WASHINGTON—The Federal Trade Commission and State of Wisconsin have taken action against Wisconsin auto dealer group Rhinelander Auto Center, its current and former owners, and general manager Daniel Towne for “deceiving” consumers.
The allegations include tacking hundreds or even thousands of dollars in illegal junk fees onto car prices and for discriminating against American Indian customers by charging them higher financing costs and fees, the FTC reported.
According to the FTC, the defendants have agreed to proposed court orders that will require Rhinelander’s current owners and Towne to stop their unlawful practices and provide $1.1 million to be used for refunds to consumers.
‘Add-On Products’
In their complaint, the FTC and Wisconsin DOJ state that Rhinelander and Towne regularly charged many of their customers junk fees for “add-on” products or services without their consent.
“The complaint cites one survey of Rhinelander customers that shows half of the dealer’s customers said they were charged for add-ons without authorization or through deception,” the FTC stated. “One consumer was told—deceptively—that Guaranteed Asset Protection was required for her car purchase, even though she didn’t want to buy it; it cost her more than $1,000 in fees and additional interest on her loan.”
Targeting American Indians
The FTC complaint further states Rhinelander and Towne discriminated against American Indian customers in the cost of financing by adding more “markup” to their interest rates, with the additional markup costing American Indian customers $401 more on average compared to non-Latino white customers.
The complaint also notes that since Rhinelander changed ownership in 2019, the disparity has only increased.
Additional Allegations
In addition, the complaint alleges that American Indian customers were charged for unwanted add-ons at a higher rate than non-Latino white customers, the FTC said.
“These additional junk fees can significantly drive up the amount that customers finance when they purchase their vehicle, which in turn leads to higher cost over the life of the loan,” the FTC stated. “In total, American Indians paid on average approximately $1,362 more for add-ons in credit transactions than non-Latino White customers since 2016, and $1,374 more since the new ownership took over.”
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