FTC and Wisconsin AG File Complaint Against Auto Financing Company

On October 24, 2023, the Federal Trade Commission (FTC) announced that it had filed a complaint against a Wisconsin-based auto dealership alleging “unfair or deceptive acts or practices in or affecting commerce” in violation of FTC Act,15 U.S.C. § 45(a), and violations of the Equal Credit Opportunity Act (ECOA) and Regulation B, which prohibit a creditor from discriminating against an application on the basis of race, color, religion, national origin, sex, marital status, or age.

The complaint, filed in United States District Court for the Western District of Wisconsin, alleges that the servicer violated the FTC Act by charging “consumers for add-on products in connection with a vehicle purchase without obtaining consumers’ express, informed consent” and engaged in discriminatory credit practices “by imposing higher borrowing costs on American Indian customers relative to non-Latino White customers in financed motor vehicle purchase transactions, including by charging them higher interest rates on purchases financed by companies that allow discretionary markups and charging them for more unwanted add-on products.”​  The complaint also alleges violations of Wisconsin state law.

In a simultaneously-filed stipulated order, the defendants agreed to a proposed settlement in which the current owners would cease the illegal practices, establish a fair lending program and issue refunds to consumers in the amount of $1 million. Additionally, the former owners agreed to permanently wind down their business and refund consumers in the amount of​ $100,000.