Second Hudson Valley Auto Dealer Cited For Deceptive Sales Of Rental Cars

Attorney General Spitzer today announced a settlement with a Hudson Valley auto dealership that sold cars without proper disclosures of vehicle histories.

"State law requires dealers to notify buyers in writing when vehicles were used as rental cars, taxis or police vehicles, or were returned to the dealer as "lemons," Spitzer said. "My office is committed to attaining full compliance with this law, which provides consumers with important product information."

Orange County Cars, Inc. - which does business as Middletown Mazda Volkswagen - has agreed to pay restitution to consumers who purchased former rental vehicles without knowing the history of the vehicle they were buying. The company also agreed to reform its advertising practices.

Late in 2001, Spitzer’s office began investigating Middletown Mazda over concerns about its advertising practices. During the course of the three-month investigation, Spitzer’s office discovered that on at least two occasions, the dealership sold cars without disclosing that the autos were actually former rental vehicles.

Under the terms of the settlement, Middletown Mazda paid over $4,500 to the two consumers and pay restitution equal to 15 percent of the sales price of each rental car sold after March 1, 2001 to any other buyers who were not informed of their vehicle’s prior use. For consumers who unknowingly purchased rental cars between March 1, 2000 and February 28, 2001, Middletown Mazda agreed to pay restitution equal to 10 percent of the sales price. Dozens of consumers could be affected.

Consumers have until July 25, 2002 to file a complaint with the Attorney General’s office to be eligible for restitution. To determine whether a vehicle purchased at Middletown Mazda is a former rental car, consumers should contact the Attorney General’s Poughkeepsie Regional Office at (845) 485-3900 or the consumer help line at (800) 771-7755 for assistance.

In addition to deceptive sales practices, Middletown Mazda was cited for the following false advertising violations:

• Falsely advertising used cars as "bank repossessed cars";
  
• Luring consumers by advertising attractive finance terms that were not truly available and instead switching customers to cars with much more costly financing terms than those advertised;
  
• Grossly misrepresenting in advertisements the size of the used car inventory;
  
• Falsely implying a sale is court-ordered or that the dealership is going out of business with ads that boldly state: "Public Notice";
  
• Violating federal laws that require disclosure of certain finance terms when advertising the availability of credit; and
  
• Falsely implying that anyone can get financing regardless of creditworthiness, with bold typeface ads stating: "Bad credit No problem...all credit applications accepted."

Middletown Mazda will pay a fine of $6,000 for violations of New York’s consumer protection laws.

This is the second case handled by Spitzer’s Hudson Valley regional office involving deceptive sales of rental cars. In a similar case, Condor Pontiac of Catskill was recently cited for deceptive sales of rental cars. Since the Attorney General’s February announcement that six consumers were receiving $13,600 in refunds in the Condor Pontiac case, an additional 80 consumers have come forward to make claims for restitution.

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