AG sues car dealerships for overcharging black and Hispanic customers for add-ons

The attorney general’s office said it based its findings on an analysis of agents’ records for the period from 2016 to 2018.

“Jvarian has consistently engaged in the same or substantially similar policies and practices since at least 2016,” says the lawsuit, filed in Essex High Court.

In a statement issued in response to the lawsuit, Jafarian’s lawyer said: “We categorically deny the allegations in this lawsuit… Jafarian takes a strong stand against discrimination in all its forms.”

Jafarian said she has “never received any complaint from any client regarding discrimination” and plans to “vigorously defend herself against the lawsuit…in court”.

The sale of add-ons usually comes after the customer has done it Negotiate a price to buy or rent a car, arranging financing if necessary. At this point, the CFO typically quotes prices on many extras—like paint protection, key replacement, service agreements and wheel and tire agreements—but clients “may not understand that these prices are negotiable, the lawsuit says. CFOs actually own” Unrestricted discretion” in pricing add-ons.

As a result, completely different consumers may be charged for the same price [add-on] product,” the lawsuit says.

The attorney general’s office said in the press release that dealerships generally make more money selling add-on products than selling the car itself. Furthermore, Jaffarian formulates its compensation to finance managers to reward them for selling products at the highest prices, prompting managers to “instruct consumers to buy more additional products and to put higher labels on those products,” the lawsuit says.

“The higher the profit margins, the higher the CFO’s profit,” the lawsuit says.

“Under these circumstances, Jvarian seeks to obtain disproportionately higher profits from Hispanic and Hispanic consumers,” the lawsuit says.

“One of the unfair phenomena in today’s market is price differentials based on the race of the buyer,” the lawsuit says. “Many studies show that these disparities occur when salespeople are given discretion in pricing.”

The attorney general’s office says it has studied more than 2,000 sales of Javarian add-ons. The lawsuit says that by analyzing the customers’ first names, surnames, and addresses, along with census data, the attorney general’s office was able to “determine each consumer’s expected race and ethnicity.”

Selling the add-ons to white customers, Javarian earned an average profit of about $1,000. But for black customers, the price was $1,500 and for Hispanics it was $1,380.

The lawsuit faults Jvarian for failing to “provide any instructions or audits to ensure fair and non-discriminatory treatment of its clients.”

“It has long been known that discretionary pricing policies that are not combined with audits, trainings, and other controls to prevent conscious or unconscious biases from influencing pricing decisions lead to discrimination, particularly against consumers of color,” the lawsuit says.

“Gvarian knew or should have known that its pricing and compensation policies, alone or in combination, are likely to result in unfair and discriminatory pricing that harms consumers,” the lawsuit says.

The attorney general’s office says the Jvarian’s practices violate the state’s Consumer Protection Act and the Public Places Act, which prohibit discrimination on the basis of race, color, and national origin in public places. In the lawsuit, Healy’s office is seeking an order to prevent these practices, along with compensation and civil penalties.

“We commend the Massachusetts Attorney General’s office for taking action to stop these disturbing abuses,” said John Van Alst, employee attorney at the National Center for Consumer Law, according to the press release. finance industry.

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