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Iowa Attorney General Sues S.D. Dealership for Deceptive Practices

January 14, 2005

A Sioux Falls, S.D., auto dealer is being sued by the Iowa attorney general's office for allegedly taking advantage of financially vulnerable customers by promising to rebuild their credit while providing reliable transportation.

Instead, customers who bought cars at the Dan Nelson Automotive Group were left with more debt, lower credit scores and high car-repair costs, Attorney General Tom Miller said in the lawsuit, filed in Iowa District Court, Polk County, reported the Argus Leader newspaper.

Dan Nelson told the paper that he plans fight the lawsuit. "This is simply a publicity-seeking lawsuit by the Iowa Attorney General's office against an out-of-state company," he said.

The lawsuit names the dealership, its lending arm, Nelson and his partner, Christian J. Tapken, in their business and personal capacities.

According to the lawsuit, "In reality, far from improving their credit and getting their life back together as promised, Dan Nelson Automotive's customers often find themselves much worse off for having done business with the defendants, with more debt, worse credit and no working automobile."

The lawsuit also alleges that the dealership:

  • Uses misleading advertising to get customers into the dealership then fails to honor advertised prices

  • Violates Iowa's Consumer Fraud Act and Consumer Credit Code

  • Sells vehicles in poor condition that break down, warranties aren't honored in a timely manner and repair work is frequently of substandard quality

  • Auto prices are often higher than the retail value of the car, and loan terms likely exceed the life of the car, with a typical interest rate of 24.95 percent

    "We have honored millions of dollars in warranty claims from customers," Nelson told the Argus Leader. "It does us no good if someone has a problem with a vehicle and we do nothing. We stand behind our warranties."

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