A lawsuit filed by the Federal Trade Commission (FTC) and the state of Illinois has led to a proposed settlement requiring Leader Automotive Group and its parent company, AutoCanada, to pay $20 million. The settlement aims to address allegations that the companies defrauded consumers through deceptive practices.
The FTC announced that the funds will be used to refund affected consumers. The settlement also mandates clear disclosures of a car's offering price, excluding only required government charges, and requires consumer consent for any additional charges. This monetary judgment is noted as the largest ever secured by the FTC against an auto dealer.
"Working closely with the Illinois Attorney General, we are holding these dealerships accountable for unlawfully extracting millions of dollars from consumers through a textbook bait-and-switch scheme," stated Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. He emphasized ongoing efforts to prevent overcharging in car sales.
Illinois Attorney General Kwame Raoul commented on the deceptive tactics employed by Leader Automotive Group: "This dealership network engaged in bait-and-switch tactics by luring consumers into their dealerships with lower prices."
The complaint accuses Leader Automotive Group and former vice president James Douvas of violating federal and state laws. Allegations include misleading consumers about vehicle pricing and availability, unauthorized add-on charges, fake reviews, undisclosed Canadian imports, and other unlawful activities.
Leader advertised vehicles at low prices online but allegedly imposed additional costs upon customer arrival at dealerships. These costs often included high-profit add-ons like protective coatings and theft protection.
A survey revealed nearly 80% of customers were charged for at least one unauthorized add-on or falsely informed it was necessary. The complaint also highlighted persistent deceptive practices even after FTC investigations began.
Leader's advertising strategy was reportedly aimed at attracting customers with low prices but resulted in directing them toward more expensive vehicles with hidden fees. There were instances where cars were advertised as certified pre-owned without completing necessary certification work.
The complaint further alleges that employees were coerced into posting fake positive reviews under threat of withheld bonuses or offered incentives for doing so. Customers were sometimes pressured into leaving five-star reviews before receiving their purchased vehicles.
The proposed settlement includes measures to ensure transparency in vehicle pricing and obtain explicit consumer consent for any additional fees. While Leader Automotive Group has agreed to these terms, proceedings against James Douvas continue.
Leader operates several dealerships across Illinois under various brand names including North City Honda and Toyota of Lincolnwood among others.
The Commission unanimously authorized filing the complaint in U.S. District Court for Northern Illinois. Complaints are filed when there is reason to believe legal violations have occurred warranting public interest intervention.
FTC staff attorneys involved in this case are James Davis, Rachel Sifuentes, and Rachel Granetz from its Midwest Region office.
The FTC continues its mission to promote competition while protecting consumer rights through education on fraudulent business practices via platforms like consumer.ftc.gov or ReportFraud.ftc.gov.
___
