New York, NY - August 15, 2017 - Attorney General Eric T. Schneiderman today announced a $298,000 settlement with Pana Nissan, LLC (d/b/a Nissan of New Rochelle) for deceptively charging hundreds of consumers for an unwanted and bogus anti-theft product that cost up to thousands of dollars per consumer. This item, known as an “after-sale” product, was often added onto the final cost of the vehicle without the consumer’s knowledge or consent, after the customer had agreed upon the purchase price of a vehicle but before the sale transaction was finalized.
“Consumers should not have to worry that they are being scammed into adding on bogus products and services when they purchase a car,” said Attorney General Schneiderman. “Buying a car is already a major investment for many families, and tacking on thousands of dollars extra can become a significant financial burden. I am pleased that we are able to return hundreds of thousands of dollars in restitution to the nearly 300 consumers who were scammed and defrauded.”
Following a consumer complaint in August 2015 that Nissan of New Rochelle had fraudulently sold an after-sale product, the office commenced an investigation into the dealership’s practices. The investigation found that Nissan of New Rochelle sold hundreds of consumers a product called Total Loss Protection, which was meant to serve as a theft deterrent. Consumers were charged amounts ranging from $215 to over $5,000. In many instances, Nissan of New Rochelle added this fee onto the final sales price without the knowledge or consent of the consumers. As a result, the final price paid by the consumers was inflated by the amount charged for the after-sale product.
Furthermore, Nissan of New Rochelle failed to clearly disclose the nature of the after-sale product to its customers. The “Total Loss Protection” or “Total Loss Protection Guarantee” product was advertised as a permanent etch or engraving of the vehicle’s VIN, or a registered serial number, on the windows of the vehicle – supposedly to deter theft. However, Nissan of New Rochelle did not actually etch the VIN onto the windows of the vehicles. Instead, for some vehicles, the dealership placed sticker decals with assigned registration numbers on the inside of the door or door-jamb where no one could see them, thus having no deterrent effect. For other vehicles, the dealership did not even provide stickers or decals.
Consumers were also led to believe that there would be a guaranteed credit up to either $3,000 or $5,000 towards the purchase of a new vehicle should their car be stolen. However, there were numerous conditions and limitations – such as that the credit would not be applied if it eliminated the dealership’s profit on the sale – which rendered the “credit” illusory. Only one consumer ever received a credit through the Total Loss Protection program.
Under the agreement, Nissan of New Rochelle will refund $276,127 to 298 consumers who were charged an add-on fee for the Total Loss Protection product. In addition to restitution, the dealership will also pay $22,084 in penalties, fees, and costs to the State. The dealership has also agreed to certain reforms to its sales practices, including:
- Fully disclosing that any and all after-sale services or products are optional and that the price is negotiable;
- Clearly explaining to each consumer any and all after-sale services or products being offered by the dealership; and
- Only adding an after-sale service or product to the final bill with the knowledge and full consent of the consumer.
This settlement is part of the Attorney General’s wider initiative to end the practice engaged in by many dealers of “jamming,” or unlawfully charging consumers for products and services without their knowledge or consent.
The case was handled by Assistant Attorney General Sandra Giorno-Tocco with the assistance of Law Department Investigator Peter Schottenfeld, Senior Consumer Frauds Representative John Katzenstein and intern Scott Trivella, under the supervision of Gary Brown, Assistant Attorney General-in-Charge of the Westchester Regional Office, and Martin J. Mack, Executive Deputy Attorney General for Regional Affairs.