Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 1 of 20
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`UNITED STATES DISTRICT COURT
`DISTRICT OF MARYLAND
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`Case No. ____________
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`COMPLAINT FOR PERMANENT
`INJUNCTION, MONETARY
`RELIEF, AND OTHER RELIEF
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`
`
`
`
`
`
`
`
`
`
`v.
`
`Plaintiff,
`
`
`FEDERAL TRADE COMMISSION,
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`
`
`
`
`PASSPORT AUTOMOTIVE GROUP, INC., a
`corporation,
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`PASSPORT MOTORCARS, INC., a corporation,
`also d/b/a as PASSPORT NISSAN OF MARLOW
`HEIGHTS, also d/b/a as PASSPORT NISSAN OF
`VIRGINIA, also d/b/a as PASSPORT INFINITI
`OF ALEXANDRIA,
`
`IMPORT MOTORCARS, INC., a corporation,
`also d/b/a PASSPORT MAZDA,
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`AUTOS INTERNATIONAL, INC., a corporation,
`also d/b/a PASSPORT INFINITI OF SUITLAND,
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`PASSPORT IMPORTS, INC., a corporation, also
`d/b/a PASSPORT TOYOTA,
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`PASSPORT MOTORS HOLDING, INC., a
`corporation, also d/b/a PASSPORT MINI OF
`MONTGOMERY COUNTY,
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`PASSPORT OF ALEXANDRIA, INC., a
`corporation, also d/b/a PASSPORT MINI OF
`ALEXANDRIA,
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`INTERNATIONAL MOTOR CARS, INC., a
`corporation, also d/b/a PASSPORT BMW,
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`

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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 2 of 20
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`EVERETT A. HELLMUTH, III, individually and
`as an owner of PASSPORT AUTOMOTIVE
`GROUP, INC., PASSPORT MOTORCARS,
`INC., IMPORT MOTORCARS, INC., AUTOS
`INTERNATIONAL, INC., PASSPORT
`IMPORTS, INC., PASSPORT MOTORS
`HOLDING, INC., PASSPORT OF
`ALEXANDRIA, INC., and INTERNATIONAL
`MOTOR CARS, INC., and
`
`JAY KLEIN, individually and as an officer of
`PASSPORT MOTORCARS, INC., IMPORT
`MOTORCARS, INC., AUTOS
`INTERNATIONAL, INC., PASSPORT
`IMPORTS, INC., PASSPORT MOTORS
`HOLDING, INC., PASSPORT OF
`ALEXANDRIA, INC., and INTERNATIONAL
`MOTOR CARS, INC.,
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`
`
`Defendants.
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`
`
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`Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), for its Complaint
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`alleges:
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`1.
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`The FTC brings this action under Sections 5(a), 13(b), and 19 of the Federal
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`Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 45(a), 53(b), and 57b, and the Equal Credit
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`Opportunity Act (“ECOA”), 15 U.S.C. §§ 1691-1691f , which authorize the FTC to seek, and the
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`Court to order, preliminary and permanent injunctive relief, monetary relief, and other relief for
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`Defendants’ acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and
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`in violation of the ECOA and its implementing Regulation B, 12 C.F.R. § 202 in connection with
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`Defendants’ deceptive advertising and pricing practices, as well as discriminatory and unfair
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`financing.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 3 of 20
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`JURISDICTION AND VENUE
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`2.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a),
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`and 1345.
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`3.
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`Venue is proper in this District under 28 U.S.C. § 1391(b)(2), (c)(1), (c)(2), and
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`(d), and 15 U.S.C. § 53(b).
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`PLAINTIFF
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`4.
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`The FTC is an independent agency of the United States Government created by
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`the FTC Act, which authorizes the FTC to commence this district court civil action by its own
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`attorneys. 15 U.S.C. §§ 41–58. The FTC enforces Section 5(a) of the FTC Act,
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`15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce.
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`The FTC also enforces the ECOA, 15 U.S.C. §§ 1691-1691f, which, inter alia, prohibits
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`discrimination on the basis of race, color, or national origin in credit transactions.
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`DEFENDANTS
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`5.
