Consumers to Benefit from Settlement between Used Car Dealer and State

The State does not look lightly on false advertising and other misleading business practices as at least one New Jersey used car dealer learned recently.

Although it did not admit to any wrongdoing, Global Auto, Inc., based in Elizabeth, NJ, agreed to pay a $140,000 settlement to resolve a lawsuit brought against it by the State’s Attorney General and the Division of Consumer Affairs alleging misleading business practices. (1)

The lawsuit, filed a year ago, alleges that Global Auto, Inc., also known as Auto Collection Group, violated the State’s consumer protection regulations and laws. Among those violations were:

• bait and switch advertising, in which vehicle prices were misrepresented in order to draw customers;
• not fulfilling promises to pay off loans on vehicles accepted for trade;
• providing false information to loan companies in order to get financing for customers;
• having customers sign blank papers to facilitate the sale;
• failing to reveal to consumers accurate damage information on the vehicles being purchased; and

• inappropriately combining the paperwork on sales with an out-of-state dealership. (2)

The settlement amount includes $16,537, which will be paid as restitution to seven customers. Of the remaining amount, $86,462 covers civil penalties and $37,000 covers investigative costs and attorneys’ fees. (1) The settlement stipulates that $50,000 of the penalties amount will be suspended for a year. However, that amount will be payable immediately if the company fails to make restitution to its customers within 75 days and/or if the company does not follow certain business practices imposed by the agreement. If all requirements are met, including restitution payments, the $50,000 in penalties will be waived. (3)

Among the business practices Global must adapt are honoring the advertised price of its vehicles; not providing misleading information to lending institutions regarding customer information; paying off all balances on vehicles accepted as trade-ins when agreed upon; carrying out a search of a vehicle’s background through a service such as CARFAX and disclosing that information to the consumer. (1)

Global Auto, Inc. and Global Auto Mall in North Plainfield, NJ, are not associated.

(1) http://www.state.nj.us/lps/ca/press/elizcardeal113010.htm

(2) http://www.legalnewsline.com/news/230037-auto-dealer-setles-with-new-jersey

(3) http://www.newjerseynewsroom.com/state/elizabeth-used-car-dealer-agrees-to-pay-former-customers-state-140000-for-improper-business-practices