Passport Automotive settles FTC suit over illegal fees, discrimination for $3.38 million

Regarding the allegations of charging customers extra fees, Passport said it “does not tolerate behavior that violates customer trust, and the company took swift action upon learning that some customers were charged redundant fees,” the company said in a written reply to Automotive News. “An internal investigation determined that violations were largely isolated to a group of three employees, and those employees are no longer part of the organization.”

As for claims of discrimination, the group said the FTC’s allegations are based on “an unreliable approach to guessing borrowers’ races.”

Passport said it refutes the FTC’s findings “in the strongest possible terms,” but said fighting the charges in court would take too long and be too costly “that ultimately would have distracted us from the important work we do. 

“That time, energy and money can be better utilized by continuing to invest in our communities,” the dealership group said. “For that reason, we agreed to the settlement announced today.”

Passport Auto Group, a family-owned business, started in 1991 and has nine stores in Virginia and Maryland selling BMW, Infiniti, Mazda, Mini, Nissan and Toyota vehicles.

The action against Passport comes as the FTC has proposed stricter rules to protect consumers from what it says are deceptive or unfair practices by dealerships. The agency wants to ban finance and insurance coverage and physical vehicle add-ons “that provide no benefit” and require expanded disclosure and consent on such optional products — including a list of prices online.

Also under consideration is a crackdown on dealerships’ advertising related to the cost of the vehicle itself.

NADA and many dealers have argued the FTC proposals are “unsupported, sloppy and inconsistent in regulating the industry.”

This is the second time the FTC has cracked down on Passport, its president and vice president. The consumer agency in 2018 said Passport mailed consumers more than 21,000 notices alerting customers of a fake “urgent recall” to induce them to visit the dealership.

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