Attorney General Josh Kaul addresses the Menominee Nation in 2020. (Photo courtesy of Wisconsin Department of Justice)
The U.S. Federal Trade Commission and Wisconsin Department of Justice announced Tuesday they’re taking legal action against a Rhinelander car dealer for charging Native American customers higher financing costs and adding up to thousands of dollars in illegal junk fees onto car prices.
Since 2016, the dealership, Rhinelander Auto Center, was charging Native American customers interest rates that were, on average, 34 basis points higher than the rates for the dealership’s white customers, a complaint from the FTC alleges. Since 2019, the interest rates for Native American customers was an average of 50 basis points higher than for white customers.
The dealership was also charging about half of its customers with “add-ons” to their purchases without the customers’ knowledge, resulting in hundreds or thousands of dollars of extra costs. The dealership included the add-ons more frequently for Native American customers, resulting in those customers paying an average of $1,374 more than white customers.
“Working closely with the State of Wisconsin, we are holding these dealerships accountable for discriminating against American Indian customers and sneaking junk fees onto consumers’ bills,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement. “A vehicle is one of the most expensive purchases families make, and we are fully committed to ensuring that all consumers navigating the car-buying process can do so without facing unlawful discrimination or paying for products and services they do not want.”
As part of a settlement the dealership’s current and former owners have agreed to stop the unlawful practices and pay $1.1 million in refunds to their customers. The dealership will also have to create a fair lending program. Under state law, the settlement will need to be approved by the Legislature’s Joint Committee on Finance.
In a statement, the dealership denied the allegtions but said it settled with the FTC and DOJ to avoid a lengthy lawsuit.
“Rhinelander Auto Group respects all of its customers, and we are committed to treating all customers with dignity,” the owners said through a spokesperson. “We totally reject that our people – many of whom are long-term members of the local community – would engage in the practices alleged. That’s not who we are, and there is a great deal of evidence to reinforce the fact that Rhinelander Auto Group and its employees are ethical, decent, and very good people. Nonetheless, to avoid lengthy and costly litigation, we reluctantly agreed to a voluntary resolution to conclude the matter. The agreement includes no admission of wrong-doing, and it requires the company to pay a forfeiture; upgrade its compliance, credit, and other administrative policies; and expand its employee training efforts.”
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