the warranties for One Source, however, were significantly less, Schneiderman says. As a result, the warranties inflated the size of the loan, the amount of sales tax and the amount of time it would take to pay back the loan, he says.
The suit also alleges that the company imposed a previously undisclosed $495 fee if customers refused an extended warranty, claiming that the payment was imposed by the car dealership, which would not finalize the sale without it.
The lawsuit seeks civil penalties and restitution.