The New Jersey Attorney General’s Office filed suit against two automobile dealerships and their owner in the Superior Court of New Jersey, alleging that the dealerships should be closed and their owner barred from the industry because they targeted financially vulnerable consumers with a variety of unconscionable and deceptive business practices.
According to the AG’s Office, Nu 2 U Auto World and Pine Valley Motors, Inc., both owned by Kenneth R. Cohen, allegedly sold high-mileage used vehicles at inflated prices, financed sales through in-house loans with high interest rates that created a substantial risk of default, then “churn[ed]” the vehicles by repossessing and selling the same cars over and over again.
The AG’s Office asserts violations of the New Jersey Consumer Fraud Act, the Used Car Lemon Law, and the state’s vehicle advertising regulations related to the dealerships’ alleged sales tactics, including:
- Selling and financing used motor vehicles at prices that exceeded the vehicle’s estimated value and compounding the inflated prices by offering financing at double-digit interest rates in excess of the rates offered by banks and credit unions;
- Requiring consumers to make high up-front payments for the vehicles they purchased despite advertising that all vehicles required a down payment of only $488;
- Advertising and offering for sale used motor vehicles without disclosing that they were previously damaged or required substantial repair or body work, including motor vehicles branded as “salvage”;
- Requiring consumers who financed their purchase of used motor vehicles to sign a “right of repossession” form that prohibited consumers from keeping personal property in their motor vehicle during the duration of the financing term and permitting the dealerships to repossess the vehicles for late payment without providing advance notice; and
- Failing to provide consumers with complete copies of signed sales documents, including financing agreements.
The state seeks closure of both dealerships and an order preventing the owner from ever owning, managing, or operating any business that sells or advertises vehicles for sale in New Jersey. The requested relief also includes penalties under the state’s Consumer Fraud Act for each violation and restitution to affected consumers.
“Governor Murphy promised New Jersey consumers increased protections against financial exploitation and we’re making good on that promise,” said Attorney General Burbir S. Grewal in a statement. “As this lawsuit demonstrates, we are prepared to use the broad enforcement powers of New Jersey’s Consumer Fraud Act, and other laws and regulations at our disposal, to protect New Jersey consumers from unconscionable and deceptive lending practices.”
A copy of the complaint is available here.