FTC, DOJ take action against Rhinelander Auto Center
Rhinelander Auto Center. Star Journal photo
Settlements include $1.1 million consumer refunds, end ‘unlawful practices’
By Eileen Persike
RHINELANDER – After an investigation by the Federal Trade Commission and Wisconsin Department of Justice, owners past and present along with the current general manager of a Rhinelander auto dealership have agreed to settle a complaint that alleges they deceived customers and discriminated against American Indians.
Rhinelander Auto Center and Daniel Towne have agreed pay $1.1 million to refund customers and to “stop unlawful practices of deceiving customers into paying up to thousands of dollars in illegal junk fees added onto car prices and for charging American Indian customers higher financing costs and fees,” according to a joint release by the FTC and Wisconsin DOJ.
“Working closely with the State of Wisconsin, we are holding these dealerships accountable for discriminating against American Indian customers and sneaking junk fees onto consumers’ bills,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “A vehicle is one of the most expensive purchases families make, and we are fully committed to ensuring that all consumers navigating the car-buying process can do so without facing unlawful discrimination or paying for products and services they do not want.”
“Companies must not be permitted to engage in discriminatory practices or improperly charge customers for ‘add-on’ products or services,” said Wisconsin Attorney General Josh Kaul. “Thank you to those at Wisconsin DOJ, the FTC, and other agencies whose work led to the filing of this complaint.”
In their complaint, the FTC and Wisconsin DOJ say that Rhinelander Auto Center and Towne regularly charged many customers junk fees for add-ons without their consent.
One survey cited in the complaint shows half of the dealership’s customers said they were charged for add-ons, including Guaranteed Asset, without authorization which cost one customer more than $1,000 in fees and interest on her loan.
The discrimination component of the complaint alleges American Indian customers were charged for unwanted add-ons at a higher rate – an average of $401 more – than non-Latino White customers. It also notes that since Rhinelander changed ownership in 2019 the disparity has increased.
Rhinelander Auto Center statement
“Rhinelander Auto Group respects all of its customers, and we are committed to treating all customers with dignity. We totally reject that our people – many of whom are long-term members of the local community – would engage in the practices alleged. That’s not who we are, and there is a great deal of evidence to reinforce the fact that Rhinelander Auto Group and its employees are ethical, decent, and very good people.
“Nonetheless, to avoid lengthy and costly litigation, we reluctantly agreed to a voluntary resolution to conclude the matter. The agreement includes no admission of wrong-doing, and it requires the company to pay a forfeiture; upgrade its compliance, credit, and other administrative policies; and expand its employee training efforts.
“Rhinelander Auto Group is glad to put this matter behind us and focus on serving our customers. We have been a part of the Rhinelander area for nearly 20 years, and we take pride in doing things the right way and treating everyone fairly. Our commitment is to continue on that path going forward.”
The proposed settlement with Rhinelander’s current owners and Towne will require the company to stop deceiving consumers about whether add-ons are required for a purchase and obtain consumers’ express informed consent before charging them for add-ons.
The settlement will also the require the defendants to establish a comprehensive fair lending program that, among other components, will allow consumers to seek outside financing for a purchase and cap the additional interest markup Rhinelander can charge consumers. The current owners and Towne will also be required to pay $1 million to be used to refund affected consumers.
The former owners, Rhinelander Auto Center, Inc. and Rhinelander Motor Company, have agreed to a separate settlement that would require the companies to permanently wind down the businesses and pay $100,000 to be used to refund affected consumers.