FOR IMMEDIATE RELEASE:
Wednesday, November 29, 2017
Abigail Lootens / Christine Gianakis
Department of Consumer Affairs
Department of Consumer Affairs Secures More Than $300,000 from Financing Companies for 50 Victims of Predatory Lending at Brooklyn Used Car Dealerships
Victims of USA1 Auto Sales, Lenden Used Car Sales, D&A Guaranteed Auto Sales, and Linden Used Cars’ Predatory Lending Are Encouraged to File Complaints Before March 11, 2018 to be Included in the Settlements and Potentially Receive Restitutions
NEW YORK, NY—The Department of Consumer Affairs (DCA) Commissioner Lorelei Salas today announced settlement agreements with three financing companies—Credit Acceptance Corp., Clover Commercial Corp, and Westlake Financial Services—that financed subprime auto loans as high as 24.9 percent through a group of Brooklyn used car dealerships; in total, DCA secured $311,260.57 in restitution for 50 consumers. In May 2017, DCA charged the dealerships—USA1 Auto Sales, Inc., Lenden Used Car Sales, Inc., D&A Guaranteed Auto Sales, Inc., and Linden Used Cars, Inc.—and their owners, with deceptive and unlawful trade practices, including misleading consumers about the price of automobiles, concealing and misrepresenting the terms of sale and financing, and failing to inspect the automobiles. DCA encourages all consumers who were harmed by these dealerships to file a complaint before March 11, 2018 so that they can potentially be included in the settlements and receive restitution.
“Thanks to DCA’s efforts, all three financing companies have agreed to pay restitution to consumers who were burdened with exorbitant interest rates on loans they received through these deceptive dealerships,” said DCA Commissioner Lorelei Salas. “The City will not tolerate predatory financing and sales practices. We will continue to hold dealerships and financing companies accountable in an effort to protect innocent New Yorkers from purchasing unusable cars and loans that place excessive financial burdens on themselves and their family members.”
Credit Acceptance Corp., Clover Commercial Corp, and Westlake Financial Services have agreed to:
- Reimburse $311,260.57 to 50 consumers who were in high interest loan agreements with the dealerships and whose contracts were assigned to the finance companies. Consumers who owe money will receive a credit to their account and any amount beyond what is owed will be paid via check. Consumers who no longer owe any money will also receive a check;
- Provide restitution to eligible consumers who file new complaints about USA 1 Auto Sales, Inc., Lenden Used Car Sales, Inc., D&A Guaranteed Auto Sales, Inc., and Linden Used Cars, Inc. before March 11, 2018, allowing even more consumers the opportunity to benefit from the agreements;
- Safeguard consumers by requesting that consumer reporting agencies delete any negative information that was reported in an effort to help repair the consumers’ damaged credit.
With auto loan debt being the fastest-growing household debt (Federal Reserve Bank of New York
), DCA has sought different approaches to make consumers whole. By seeking restitution from financing companies, which, by contract, take on a consumer’s claims against the dealerships, DCA provides victims of dealerships’ deceptive practices an outlet to be compensated even if the dealerships themselves might be out of business. Deceptive and illegal practices by dealerships hurt both consumers and lenders, and lenders would be wise to scrutinize the dealerships with which they do business. DCA encourages any consumer who believes that they have been misled by a used car dealership about the price of their car or have been sold an unsafe automobile to contact the agency by calling 311, or by filing a complaint at nyc.gov/dca
DCA currently licenses 666 used car dealerships and has received nearly 5,800 complaints from consumers about used car dealerships over the past four years. The complaints range from instances of forgery on contracts to a dealership’s failure to provide material disclosures to consumers. As a result of the mediation of consumer complaints, investigations and settlements, DCA has secured more than $2.7 million in consumer restitution and assessed nearly $1.8 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 used car dealerships in the city with multiple locations in Queens, for engaging in deceptive financing and sales practices that resulted in predatory lending targeting immigrants and New Yorkers with low incomes. Enforcement is one prong of DCA’s efforts to combat these predatory practices, which also includes education and advocacy.
In October 2017, Mayor Bill de Blasio signed a package of legislation to combat predatory financing practices in the used car industry. These new laws, which go into effect in February 2018, require used car dealerships to post a Consumer Bill of Rights and to disclose other information about the automobile price and financing terms; provide required notices to the consumer in the language used to negotiate the contract; and provide consumers with the option to cancel their contract within two business days of the sale. This package of legislation was introduced by Council Member Rafael Espinal, Jr., Chair of the Council Committee on Consumer Affairs, Council Member Dan Garodnick, and Council Member Jumaane D. Williams following a public hearing
hosted by Commissioner Salas and Council Member Espinal.
DCA offers an online guide to Getting Your Finances in Gear to Buy a Used Car
, which is available in English
, Haitian Creole
, 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.
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.