FOR IMMEDIATE RELEASE:
Monday, June 5, 2017
Abigail Lootens / Christine Gianakis
Department of Consumer Affairs
Department of Consumer Affairs Launches Public Awareness Campaign to Help Consumers Avoid Predatory Lending in the Used Car Industry
NEW YORK, NY –Department of Consumer Affairs (DCA) Commissioner Lorelei Salas today announced the launch of a public awareness campaign
to educate current and prospective used car owners about the rise of predatory lending in the used car industry. The multilingual campaign ads will be running on targeted bus shelters, telephone kiosks, and LinkNYC, as well as in community and ethnic newspapers, on radio and online. DCA is also doing neighborhood marketing and conducting outreach events to educate New Yorkers.
The campaign advertisements highlight the over-the-top approach used by some dealerships such as their eye-catching low prices and assurances about financing despite a low credit score. DCA’s campaign provides a reality check about advertised promises, reminding consumers that if a deal sounds too good to be true, it probably is. Campaign ads direct consumers to come to DCA for consumer protection tips, complaint mediation, or free financial counseling.
“Predatory lending is a growing concern in New York City and nationally, one that is disproportionally affecting immigrant New Yorkers and those with low incomes who are already struggling to make ends meet,” said DCA Commissioner Lorelei Salas. “One of DCA’s top priorities is to help combat inequality by providing much financial counseling and assisting individuals whose rights have been violated. Our multilingual public awareness campaign will make sure that all New Yorkers know their rights and are empowered to take advantage of the many resources available to them when they are thinking about purchasing a used car.”
With auto loan debt being the fastest-growing household debt (Federal Reserve Bank of New York
), DCA is also pursuing new approaches, such as seeking restitution from the financing companies involved in the used car lending, in order to make consumers whole. Seeking restitution from the financing companies, which, by contract, take on any consumer claims against the dealerships, could provide greater assurance to consumers that they will be made whole after the losses they suffered from the dealerships’ deceptive practices. DCA’s campaign encourages consumers to take advantage of free financial counseling available at NYC Financial Empowerment Centers to better understand the factors that influence their credit scores and their financing options when purchasing a car.
From October 2013 through April 2017, DCA received 5,400 complaints from consumers about used car dealerships. The complaints range from instances of forgery on contracts to a lack of material disclosures by dealership staff and are concentrated in boroughs outside of Manhattan where most of DCA’s licensees are located and customers are more likely to rely on automobiles for transportation. Combating predatory lending, beginning with the used car industry, is a strategic priority for DCA. Since April 2017, DCA has participated in 22 predatory lending workshops to educate nearly 1,000 consumers on DCA initiatives and the protections available to them.
Education is one prong of DCA’s efforts to combat predatory practices in the used car industry, which also includes advocacy and enforcement. On the advocacy approach, in April 2017, DCA Commissioner Lorelei Salas, Council Member Rafael Espinal, Jr., Chair of the Council Committee on Consumer Affairs, Council Member Dan Garodnick, and Council Member Jumaane D. Williams announced a package of legislation to combat predatory practices
in the used car industry. The legislation would require used car dealerships, which DCA licenses, to post a Consumer Bill of Rights and disclose information about financing and pricing, provide all required notices to the consumer in whatever language the dealerships and consumer used to negotiate the contract, and provide consumers with the option to cancel their contract within two days of the sale. Council held a hearing on the bills on April 26, 2017.
“We must continue to be vigilant against used auto frauds,” said Council Member Rafael Espinal, Chair of the Committee on Consumer Affairs. “Whether through legislation, litigation, or public outreach I stand alongside DCA in protecting New Yorkers from becoming victims of this industry.”
“I’m proud to co-sponsor a bill that will impact thousands of consumers, who are targets of predatory practices by unscrupulous used car salesmen,” said Council Member Jumaane D. Williams, Deputy Leader. “Low income and immigrant New Yorkers are especially affected by these deceptive practices. Making money off the back of struggling New Yorkers is shameful and is the responsibility of legislators to put an end to it.”
