The Federal Trade Commission (FTC) filed charges against a New York City car dealer and its general manager for allegedly discriminating against African-American and Hispanic consumers and for its other unlawful business practices.
In the complaint, the FTC named Bronx Honda and its general manager, Carlo Fittanto as defendants in the case.
Allegations Bronx Honda and its general manager
The Commission alleged that the defendants ordered its salespeople to charge higher financing markups and fees to African-American and Hispanic consumers. The defendants allegedly discriminated against these groups of consumers because their education is limited. When it comes to dealing with White consumers, the defendants instructed their salespeople not to apply the same practice.
According to the FTC, Bronx Honda and Fittanto charged around $163 more in interest to African-American consumers while around $211 more in interest to Hispanic consumers than non-Hispanic white consumers.
Additionally, the Commission accused the defendants of deceptive advertising, charging bogus fees, inflating prices, and other illegal business practices.
The defendants allegedly committed the following:
- failed to honor advertised sale prices, inflating the cost through a variety of methods;
- changed the sales price on paperwork in the middle of the sale without telling the consumer, a practice the defendants internally referred to as adding “air money” to the contract;
- double-charged consumers for taxes and fees without their knowledge; and
- told consumers that they had to pay thousands of dollars in unnecessary fees to purchase “certified pre-owned” cars that were not required by that program.
Bronx Honda and Fittanto violated the FTC Act, the Truth in Lending Act (TILA), and the Equal Credit Opportunity Act (ECOA).
Defendants to pay $1.5 million to settle FTC’s complaint
Bronx Honda and Fittanto reached a settlement with FTC. The defendants agreed to pay $1.5 million, which the Commission will use to provide redress to consumers affected by their discriminatory and other unlawful business practices.
The settlement also prohibits Bronx Honda and Fittanto from misrepresenting the cost or terms to buy, lease, or finance a car, or whether a fee or charge is optional. It also requires them to establish a fair lending program that will, among other components, limit the amount of additional interest markup they can charge consumers.
In a statement, FTC Commissioner Rohit Chopra said, “Federal law forbids auto dealers from discriminating based on race when making or arranging loans. For the first time, the FTC is charging an auto dealer with illegal racial discrimination.”