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New York AG Suing Staten Island Dealer Group for Payment Packing

NEW YORK — New York Attorney General Eric T. Schneiderman's crackdown on payment packing continues. Today, he announced a lawsuit against two Staten Island dealerships owned by SG Hylan Motors Corp.: Staten Island Honda and Staten Island Nissan.

The lawsuit alleges that SG Hylan Motors unlawfully sold “after-sale” products and services, including credit repair and identity theft protection services, to more than 2,300 consumers without their consent. The price for these services, the suit alleged, would at times exceed $2,000 per consumer.

Schneiderman is now seeking a court order to prohibit the dealerships from engaging in such practices in the future and for the dealerships to refund all illegally obtained overcharges to consumers.

According to the suit, SG Hylan Motors dealerships began using deceptive sales tactics back in 2011 and continued up until 2014. In that timeframe, SG Hylan Motors dealerships collected more than $2 million from consumers using its alleged deceptive sales tactics, court documents stated.

The dealerships, the suit alleged, would oftentimes misrepresent that certain services — like security systems and special tire protection services —  would be free or would charge consumers for services and then conceal the charges from them. On some occasions, the suit charged, the dealerships charged consumers for services, hid the charges and then never provided any of the services for which customers were charged. This was often done by bundling the price of the services with the price of the vehicle, the suit alleged.

Additionally, the suite charged the dealerships with selling customers credit repair and identity theft protection services through an arrangement with an independent company called Credit Forget it Inc. According to the attorney general’s office, charging upfront fees for services that promise to help consumers restore or improve their credit is a violation of state and federal law and any contracts that violate those laws are considered void.

In 2015, Schneiderman announced a settlement with the now-defunct Credit Forget it. The company was ordered to pay $2 million in fines, however, those charges were suspended on the condition that the company cease operations and notify all dealers with which it had contracts.

This lawsuit, according to the attorney general’s office, is part of the attorney general’s initiative to end the practice often referred to as “jamming,” or payment packing. Since 2015, Schneiderman has settled with nine dealership groups for a total of nearly $16 million in restitutions and penalties.

 

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