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`Defendant Passport Automotive Group, Inc. (“Passport Auto Group”), is a
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`Virginia corporation with its principal place of business at 5000 Auth Way, Marlow Heights,
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`Maryland 20746. Passport Auto Group transacts or has transacted business in this District. At
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`all times relevant to this Complaint, acting alone or in concert with others, Passport Auto Group
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`has advertised, marketed, distributed, or offered vehicles to consumers for sale, and Passport
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`Auto Group regularly arranged for the extension of credit.
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`6.
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`Defendant Passport Motorcars, Inc., also d/b/a Passport Nissan of Marlow
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`Heights, also d/b/a Passport Nissan of Virginia, also d/b/a Passport Infiniti of Alexandria
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`(“Passport Motorcars”), is a Virginia corporation with its principal place of business at 150 S.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 4 of 20
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`Pickett Street, Alexandria, Virginia 22304. Passport Motorcars transacts or has transacted
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`business in this District. At all times relevant to this Complaint, acting alone or in concert with
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`others, Passport Motorcars has advertised, marketed, distributed, or offered vehicles to
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`consumers for sale, and Passport Motorcars regularly arranged for the extension of credit.
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`7.
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`Defendant Import Motorcars, Inc., also d/b/a Passport Mazda (“Import
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`Motorcars”), is a Virginia corporation with its principal place of business at 5000 Auth Way,
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`Suitland, Maryland 20746. Import Motorcars transacts or has transacted business in this
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`District. At all times relevant to this Complaint, acting alone or in concert with others, Import
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`Motorcars has advertised, marketed, distributed, or offered vehicles to consumers for sale, and
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`Import Motorcars regularly arranged for the extension of credit.
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`8.
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`Defendant Autos International, Inc., also d/b/a Passport Infiniti of Suitland
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`(“Autos International”), is a Virginia corporation with its principal place of business at 5000
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`Auth Way, Suitland, Maryland 20746. Autos International transacts or has transacted business
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`in this District. At all times relevant to this Complaint, acting alone or in concert with others,
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`Autos International has advertised, marketed, distributed, or offered vehicles to consumers for
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`sale, and Autos International regularly arranged for the extension of credit.
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`9.
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`Defendant Passport Imports, Inc., also d/b/a Passport Toyota (“Passport
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`Imports”), is a Virginia corporation with its principal place of business at 5000 Auth Way,
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`Suitland, Maryland 20746. Passport Imports transacts or has transacted business in this District.
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`At all times relevant to this Complaint, acting alone or in concert with others, Passport Imports
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`has advertised, marketed, distributed, or offered vehicles to consumers for sale, and Passport
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`Imports regularly arranged for the extension of credit.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 5 of 20
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`10.
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`Defendant International Motor Cars, Inc., also d/b/a Passport BMW
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`(“International Motor Cars”), is a Maryland corporation with its principal place of business at
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`4730 Auth Place, Marlow Heights, Maryland 20746. International Motor Cars transacts or has
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`transacted business in this District. At all times relevant to this Complaint, acting alone or in
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`concert with others, International Motor Cars has advertised, marketed, distributed, or offered
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`vehicles to consumers for sale, and International Motor Cars regularly arranged for the extension
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`of credit.
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`11.
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`Defendant Passport Motors Holding, Inc., also d/b/a Passport MINI of
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`Montgomery County (“Passport Motors Holding”), is a Virginia corporation with its principal
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`place of business 150 S. Pickett Street, Alexandria, Virginia 22304. Passport Motors Holding
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`transacts or has transacted business in this District. At all times relevant to this Complaint,
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`acting alone or in concert with others, Passport Motors Holding has advertised, marketed,
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`distributed, or offered vehicles to consumers for sale, and Passport Motors Holding regularly
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`arranged for the extension of credit.
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`12.
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`Defendant Passport of Alexandria, Inc., also d/b/a Passport MINI of Alexandria
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`(“Passport of Alexandria”), is a Virginia corporation with its principal place of business at 5590
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`Duke Street, Alexandria, Virginia 22304. Passport of Alexandria transacts or has transacted
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`business in this District. At all times relevant to this Complaint, acting alone or in concert with
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`others, Passport of Alexandria has advertised, marketed, distributed, or offered vehicles to
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`consumers for sale, and Passport of Alexandria regularly arranged for the extension of credit.
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`13.
