Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Maryland dealership allegedly falsely advertised prices, fees, (Jan 2, 2025)

By Jody Coultas, J.D.

The FTC and Maryland Attorney General have charged Lindsay Automotive Group with charging customers junk fees and for unwanted add-ons.

The owners and operators of several car dealerships in Maryland and Virginia have been charged by the FTC and Maryland Attorney General with deceiving and overcharging consumers for years, costing them millions of dollars in junk fees and unwanted add-on products, and agencies announced (FTC v. Lindsay Chevrolet, L.L.C., FTC File No. 2323032, No. 1:24-cv-02362 (E.D. Va. Dec. 27, 2024)).

Lindsay Automotive Group, a group of dealerships in the greater Washington, DC metropolitan region, allegedly advertised its cars online at prices that it refused to honor. When consumers call the dealership to confirm the advertised price, in many instances, Lindsay employees falsely claim that the advertised price is available to all consumers, and not subject to any qualifying incentives, rebates, or significant additional fees. After getting customers to visit the dealership with the false prices and choosing a vehicle, Lindsay informed customers that the actual price of the car is hundreds or thousands of dollars more than advertised. A random sample of Lindsay’s transactions from April 2020 through March 2023 shows that, of the vehicles Lindsay advertised and priced on third-party sites CarGurus.com and Cars.com, over 88% of consumers paid more than the advertised price. One dealership manager told a consumer that the price on the website “was not realistic” and that “no one would qualify for it because it was nearly impossible to qualify for all the rebates to get to that price.” Michael Lindsay told Smallwood and others, “we never deliver the vehicle anywhere near the stated price.”

The FTC alleged that Lindsay told customers that they could not honor its advertised prices because the consumers did not qualify for various undisclosed rebates and incentives included in its price, such as loyalty, active-duty military, first responder, and education discounts. Also, in numerous instances, the dealerships told consumers they must pay thousands of dollars in additional fees to purchase the vehicle. When consumers asked to have these fees removed, or to purchase a vehicle at the advertised price without the additional fees, they were falsely told the fees are required. In other cases, dealership employees simply told consumers directly that the advertised price wasn’t true, according to the complaint.

Additionally, the complaint alleged that Lindsay often misrepresented that consumers must rely on Lindsay to secure financing and rushed consumers through the closing process. Lindsay receives what it calls “kickbacks” from financing companies when consumers finance a car through the dealership, according to the complaint. Consumers who wanted to pay cash or with pre-approved financing from another financial institution were regularly told that the advertised price would not be honored. The complaint cites multiple instances in which consumers were directed to financing offers through Lindsay that charged higher interest than what they’d obtained on their own—and would cost them thousands more over the life of the loan.

Finally, the complaint alleged that Lindsay systematically charged consumers for add-on products—such as extra service plans, tire and rim protection, and “guaranteed asset protection” coverage—they did not consent to purchase or falsely told consumers the add-ons are mandatory. In fact, a survey cited in the complaint shows 68% of consumers were charged for at least one add-on they did not agree to buy or were falsely told was required. These charges often amount to hundreds or thousands of dollars for each consumer.

Companies: Lindsay Chevrolet of Woodbridge; Lindsay Ford of Wheaton; Lindsay Chrysler-Dodge-Jeep-Ram; Lindsay Management Company, LLC

News: Advertising ConsumerProtection FederalTradeCommissionNews MarylandNews