Maryland-based Passport Automotive Group settled with the Federal Trade Commission over claims of junk fees and discrimination of black and Hispanic customers through higher financing costs and fees.
Passport will pay $3.3 million to settle the complaint. It also agreed to change business practices, including getting buyers’ express, informed consent before charging them any fees, and that its dealerships charge no financing markups or the same markup rate to all buyers.
The group operates nine car dealerships in the Washington, D.C., area.
The FTC said Passport ads told consumers they could buy certain inspected, reconditioned or certified vehicles at specific prices, but that in many cases, double pricing kicked in when the consumer tried to make a purchase based on those amounts. It said advertised prices included certification, inspection and more but that Passport added large, redundant “mandatory” fees for those adds.
The consumer-protection agency said Passport also illegally charged higher borrowing costs to black and Hispanic buyers compared to non-Hispanic white customers.
The complaint said that of the thousands of customers who secured financing through Passport from August 2017 to August 2020, Passport charged black customers, on average, about $291 more in interest, and Hispanic customers, on average, about $235 more. Black buyers were charged the maximum markup about 47% more often, and Hispanic buyers 38% more often than non-Hispanic white buyers. The minority buyers also paid more in junk fees, the FTC complaint says.