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`Defendant Everett A. Hellmuth, III (“Hellmuth”) is owner and President of
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`Passport Auto Group, Passport Motorcars, Import Motorcars, Autos International, Passport
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 6 of 20
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`Imports, International Motor Cars, Passport Motors Holding, and Passport of Alexandria. At all
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`times relevant to this Complaint, acting alone or in concert with others, he has formulated,
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`directed, controlled, had the authority to control, or participated in the acts and practices of
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`Passport, including the acts and practices set forth in this Complaint. Defendant Hellmuth, in
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`connection with the matters alleged herein, transacts or has transacted business in this District.
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`14.
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`Defendant Jay Klein (“Klein”) is the Vice President of Passport Motorcars,
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`Import Motorcars, Autos International, Passport Imports, International Motor Cars, Passport
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`Motors Holding, and Passport of Alexandria. At all times relevant to this Complaint, acting
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`alone or in concert with others, he has formulated, directed, controlled, had the authority to
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`control, or participated in the acts and practices of Passport, including the acts and practices set
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`forth in this Complaint. Defendant Klein, in connection with the matters alleged herein,
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`transacts or has transacted business in this District.
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`COMMON ENTERPRISE
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`15.
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`Defendants Passport Auto Group, Passport Motorcars, Import Motorcars, Autos
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`International, Passport Imports, International Motor Cars, Passport Motors Holding, and Passport
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`of Alexandria (collectively, “Corporate Defendants”) operate as a common enterprise while
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`engaging in the deceptive and unfair acts and practices and other violations of law alleged below.
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`Corporate Defendants conduct the business practices described below through an interrelated
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`network of companies that have common ownership, officers, managers, business functions,
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`employees, and office locations. Because these Corporate Defendants operate as a common
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`enterprise, each of them is liable for the acts and practices alleged below.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 7 of 20
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`COMMERCE
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`16.
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`At all times relevant to this Complaint, Defendants have maintained a substantial
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`course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act,
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`15 U.S.C. § 44.
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`DEFENDANTS’ BUSINESS ACTIVITIES
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`17.
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`Defendants are the owners and operators of nine automobile dealerships located
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`in the greater Washington, DC metropolitan region and collectively doing business as the
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`Passport Auto Group (hereinafter, “Passport”). Passport represents in advertisements that
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`consumers can purchase particular inspected, reconditioned, or certified vehicles at specific
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`prices. However, in many instances, when consumers attempt to purchase these vehicles for the
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`advertised prices, Passport charges them extra hundreds to thousands of dollars in fees, such as
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`for inspection, reconditioning, preparation, and certification. Passport represents that consumers
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`are required to pay these redundant fees to purchase the vehicles. But, in fact, Passport already
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`includes the costs of inspection, reconditioning, preparation, and certification in its advertised
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`prices. Thus, Passport is double charging consumers for inspecting, reconditioning, preparing,
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`and certifying used vehicles. Passport has charged millions of dollars in such fees.
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`18.
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`Passport also unlawfully discriminates on the basis of race, color, and national
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`origin by imposing higher costs on Black and Latino consumers on average than non-Latino
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`White consumers.
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`Passport’s Deceptive Price and Fee Claims
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`19.
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`Through their own websites, print, direct mail, email, and third-party auto
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`classified websites, Passport advertises for sale particular inspected, reconditioned, or certified
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 8 of 20
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`vehicles at specific prices. Passport’s vehicle advertisements typically indicate, among other
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`things, the make and model of the vehicle, the vehicle identification number (“VIN”), and the
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`sales price of the vehicle. For example, in the advertisement below, Passport represents that
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`consumers can purchase a 2019 Nissan Maxima 3.5 SL with a “Nissan Certified 7 Year 100,000
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`Mile Warranty” for $23,700.
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`20.
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`In numerous instances, however, when consumers attempt to purchase particular
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`inspected, reconditioned, or certified vehicles for the prices advertised, Passport charges them
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`additional hundreds to thousands of dollars in fees, resulting in consumers paying more than the
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`advertised prices to purchase the vehicles or negating any later discounts they negotiate.
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`21.
