FTC targets 3 Asbury dealerships over 'payment packing'

The Federal Trade Commission (FTC) has joined a lawsuit targeting alleged “payment packing” practices at three Texas dealerships owned by Asbury Automotive.

Driving the news: The lawsuit says the dealerships employed a multitude of unnecessary add-ons to jack up prices on consumers without their consent.

• Three locations are named in the suit: David McDavid Ford Fort Worth, David McDavid Honda Frisco and David McDavid Honda Irving.

• Among its complaints, the FTC said the storefronts used payment packing, a tactic that sees customers unwittingly agree to pay higher monthly payments than needed.

• The agency also accused the dealerships of discriminatory practices against Black and Latino car buyers.

Zooming in: Asbury Automotive has denied the allegations and promised to fight back against the FTC.

• The dealership group says a Freedom of Information Act request found no consumer complaints regarding the three locations were submitted to the FTC during the timeframe named by the agency.

• Asbury also claims it conducted an internal investigation and found no evidence of wrongdoing.

• “Asbury Automotive takes great pride in its compliance procedures and training practices, and firmly believes that we protect our guests and serve them well,” said company CEO David Hult in a news release.

Big picture: While the FTC said it has received numerous complaints from car shoppers in relation to the issue, its targeting of the McDavid dealerships is the latest in a series of escalations against the retail auto sector.

• Earlier this year, the agency attempted to enact the Combatting Auto Retail Scams (CARS) rule, which would have implemented a host of new compliance procedures aimed at removing add-ons and fees.

• The CARS rule is currently awaiting oral arguments from lawyers after the Texas Automobile Dealers Association and National Automobile Dealers Association sued the FTC earlier this year, resulting in a court review.

Bottom line: It remains to be seen whether the commission’s case holds water. Whatever the result of the lawsuit, dealers would do well to increase their vigilance against illegal activity at their storefronts as the FTC seems to be more focused on their business sector than ever.

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