Auto Dealership Caught Hiding Fees For Dubious Services

Attorney General Spitzer today announced a settlement with an Orange County auto dealership that was hiding fees associated with an unsought and unregistered road hazard insurance policy.

Newburgh Nissan Inc., which does business as Newburgh Used Car Authority, was cited by Spitzer's office for tricking numerous consumers into paying between $45 - $1,495 for an insurance policy for tires and windshields damaged by road hazards.

"This dealership took advantage of trusting individuals by hiding the cost of an unrequested insurance product in the voluminous paperwork that would accompany vehicle purchases," Spitzer said. "This deceptive practice demonstrates how important it is that consumers carefully review all documents when buying cars."

Between 2001 and the Spring of 2002, Newburgh Nissan sold a Tracguard Road Hazard Protector Plan, a service that provides partial reimbursement to the buyer in the event of damage to tires or wheels by a road hazard and limited reimbursement for the cost of repairing glass damage from accidents or vandalism.

Tracguard was primarily sold to consumers purchasing extended warranties with their used cars. During the purchase transaction, it was implied that Tracguard protections were part of the extended warranty or service plan, when, in fact, they were two different policies and priced separately. Contributing to the problem, Newburgh Nissan failed to itemize Tracguard on installment contracts, in violation of federal law.

Many consumers complained that they were either unaware of how much they paid for Tracguard or unaware that they had even purchased the insurance policy at all.

Newburgh Nissan was also cited for selling an insurance product without being properly licensed by the state.

In settling the case, Newburgh Nissan agreed to cancel all Tracguard policies it sold to consumers and to make refunds for the full purchase price, a total of over $98,000 in restitution. The auto dealer also will pay $20,000 in civil penalties.

In addition, Newburgh Nissan is prohibited from suggesting or implying that Tracguard is part of an extended warranty. The auto dealer also is required to:

• Prominently post a sign notifying consumers that prices for many products and services are negotiable;
  
  
• Stop selling Tracguard or any other insurance policy unless the dealership is properly licensed;
  
  
• Properly disclose the cost of any insurance policy, including Tracguard, as required by federal law; and
  
  
• Disclose in writing the costs and material terms of any policy or service prior to a sale.
  
  

Newburgh Nissan voluntarily stopped selling the Tracguard policy upon learning of the Attorney General's investigation.

Individuals who were charged for the Tracguard Road Hazard Protector Plan may be eligible for refunds. They are encouraged to contact the Attorney General's consumer help line at (800) 771-7755. Claims must be made by May 2, 2003.

This case was handled by Assistant Attorney General G. Nicholas Garin of the Poughkeepsie Regional Office, assisted by Senior Consumer Frauds Representative Mark Hoops.