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`In numerous instances, Passport represents that these extra reconditioning,
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`inspection, preparation, and certification fees are required, even though Passport’s advertised
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`prices are for vehicles that have already been reconditioned, inspected, and certified.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 9 of 20
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`Additionally, with respect to certified vehicles, manufacturers require dealerships to inspect and
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`recondition those vehicles to the manufacturer’s specifications and pay a certification fee to the
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`manufacturer before advertising them as certified. Many manufacturer policies specifically
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`prohibit Passport from separately charging for the cost of certification or including the
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`certification cost in price negotiation.
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`22.
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`For example, Passport Nissan of Marlow Heights advertised a Certified Pre-
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`Owned 2018 Nissan Rogue for $24,050. However, it subsequently charged the buyer $2,390 in
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`fees, purportedly required for reconditioning and certification. As a result, the buyer ended up
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`paying at least $2,390 more than the advertised price to purchase the vehicle. In another
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`instance, Passport Mazda advertised a Certified Pre-Owned 2016 CX-5 for $19,900, but then
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`charged the buyer a $695 fee, purportedly required for certification. As in the previous
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`example, the addition of this fee resulted in the buyer paying more than the price advertised.
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`Passport’s Discriminatory Credit Practices
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`23.
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`Passport unlawfully discriminates on the basis of race, color, and national origin
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`by imposing higher borrowing costs on Black and Latino consumers than non-Latino White
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`consumers.
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`24.
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`Passport arranges financing for consumers to purchase motor vehicles through
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`third-party financing entities. Passport obtains and completes consumer applications for credit,
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`obtains consumer credit reports, and verifies income to make an initial determination whether a
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`financing applicant will meet financing entities’ underwriting guidelines. Passport then submits
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`applications to one or more financing entities on behalf of consumers.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 10 of 20
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`25.
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`Each financing entity provides Passport with a specific “buy rate,” a risk-based
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`finance charge that reflects the interest rate at which the entity will finance a retail installment
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`contract from the dealer. In some circumstances, depending on its policies, the financing entity
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`also permits Passport to add a finance charge to the buy rate called a “markup.” Unlike the buy
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`rate, the markup is not based on the underwriting risk or credit characteristics of the applicant.
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`Passport communicates to the consumer only the final total contract rate, which equals the buy
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`rate plus the markup. The financing entity compensates Passport from the increased interest
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`revenue derived from the markup. Passport, in turn, compensates its employees based in part on
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`revenue derived from the markup.
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`Passport’s Discriminatory Interest-Rate Markup Practice
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`26.
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`Passport has a policy, approved by Hellmuth, of charging consumers a standard
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`markup of 200 basis percentage points or 2%, but giving employees discretion to reduce or
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`eliminate the markup for certain reasons, such as if the consumer states they have a competing
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`credit offer or a monthly payment constraint. If one of these reasons applies, employees may,
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`but are not required to, reduce or eliminate the standard markup.
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`27.
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`Under the policy, any deviations from the standard markup must be recorded on a
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`certification form. Each form must be signed by the employee who arranged the credit
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`transaction, and a program coordinator or another employee who did not participate in the credit
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`transaction must review the form and sign it as well. The policy also requires random
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`monitoring of dealership credit offers and periodic audits of credit sales to ensure the policy is
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`being effectively implemented.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 11 of 20
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`28.
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`In practice, however, Passport failed to follow several of the policy’s
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`requirements. For example, in many instances, Passport did not fill out the required certification
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`form or report a specific reason for deviating from the standard markup. In many other
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`instances, the form included no reviewer certification or was reviewed by the same individual
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`who arranged the credit transaction. And Passport did not adequately monitor its credit offers or
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`conduct periodic audits of credit sales to ensure the policy was being effectively implemented.
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`29.
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`Passport’s discretionary markup rate practice has resulted in Passport charging, on
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`average, Black and Latino consumers higher markups than non-Latino White consumers. These
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`disparities are statistically significant. Among thousands of consumers who received motor
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`vehicle financing through Passport between August 2017 and August 2020, Passport charged
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`Black consumers, on average, approximately 28 basis points (approximately $291) and Latino
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`consumers, on average, approximately 26 basis points (approximately $235) more in interest
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`than non-Latino White consumers. Black consumers received the maximum Passport-allowed
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`markup approximately 47% more often and Latino consumers approximately 38% more often
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`than non-Latino White consumers did.