“The Center for Responsible Lending believes that addressing predatory lending practices requires effective regulation, enforcement and strategies to make consumers aware of how to combat abuses,” said Chris Kukla, Executive Vice President with the Center for Responsible Lending. “DCA’s announcement today, as part of an overall effort to make the car buying market safer for New York City consumers, is another helpful step in the right direction.”
“We applaud the New York City Department of Consumer Affairs for launching a comprehensive marketing campaign to reach populations and neighborhoods particularly at risk of exploitation at the hands of unscrupulous used car dealerships,” said Beth Goldman, President and Attorney-in-Charge of the New York Legal Assistance Group. “Building awareness for the predatory practices rampant within the secondhand auto dealer lending market is a critical step in ensure that consumers’ rights are protected and vulnerable New Yorkers are spared the devastating consequences we have seen too often among our clients who fall victim to their unlawful auto-lending practices.”
"Education alone is not sufficient to address the abuses we see in auto sales and finance, but the NYC Department of Consumer Affairs has also ushered policy changes that bring transparency to the market. These policy changes mean that DCA's education campaign can provide real protections for consumers," said John W. Van Alst, Director of the National Consumer Law Center's Working Cars for Working Families Project.
DCA currently licenses 784 used car dealerships, and it has received more than 5,500 complaints about the industry since mid-2013, including more than 1,100 since July 2016, the start of the current fiscal year. Since July 2013, DCA has conducted nearly 3,000 inspections
) of used car dealerships and issued nearly 1,700 violations, most of which are for unlicensed activity, failing to post required signage, and parking vehicles on the sidewalk or roadway. As a result of the mediation of consumer complaints, investigations and settlements, DCA has secured more than $2.65 million in consumer restitution and assessed $1.7 million in fines against used car dealerships over the past three years.
In March 2017, DCA announced charges against Major World
, one of the largest local used car dealerships in the city with multiple locations, for using deceptive financing and sales practices that resulted in predatory lending targeting immigrants and New Yorkers with low incomes. DCA alleges that Major World has been submitting false information on consumers’ credit applications and failing to inform consumers of the precise terms of the financing agreement, such as interest rates, finance charges, and the number of required payments.
In May 2017, DCA announced charges against several Brooklyn used car dealerships
and their owners for engaging in deceptive and unlawful trade practices. DCA alleges numerous violations and wide-ranging consumer harm, including charges that the dealerships have been misleading about the price of automobiles, selling unsafe vehicles, and failing to inform consumers of the precise terms of the financing agreement. DCA for the first time is seeking consumer restitution from the financing companies involved in the subprime lending.
DCA offers an online guide to Getting Your Finances in Gear to Buy a Used Car
, which is available in English, Spanish, Arabic, Bengali, Chinese, Haitian Creole, Korean, and Russian. The guide informs New Yorkers of their rights when arranging financing for their used car purchase and provides general tips about used car dealerships. DCA also offers a comprehensive Used Car Buyer Guide
with tips about shopping for a used car. Any New Yorker who is trying to get their finances in order before buying a car or who is struggling with debt, can make an appointment for free, one-on-one financial counseling at one of the City’s Financial Empowerment Centers by calling 311.
DCA encourages consumer who feels that used car dealers misled them about the price of their car or sold them an unsafe automobile to contact the agency by calling 311, or by filing a complaint at nyc.gov/dca
The NYC Department of Consumer Affairs (DCA) protects and enhances the daily economic lives of New Yorkers to create thriving communities. DCA licenses more than 81,000 businesses in more than 50 industries and enforces key consumer protection, licensing, and workplace laws that apply to countless more. By supporting businesses through equitable enforcement and access to resources and, by helping to resolve complaints, DCA protects the marketplace from predatory practices and strives to create a culture of compliance. Through its community outreach and the work of its offices of Financial Empowerment and Labor Policy & Standards, DCA empowers consumers and working families by providing the tools and resources they need to be educated consumers and to achieve financial health and work-life balance. DCA also conducts research and advocates for public policy that furthers its work to support New York City’s communities. For more information about DCA and its work, call 311 or visit DCA at nyc.gov/dca or on its social media sites, Twitter, Facebook, Instagram and YouTube.