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Car Dealership Pays $1.1M for Racist Overcharging Practice

Jeff Greenberg
Jeff Greenberg

A chain of Wisconsin car dealerships has agreed to pay more than $1 million after the feds and State of Wisconsin filed a lawsuit alleging discriminatory sales practices with Indigenous American customers, who were tricked into paying thousands of dollars extra in bogus fees.

According to the Federal Trade Commission, the general manager, as well as former and current owners of the Rhinelander Auto Group agreed to a $1.1 million refund settlement Tuesday and signed court orders to cease their biased practices.

“Working closely with the State of Wisconsin, we are holding these dealerships accountable for discriminating against American Indian customers and sneaking junk fees onto consumers’ bills,” FTC Director of the Bureau of Consumer Protection Samuel Levine said in a press release. “A vehicle is one of the most expensive purchases families make, and we are fully committed to ensuring that all consumers navigating the car-buying process can do so without facing unlawful discrimination or paying for products and services they do not want.”

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Since at least 2016, the Rhinelander Auto Group, which runs three dealerships, allegedly charged Indigenous Americans more for vehicle purchases by slapping on additional fees, according to a complaint filed Tuesday by the FTC and Wisconsin Department of Justice. General Manager Daniel Towne has overseen all three lots and is also a partial owner.

“[Rhinelander Auto Group has] charged a large percentage of their customers for additional products and services (‘add-ons’ or ‘add-on products’) without those customers’ authorization or by leading the customers to believe the add-ons were mandatory,” the lawsuit states. “According to a survey of [Rhinelander’s] customers, about half were charged for add-on products without their authorization or as a result of deception, which has resulted in hundreds or thousands of dollars in unlawful charges on top of an already expensive vehicle purchase.”

According to the complaint, Indigenous American customers were charged roughly $1,362 more than white buyers. They came from more rural areas, so they didn’t have many dealerships to choose from.

Due to extra services or items being tacked on unknowingly, Indigenous Americans would have to ask for additional money from finance loans. This also incentivized car salespeople who were rewarded with commission profits, the lawsuit claims.

“Even when [employees of Rhinelander Auto Group] have not been packing add-ons into customers’ contracts, [they] nevertheless have been misleading many customers into purchasing them as required or ‘essential’ for the purchase,” the complaint alleges.

The state attorney general’s office and the FTC accused the Rhinelander Auto Group of being deceptive in its sales practices, claiming customers “will continue to suffer substantial injury as a result.”

The FTC declined to comment on the settlement.

Rhinelander Auto Group did not immediately respond to The Daily Beast’s request for comment Friday, but said in a statement that it wished to treat all customers with “dignity.”

“We totally reject that our people—many of whom are long-term members of the local community—would engage in the practices alleged. That’s not who we are,” a statement from Rhinelander read, according to a report from local outlet WJFW Rhinelander. “Nonetheless, to avoid lengthy and costly litigation, we reluctantly agreed to a voluntary resolution to conclude the matter. The agreement includes no admission of wrong-doing.

“Rhinelander Auto Group is glad to put this matter behind us and focus on serving our customers. We have been a part of the Rhinelander area for nearly 20 years, and we take pride in doing things the right way and treating everyone fairly. Our commitment is to continue on that path going forward.”

Read more at The Daily Beast.

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