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`30.
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`Passport received letters from a finance company – one in June 2019 and another
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`in June 2020 – notifying it of statistically significant differences in the markup rates charged to
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`Black borrowers at two separate Passport dealerships. Passport took no action to address the
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`markups rate disparities raised in these letters.
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`31.
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`Passport’s discretionary markup practice is not justified by a business necessity
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`that could not be met by a less discriminatory alternative. Passport could randomly monitor its
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`credit offers and conduct periodic audits to ensure the policy is being effectively implemented, as
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 12 of 20
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`its own written policy requires and as industry guidance advises, especially in light of third-party
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`letters notifying it of disparities. Passport could further limit employee discretion to charge rate
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`markups by, among other things, not charging markups, charging all consumers the same markup
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`or reducing its standard markup. Passport could also require employees to disclose to all
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`consumers that its markup is an additional charge added to finance companies’ “buy rate” that
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`can be reduced or eliminated under certain conditions.
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`32.
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`Black and Latino consumers cannot reasonably avoid Passport charging them
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`higher vehicle financing costs based on their race, color, or national origin, because they do not
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`know that Passport charges other consumers a lower rate. Nor are there any countervailing
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`benefits to charging certain consumers higher markup rates based on their race, color, or national
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`origin.
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`Passport’s Discriminatory Fee Practices
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`33.
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`In addition to charging minority consumers higher interest rate markups, Passport
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`charges Black and Latino consumers extra inspection, reconditioning, vehicle preparation, and
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`certification fees more frequently and in higher amounts than similarly situated non-Latino
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`White consumers.
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`34.
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`Among thousands of consumers who received motor vehicle financing through
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`Passport between August 2017 and August 2020, Black consumers were charged at least one
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`such extra fee approximately 24% more often and Latino consumers approximately 42% more
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`often than non-Latino White consumers. In addition, Black consumers paid, on average,
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`approximately $82 and Latino consumers paid, on average, approximately $81 more in such
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`extra fees than non-Latino White consumers.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 13 of 20
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`35. Moreover, Passport’s fees exhibit statistically significant disparities based on
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`race, color, or national origin that cannot be explained by non-discriminatory reasons.
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`36.
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`Black and Latino consumers cannot reasonably avoid Passport charging them
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`higher fees, because they do not know that they are being charged such fees when others are not.
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`Nor are there countervailing benefits to charging Black and Latino consumers more in fees than
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`similarly-situated non-Latino White consumers.
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`Hellmuth and Klein’s Knowledge of the Misconduct
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`37.
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`Hellmuth and Klein are aware of Passport’s unlawful practices and, as owners and
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`officers, have the authority to stop them. Nevertheless, the issues have persisted.
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`38.
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`Over the past several years, Hellmuth and Klein have received numerous emails
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`and text messages from Passport employees notifying them about the bogus fees and have
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`specifically discussed the problematic issue.
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`39.
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`For example, in January 2018, Passport’s then E-Commerce Director sent Klein
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`an email with the subject, “Used Car Recondition Fees.” The email states:
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`Everett [Hellmuth] just sent out an email talking about advertising separate recon
`fees and asking us to get a list of competitors together so we can report them. I
`just wanted to make sure you know that we are doing this in at least 3 stores that
`I’m aware of. I have seen it advertised and on worksheets in 3 stores. The stores I
`know are actively doing bumping for recon fees are Nissan MD, Nissan VA, and
`Mazda. I responded to Everett and informed him of the same thing.
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`40.
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`The next day, the General Manager of Passport Nissan of Alexandria emailed his
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`sales managers, copying Hellmuth, with an example of a used car sale where the dealership
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`included a bogus inspection fee. The text of the message states, “We do not need to charge
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`extra fees, we already offer [sic] quality and fair prices.” Below this text is an image of a deal
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`worksheet for a used 2011 Toyota Camry. The worksheet shows that the “Adjusted Price” of
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 14 of 20
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`the vehicle, after a discount, was $9,699.00. However, it also shows that there was a “PDI VA
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`Inspection” fee of $1,095.00 that negated much of the discount. Hellmuth forwarded the email
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`to Klein noting, “If we stop today, we need to TRAIN all our staff to Tell all customers Who are
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`shopping and don’t buy from us, what other dealers are doing around us.” Passport did not stop
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`charging the bogus fees.
