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DCA Commissioner Salas said the legislation “creates an additional layer of protection for these consumers, specifically those in low-income neighborhoods who have been disproportionally affected by these predatory practices.”
By Michael V. Cusenza
The de Blasio administration and City Council recently detailed legislation to combat predatory practices in the used car industry.
The bill would require used car dealerships to post a Consumer Bill of Rights and disclose information about financing and pricing, provide all required notices to the consumer be in whatever language used to negotiate the contract, and provide consumers with the option to cancel their contract within two days of the sale.
“For many New Yorkers having access to a car is a vital part of their economic stability,” said City Department of Consumer Affairs Commissioner Lorelei Salas. “This legislation creates an additional layer of protection for these consumers, specifically those in low-income neighborhoods who have been disproportionally affected by these predatory practices. By requiring that used car dealerships must offer additional disclosures such as a consumer bill of rights, we can better ensure that hard-working New Yorkers are operating within a fair and transparent marketplace when it comes to purchasing a car.”
The proposed legislation would require used car dealerships to disclose the following to consumers:
The lowest annual percentage rate offered by a finance company to the consumer;
Any charge imposed by the dealership for arranging financing, including mark-up charges and processing fees;
A statement that the consumer is not required to obtain financing through the dealership;
The price of each additional good, accessory, service, product, or insurance offered for sale with the automobile; and
The total cost and monthly payments, including financing, to purchase the car with each additional item included, without any items included, and with all items included.
According to DCA, from October 2013 through March 2017, the agency received 826 complaints from consumers related to purchase or payment issues in connection with used cars. The top five ZIP codes by number of complaints received are all in Brooklyn with the exception of Ridgewood in Queens. 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.
According to the City, the legislation aims to tackle common deceptive and predatory practices engaged in by used car dealers, including:
Deceiving consumers into loans with longer-than-necessary repayment terms, making the car much more expensive for the consumer;
Deceiving consumers into agreeing to purchase a car with expensive “add-on” products that are often misrepresented as “mandatory” for obtaining financing;
Misstating disclosed monthly payment amounts to make the car appear cheaper; and
Failing to disclose dealer markups of lender financing rates, total interest rate, and the total amount a consumer will pay for a car over the life of a loan.
The legislation comes on the heels of a DCA investigation of Major World, a large network of used-car dealerships in Long Island City. Consumer Affairs’ complaint document alleges “numerous violations and wide-ranging consumer harm,” and seeks more than $2 million in consumer restitution and fines; the department is also seeking revocation of the company’s three DCA secondhand auto dealer licenses.