Napleton Automotive Group to pay $10 million in FTC case

Napleton Automotive Group to pay $10 million in FTC case


Napleton Automotive Group, one of the largest U.S. dealership groups, will pay a record $10 million to settle a Federal Trade Commission auto lending case for allegedly throwing illegal “junk fees” and add-ons into customer contracts and for charging more in financing Black customers.

Napleton on Friday “vehemently” denied all wrongdoing.

The FTC, in a statement in its case with the state of Illinois, said eight Napleton dealerships in Illinois, Florida, Pennsylvania and Missouri and a general manager of two Illinois dealerships, were alleged to have illegally added junk fees and other add-on products such as paint protection in contracts as long as 60 pages.

The FTC and Illinois allege Napleton charged customers more than $70 million in unwanted add-on fees since 2017, according to their complaint.

The fees cost each customer hundreds or thousands of dollars, the FTC said. In many cases the add-ons were specifically declined by customers, while others were lied to, stating they were told the items were free or were required for them to buy or finance a vehicle, according to the FTC.

Complaint details

The government’s allegations included customer complaints such as:

  • A customer was told by a Napleton dealership salesperson that $3,400 in add-ons were required by a financing company to get approved.
  • A  consumer said a Napleton dealership listed a final price on its website but when the customer arrived he was told he’d have to pay an extra $2,495 in an add-on package.
  • A customer was told that two oil changes, tire rotation and windshield protection were free with the purchase of a vehicle; he later realized he was charged $426 for the items.

The dealerships named in the complaint, which includes nine rooftops, are: Napleton’s Kia of Elmhurst, Ed Napleton Acura in Elmhurst and Napleton’s Arlington Heights Chrysler-Dodge-Jeep-Ram, all in Illinois; Napleton’s Northlake Chrysler-Dodge-Jeep-Ram in Lake Park, Napleton Clermont Chrysler-Dodge-Jeep-Ram, Napleton Northlake Kia in Palm Beach Gardens and Napleton’s South Orlando Chrysler-Jeep-Dodge-Ram in Kissimmee, all in Florida; Napleton’s Mid Rivers Kia in St. Peters, Mo., and Napleton’s Ellwood Chrysler-Dodge-Jeep-Ram in Ellwood City, Pa.

Hitko Kadric, the general manager of two dealerships in Illinois according to the FTC, was also named in the complaint.

Discrimination claims

The Napleton group also is claimed to have discriminated against Black customers in their vehicle financing dating back at least to 2017. The FTC claims Napleton employees would boost the cost of a customer’s loan by increasing interest paid or by putting in extra add-ons.

Black customers at the dealerships paid more than “similarly situated” non-Latino White customers, the FTC said. For example, Black customers paid $99 more for like add-ons and were charged about $190 more in interest than White customers, the FTC said.

Those alleged discriminatory practices violated the Equal Credit Opportunity Act, according to the FTC.

The Napleton group said among the tens of thousands of people who received financing through the group, Black borrowers on average paid 18.4 basis percentage points more in interest, according to the FTC and Illinois complaint.

“Disparities in charges between Black consumers and non-Latino White consumers are statistically significant and cannot be explained by factors related to underwriting risk or credit characteristics of the applicants,” according to the complaint.

“Working closely with the Illinois Attorney General, we are holding these dealerships accountable for discriminating against minority consumers and sneaking junk fees onto people’s bills,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement.

Denial of wrongdoing

The Napleton group, in a statement, said it “vehemently denied any wrongdoing.”

“The Ed Napleton Dealership Group has resolved disputed claims made by the Federal Trade Commission and the Illinois Attorney General’s office,” Napleton spokesman Tilden Katz said in an emailed statement to Automotive News. “We made this decision to avoid the disruption of an ongoing dispute with the government. As a result, we reluctantly determined that it was in our best long- term business interests to resolve these matters.

“This settlement is the result of a three-year process where we provided complete transparency to the government. Most of its claims were based on interpretations of statistical data and there was no actual finding of intentional wrongdoing.”

The vast majority of the settlement — $9.95 million — will go to customers, while $50,000 will go into a Illinois Attorney General fund.

The previous record FTC settlement with an auto dealership came In 2017, when Sage Automotive Group agreed to a more than $3.6 million settlement with the FTC for alleged deceptive and unfair sales and financing practices, among other issues. More than 43,000 Sage customers shared in the settlement.

Napleton also is required to create a fair lending program that caps extra interest markups the group can pass on to customers and the group and its dealerships are forbidden from misrepresenting the cost or terms to buy, lease or finance vehicles, and if a fee or charge is optional.

In addition, the group also must hire a fair lending officer and train employees on fair lending, report fair lending complaints to the FTC and discipline employees who violate the fair lending program.

Napleton Automotive of Oakbrook Terrace, Ill., ranked No. 13 on Automotive News‘ most recent list of the top 150 dealership groups based in the U.S., retailing 35,768 new vehicles in 2020.

Jack Walsworth contributed to this report.


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