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`41. More than a year later, in April 2019, a Passport employee sent a picture to Klein
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`via text message of a Passport Nissan deal worksheet that included a $1,589 “RECON” fee.
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`The message states: “RECON!? I just emailed you.” Klein responded, “What recon? What the
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`heck are we doing?” The employee replied, “We are stealing from people and beating our chest
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`saying how good we are.”
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`42.
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`In June 2019, Hellmuth sent the same Passport employee a text message asking,
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`“Which stores sell cars over the advertised price?” The employee responded: “In the last 5
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`months I had found it at Nissan md, Mazda, Toyota. I know it has been done at Nissan Virginia
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`as well….I also found it at infiniti VA 2 weeks ago.”
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`43.
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`In December 2019, a third-party online reputation management service
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`intercepted a negative review about Passport Mazda and emailed it to Klein and other Passport
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`employees. The review reads:
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`I feel like I paid too much for the car. The advertised price was a little high to
`begin with and then we find out there is $900. additional “restocking fee”.
`apparently I had to pay for repairs done to the car. When the car’s book value is
`determined it is determined based on the condition of the car. This is why people
`prefer to buy from a dealer rather than a private party. you can usually feel safe to
`assume that maintenance will have been done prior to the car going on the lot. To
`have to pay an additional fee for needed maintenance makes no sense to me. I feel
`this is a dishonest ploy and false advertising.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 15 of 20
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`Passport’s Integrated Marketing Manager replied: “Is this a reconditioning fee? If so,
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`shouldn’t this be built into the cost of the car beforehand? We don’t disclose this type of
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`thing in any advertising either so we need to be mindful of that. It could be seen as bait
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`and switch.”
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`44.
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`Despite these multiple emails and text messages informing them of
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`Passport’s practice of charging consumers bogus fees, Hellmuth and Klein have allowed
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`the practice to continue.
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`45.
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`As noted above, Passport also has received finance company letters notifying it of
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`statistically significant differences in the markup rates charged to Black borrowers at two
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`separate Passport dealerships. Passport’s Compliance Manager testified that it was her practice
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`to send any letters from finance companies regarding markup rate disparities to Klein and discuss
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`them with him.
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`46.
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`Additionally, in 2021, a financing company that financed Passport deals
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`notified Hellmuth about markup disparities.
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`47.
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`In September 2020, Hellmuth and Klein received alerts about the FTC’s
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`consent order against a New York dealer that similarly was charging consumers bogus
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`reconditioning, dealer preparation, and certification fees and charging higher interest rate
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`markups and fees to minority borrowers. The order requires disclosure if charging
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`different markups to different borrowers and provides that notwithstanding a fair lending
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`policy, the company cannot discriminate against credit applicants on the basis of race,
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`color, or national origin.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 16 of 20
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`48.
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`Despite these notifications, Passport took no steps to modify its
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`discretionary markup policy or practice.
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`49.
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`Based on the facts and violations of law alleged in this Complaint, the FTC has
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`reason to believe that Passport is violating or is about to violate laws enforced by the FTC.
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`VIOLATIONS OF THE FTC ACT
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`50.
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`Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts
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`or practices in or affecting commerce.”
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`51. Misrepresentations or deceptive omissions of material fact constitute deceptive
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`acts or practices prohibited by Section 5(a) of the FTC Act.
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`52.
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`Acts or practices are unfair under Section 5 of the FTC Act if they cause or are
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`likely to cause substantial injury to consumers that consumers cannot reasonably avoid
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`themselves and that is not outweighed by countervailing benefits to consumers or competition.
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`15 U.S.C. § 45(n).
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`Count I
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`Misrepresentations Regarding Advertised Prices
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`53.
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`In numerous instances in connection with the advertising, marketing, promotion,
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`offering for sale, or sale or financing of motor vehicles, including through the means described in
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`Paragraphs 17 through 22, Defendants represent, directly or indirectly, expressly or by
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`implication, that Defendants will sell particular used vehicles at specific prices.
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`54.
