Attorney General Peter F. Neronha announced today that the Office has reached an agreement to resolve three enforcement actions against Rhode Island car dealerships for charging automatic add-ons and fees not included in the advertised price and other advertising practices.
In an agreement – called an Assurance of Voluntary Compliance – filed in Rhode Island Superior Court on July 26, 2023, the Office alleges that Grieco Honda, Grieco Toyota, and Grieco Hyundai engaged in sales and pricing tactics that violated the Deceptive Trade Practices Act (DTPA), including charging more for vehicles than they were advertising on their website, automatically charging every customer a fee for a $249 paint and fabric spray (a “Zurich Shield”), and describing vehicles as available for “auction” or “wholesale” prices. The agreement settles two lawsuits brought by Attorney General Neronha in March of 2022 against the dealerships.
As a result of the Agreement, the three dealerships will pay a combined $557,815 to resolve the claims brought by the Attorney General. This includes $457,815 in direct restitution to consumers and $100,000 to the Office of the Attorney General to pay for the costs of its investigation and suits.
The Agreement entered by the Court also prohibits the dealerships from engaging in these practices in the future. Dealerships will refrain from charging consumers for any products or services without first obtaining their express informed consent and will not advertise any price for a vehicle unless it is available for purchase at that price and as described in the advertisement. The dealerships had voluntarily agreed to implement many of these changes after the Attorney General filed suit in March 2022.
According to the filing, the dealerships were automatically charging every customer for a $249 paint and fabric spray and warranty product known as a “Zurich Shield.” This service and its costs were not included in advertisements, and customers would only learn about this fee later in the purchasing process. Customers who paid for the basic Zurich Shield product since January 1, 2021 at one of these Grieco dealerships will be able to keep the product, including the warranty, and also receive a check worth 28% of the price of the product ($69) from Grieco. The $69 payment represents what consumers paid to Grieco over and above the cost of the product itself.
Auto dealer initiative
This matter is part of Attorney General Neronha’s industry-wide effort to crack down on unfair and deceptive practices in the auto sales industry with a particular focus on junk fees and unwanted add-on products. The Attorney General seeks to put an end to practices like dealerships advertising one price on their website and window sticker, and then either refusing to honor that price or tacking on unwanted fees and services once a customer decides they want to buy the car. To that end, the Office has published a “Buyers Guide” to help consumers navigate the types of fees they can expect when purchasing a new or used vehicle in Rhode Island. The page also highlights the Office’s recent work to crack down on illegal and junk fees in the auto industry. The Attorney General’s work includes issuing notices to every auto dealer in Rhode Island about illegal price advertising, filing a motion to enforce a Civil Investigative Demand against Middletown-based dealership Saccucci Honda, reaching a consent agreement with formerly Newport-based Barry’s Auto for deceptive pricing tactics, and actively investigating several other dealers for similar practices to those described above.
If any Rhode Islanders were charged for a product or service in connection with their purchase of a vehicle that they did not want or agree to, we urge you file a complaint with the Office’ Consumer & Economic Justice Unit.
Deceptive Trade Practices Act
In 2021, Attorney General Neronha worked with the General Assembly to pass legislation that restored the authority of the Office of the Attorney General to protect Rhode Island consumers against violations of the DTPA. Other efforts led by the Attorney General under the newly-strengthened DTPA include a lawsuit against a solar company for allegedly scamming Rhode Islanders, a suit against a contractor for alleged unlawful behavior, halting a Certificate of Good Standing scheme, as well as other investigations.
Special Assistant Attorney General Stephen Provazza, Chief of the Consumer & Economic Justice Unit and Investigator Tayla Martins handled the matter on behalf of the Office of the Attorney General.
UPDATE: Greico has responded with a statement.
Metro Motors, Inc., Grieco Hyundai LLC, and MAG Ventures, LLC, (doing business as Grieco Honda, Grieco Hyundai, and Grieco Toyota) have reached an agreement with the Rhode Island Office of Attorney General (OAG) to refund $69 of a $249 charge for customers who purchased the Basic Zurich Shield paint and fabric protection product/warranty. While this product was preinstalled in the vehicles, and was clearly disclosed on the itemized dealer invoice, the OAG’s position was that this option could have been more transparent to the customer. The refund will be a seamless process, with checks being automatically sent to those affected (affected customers should contact the settlement administrator hired by the dealerships by calling Anthony Gomez at Optime Administration at (844) 625-7313 with any questions or concerns regarding this refund).
The eco-friendly Zurich Shield product provides valuable interior and exterior protection for the vehicle, which led many customers to purchase an upgraded version of the Zurich Shield product at an additional cost. Grieco Honda, Hyundai, and Toyota are pleased to have resolved this issue, and we are continuing to provide excellent service and quality vehicles to its customers.
The OAG also alleges the dealerships engaged in deceptive advertising practices surrounding the use of the Manufacturer’s Suggested Retail Price (MSRP). Although MSRP was used in advertisements, at no time was this intended to reflect a firm offer or final price of a vehicle, as customers are generally aware.
Although the dealerships do not agree with the OAG findings, an agreement to amend certain trade practices was reached, without the dealerships admitting to any violation of any Regulations. The dealerships look forward to continue to sell and service quality vehicles in a consumer-friendly and professional atmosphere.
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