NEW YORK—The city council is considering two bills that lawmakers say will prevent used car dealers from exploiting consumers.
One bill would require dealerships to clearly display the total price of the car, including any extraneous fees.
At a Tuesday hearing on the bills, Councilmember Jumaane Williams relayed an incident years ago when he was shopping for a used car. The dealer advertised a reasonable price on its website, but when he arrived at the location, the salesperson told him there would be an additional $5000 “dealer fee.”
“No consumer should be hit with such surprise fees,” said Williams.
Another bill would prohibit dealers from selling used cars that have been recalled by manufacturers, unless they make necessary repairs.
Violators would be fined, and if they repeat the offense, their operating licenses can be suspended or revoked.
Currently, federal law bans selling new cars with recalled parts, but it does not apply to used cars.
The city’s Department of Consumer Affairs (DCA), which oversees over 860 licensed used car dealerships in the five boroughs, said that many dealers use false advertising to lure customers. They then force buyers to purchase add-on services, such as theft protection, warranty, or window etching, which drives up the final price tag.
On Tuesday, the DCA announced a settlement agreement with a used car dealership in Long Island City, Queens—Planet Automotive—which agreed to pay $441,000 in restitution and fines for “deceptive advertising and high-pressure sales tactics.”
Some will also steer buyers into loans that have high interest rates. Among clients who get financial counseling from the dealer’s office and have accrued debt from purchasing a used car, their debt averages more than $12,000, DCA commissioner Julie Menin said at the hearing.
The agency said it supports the bill requiring dealers to display their prices, and recommended that the legislation also require showing the prices of add-on products.
Although the DCA already inspects used car dealerships for selling unrepaired recalled cars, the City Council bill will “enhance the agency’s ability to protect New Yorkers by ensuring dealers comply,” Menin said.
The agency suggested that the bill also ask dealers to keep documents showing that they confirmed the recall status of the car with the federal government’s directory, and that they made the necessary repairs. This will make the bill more enforceable, Menin said.
In fiscal year 2014, the DCA conducted 615 inspections on used car dealers and issued 338 violations. Among the most common violations are doing business in a location other than the one listed on the license, unlicensed activity, deceptive trade practices, and not displaying prices.
The agency added that it wants to crack down on “curbstoning,” or the practice of selling used cars off the street without a license.
Twenty violations were issued for this illegal activity so far this year, which is mostly concentrated in Brooklyn and the Bronx.