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`In truth and in fact, in numerous instances in which Defendants make the
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`representations set forth in Paragraphs 17 through 22, Defendants do not sell those vehicles at
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`those prices.
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 17 of 20
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`55.
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`Therefore, Defendants’ representations as set forth in Paragraphs 17 through 22
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`are false or misleading and constitute deceptive acts or practices in violation of Section 5(a) of
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`the FTC Act, 15 U.S.C. § 45(a).
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`Count II
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`Misrepresentations Regarding Charges
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`56.
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`In numerous instances, in connection with the advertising, marketing, promotion,
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`offering for sale or financing, or sale and financing of vehicles, including through the means
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`described in Paragraphs 17 through 22, Defendants represent, directly or indirectly, expressly or
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`by implication, that consumers are required to pay certain fees, such as for inspecting,
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`reconditioning, preparing, or certifying vehicles.
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`57.
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`In truth and in fact, in numerous instances in which Defendants make the
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`representations set forth in Paragraphs 17 through 22, consumers are not required to pay fees for
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`inspecting, reconditioning, preparing, or certifying vehicles.
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`58.
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` Therefore, Defendants’ representations as set forth in Paragraphs 17 through 22
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`are false or misleading and constitute deceptive acts or practices in violation of Section 5(a) of
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`the FTC Act, 15 U.S.C. § 45(a).
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`
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`Count III
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`Unfair Discrimination
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`59.
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`In numerous instances, as described in Paragraphs 23 through 36, Defendants
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`impose higher costs on Black and Latino consumers than on similarly situated non-Latino White
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`consumers.
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`60.
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`Defendants’ actions cause or are likely to cause substantial injury to consumers
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`that consumers cannot reasonably avoid themselves and that is not outweighed by countervailing
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`benefits to consumers or competition.
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`61.
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`Therefore, Defendants’ acts or practices as set forth in Paragraphs 23 through 36
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`constitute unfair acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a), (n).
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`VIOLATIONS OF THE EQUAL CREDIT OPPORTUNITY ACT AND REGULATION B
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`62.
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`Section 701(a)(1) of the ECOA, 15 U.S.C. § 1691(a)(1), and Section 202.4(a) of
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`Regulation B, 12 C.F.R. § 202.4(a), prohibit a creditor from discriminating against an applicant
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`with respect to any aspect of a credit transaction on the basis of race, color, religion, national
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`origin, sex, marital status, or age (provided the applicant has the capacity to contract); because all
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`or part of the applicant’s income derives from any public assistance program; or because the
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`applicant has in good faith exercised any right under the Consumer Credit Protection Act, 15
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`U.S.C. Ch. 41.
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`63.
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`Defendants are creditors as defined in Section 702(e) of the ECOA, 15 U.S.C. §
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`1691a(e), and Section 202.2(l) of Regulation B, 12 C.F.R. § 202.2(l).
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`64.
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`Section 704(c) of the ECOA, 15 U.S.C. § 1691c(c), specifically empowers the
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`Commission to enforce the ECOA. Defendants’ violations of the ECOA are deemed to be
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`Case 8:22-cv-02670-TDC Document 1 Filed 10/18/22 Page 19 of 20
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`violations of the FTC Act and are enforceable as such by the Commission under that Act.
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`Further, the Commission is authorized to use all of its functions and powers under the FTC Act
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`to enforce compliance with the ECOA by any person, irrespective of whether that person is
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`engaged in commerce or meets any other jurisdictional tests set by the FTC Act. This includes
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`the power to enforce a Consumer Financial Protection Bureau regulation promulgated under the
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`ECOA, such as Regulation B, in the same manner as if a violation of that regulation had been a
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`violation of an FTC trade regulation rule.
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`Count IV
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`Discriminatory Financing Practices
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`65.
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`In connection with motor vehicle credit transactions, on the basis of race, color, or
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`national origin, Defendants impose higher costs on Black and Latino applicants on average than
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`similarly situated non-Latino White applicants.
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`66.
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`Defendants’ acts, policies, and practices as set forth in Paragraphs 23 through 36
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`constitute discrimination against applicants with respect to any aspect of a credit transaction on
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`the basis of race, color, or national origin in violation of Section 701(a)(1) of the ECOA, 15
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`U.S.C. § 1691(a)(1), and