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New York car dealerships to pay $14M for allegedly 'jamming' consumers

By Legal News Line | Jun 25, 2015

New York Attorney General Eric Schneiderman said his office had reached a $14 million settlement with three car dealerships over a lawsuit claiming the companies unlawfully charged consumers hidden fees. | New York Attorney General

ALBANY, N.Y. (Legal Newsline) - Three New York car dealerships agreed to a $14 million settlement with the state in order to settle a lawsuit that claimed the companies' practices resulted in inflated car prices, New York Attorney General Eric Schneiderman said.

Paragon Motors of Woodside, Worldwide Motors and Civic Center Motors agreed to the terms last week, Schneiderman said. About $13.5 million from the settlement will go to consumers as restitution. The lawsuit alleged the car dealerships added more than $2,000 in hidden costs on top of the price of the vehicles. Under the agreement the company will also pay $325,000 in penalties.

“When consumers shop for a car, they deserve to be dealt with honestly and fairly – and not to be misled by auto dealers who use deceptive tactics to fleece their own customers,” Schneiderman said.

“New York consumers must beware: Car dealerships sometimes pad their pockets by charging for worthless after-sale items, which inflate the price of their car. These items are often ones that consumers don’t need, did not ask for and often are not even told about. Businesses need to make a profit to survive, but it’s illegal to do so by duping consumers.”

Schneiderman said the lawsuit and settlement with the dealerships are part of an ongoing “initiative” to stop the practice of “jamming” by other car dealerships. Jamming is the unlawful charging of hidden purchases by car dealerships.

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