More than two years after filing suit, the Federal Trade Commission (FTC) and Connecticut Attorney General William Tong have secured a $4 million settlement with Manchester, Connecticut auto dealer Chase Nissan LLC, doing business as Manchester City Nissan, along with its owners and managers, resolving allegations of widespread deceptive fee practices targeting consumers in the car-buying process.

Background

As we discussed in our January 2024 post, the FTC and Connecticut AG filed suit against Manchester City Nissan under the FTC Act and the Connecticut Unfair Trade Practices Act. The complaint alleged a pattern of deceptive conduct, including:

  • Advertising certified pre-owned vehicles at a set price, then charging consumers hundreds to thousands of dollars in additional “inspection” fees for certification services that were supposed to be included in the advertised price. In some cases, the dealership charged for certifications that were never actually performed, leaving consumers without the promised warranty;
  • Inserting add-on charges (including GAP insurance, service contracts, maintenance contracts, and total loss protection (TLP)) into financing agreements without consumers’ knowledge or consent, with TLP appearing in approximately 90% of all Manchester City sales;
  • Falsely representing to consumers that certain add-on products were required by the dealership or finance company as a condition of purchase or financing; and
  • Overstating government fees and other charges in closing documents.

The Settlement

Today, the FTC announced that the Commission voted 2-0 to approve a stipulated final order, which has been filed in the U.S. District Court for the District of Connecticut. Under the terms of the settlement, defendants must:

  • Pay $4 million to the Connecticut AG to be used for consumer redress;
  • Refrain from making misrepresentations, including about whether vehicles are certified or include a limited manufacturer warranty;
  • Clearly and conspicuously disclose the maximum total price a consumer must pay for a vehicle — as the most prominently displayed item — excluding only required government charges; and

“Today’s settlement with Manchester City Nissan marks another critical step in the Commission’s goal of advancing price transparency in the auto marketplace,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. Connecticut AG Tong added that the settlement “will now send millions of dollars back to customers” who were “systematically ripped-off” through unauthorized junk fees.

Key Takeaways for Auto Finance and Dealer Compliance

This settlement is another reminder that junk fee enforcement in the auto space remains a priority at both the federal and state level regardless of the broader regulatory environment. Several points are worth noting for dealers and auto finance companies:

  • The total price disclosure requirement in the settlement order mirrors the FTC’s position in the Combating Auto Retail Scams (CARS) Rule and tracks the agency’s broader push, memorialized this March in warning letters to the industry, for all-in price transparency in vehicle advertising and sales;
  • State attorneys general continue to be active and willing co-plaintiffs with the FTC in auto enforcement actions, and that dynamic shows no signs of slowing.