ARLINGTON, Texas and NEW YORK -

The National Independent Automobile Dealers Association’s certified pre-owned program has been brought into an investigation by the NYC Department of Consumer and Worker Protection (DCWP) of multiple dealerships in New York City.

On Wednesday, DCWP commissioner Peter Hatch announced cases against two dealer groups — Kings Autoshow and JF Motors — which operate a total of five dealerships in Brooklyn and Queens. Hatch said these dealerships have been engaging in deceptive and unlawful trade practices that “preyed on vulnerable New Yorkers, as well as consumers from across the tristate area. “

DCWP’s cases, which will be heard at the city’s Office of Administrative Trials and Hearings (OATH), allege thousands of violations, including violations of the city’s new laws and rules designed to prevent “predatory conduct by the industry.”

In its case against Kings Autoshow, which operates two Brooklyn Mitsubishi locations, DCWP is charging the company with more than 7,000 violations and seeking more than $50,000 in restitution for 34 consumers, civil penalties and revocation of both of its dealership licenses.

The case against JF Motors includes Automania, Luxury Automotive Club and the now-closed World Auto, all of which are in Queens. DCWP is charging the JF Motors group of dealerships with more than 9,000 violations and seeking more than $100,000 in restitution for nine consumers, civil penalties and revocation of its two remaining licenses.

DCWP is also seeking to hold the respective owners and Brooklyn Mitsubishi’s general manager personally liable for the violations.

“These dealerships repeatedly victimized their customers and violated consumer protection laws,” Hatch said in a news release. “We are taking action to a put a stop to their exploitative practices, obtain restitution for the consumers they harmed, and to revoke their licenses so they cannot do this again.”

Among the specific allegations, DCWP highlighted:

1. Using false advertising to lure consumers and charging more than advertised

DCWP alleged both companies used deceptive advertising to lure customers to their dealerships and then illegally sold vehicles at prices well above the advertised prices.

For example, the agency said one consumer saw a 2017 Jeep Grand Cherokee advertised by Brooklyn Mitsubishi on CarGurus.com for $27,994. She visited the dealership and, after taking her down payment, Brooklyn Mitsubishi “rushed her through signing all the paperwork and ultimately charged her $36,585 for the automobile, or $8,500 above the advertised price,” according to DCWP.

The agency said both Brooklyn Mitsubishi dealerships persistently advertised “expired” prices with false claims stating, “the price you see is the price you pay” and “no dealer fees” that weren’t honored when consumers got to the dealership. DCWP added the stores also falsely advertised accessories, warranties and add-on products that did not come with the vehicle.

Meanwhile, DCWP said JF Motors’ dealerships frequently marketed their vehicles as certified pre-owned through the program offered by NIADA, even though JF Motors did not conduct the required 125-point inspection, give buyers the promised 10-year/100,000 warranty, or provide the vehicle history report for each vehicle.

“JF Motors inflated prices by adding fake fees, even charging consumers a fee for the fake NIADA certification,” officials said.

2. Misleading consumers about financing

DCWP said the Brooklyn Mitsubishi dealerships had a practice of “luring” consumers with lower credit scores by promising “guaranteed approval” for financing and pre-approval for financing from a “fake finance company.”

3. Conducting other illegal activity

The agency said the Brooklyn Mitsubishi dealerships misled consumers about warranties, executed illegal contracts, failed to maintain required records, failed to respond to DCWP’s subpoenas and submitted false license applications to DCWP.

Officials added that the JF Motors dealerships used illegal contracts, required consumers to buy service contracts that either did not exist or had less coverage than promised, overcharged out-of-state buyers for title and registration fees and failed to provide contracts and other documents to consumers in Spanish even though the deal was negotiated in Spanish.

NIADA response

After the allegations surfaced, NIADA chief executive officer Bob Voltmann offered this statement on Thursday via a news release.

“The National Independent Automobile Dealers Association does not condone illegal or unethical practices,” Voltmann said. “We continually strive to strengthen the integrity of our industry-leading CPO program through enhanced technology and training.

“The all-new NIADA CPO 3.0 program will guard against fraudulent and deceptive practices through a digital inspection process and will require participating dealers to complete training and acknowledge NIADA’s Code of Ethics,” he continued.

With the reworked program, NIADA and its board of directors said they are helping association members better meet the needs of their customers. The association highlighted that the improvements include a technologically advanced platform that provides consumers multiple layers of protection against fraud.

“The modernized NIADA CPO program uses multi-level vetting to assure car buyers that the vehicles meet certified standards. It includes tighter standards for vehicles to earn the certified designation, while allowing older, higher-mileage units to qualify for limited coverage in the newly created verified pre-owned category,” the association said in the news release.

“The updated program also employs the latest technology to upgrade the vehicle inspection to a tamper-proof 200-point digital process,” NIADA added.

Irate customers

The DCWP news release contained comments from two customers who described their experiences with Brooklyn Mitsubishi.

Jefferey Williams said: “I was looking for a good experience in buying my very first car. Instead, I was taken advantage of and cheated out of my hard-earned money. No one should ever have to go through this with any used car dealership, especially if it’s their first time.”

Karinie Olivero said: “Brooklyn Mitsubishi made it clear that they were not on my side the moment I walked through their doors. There was no explanation of the car-buying process and I didn’t even receive my paperwork on the same day. I felt used, robbed, betrayed and unhappy with how they treated me. It was very troubling as a consumer and as a hard-working New Yorker to go through this kind of treatment.”

DCWP said it currently licenses 476 dealerships and has received more than 10,000 complaints about the industry since 2014.

In that same period, DCWP said it has conducted more than 4,500 inspections of dealerships and issued more than 1,600 violations, most of which were for failure to post required signs, parking or storing cars on sidewalks and public roadways and missing price disclosures.

As a result of mediating complaints, charging businesses with violations of the applicable law and rules, and executing settlements, DCWP said it has secured nearly $3.4 million in consumer restitution and more than $5.5 million in fines against dealerships since 2014.