Sage Auto Group in Universal City has found itself in the hot seat.
The Federal Trade Commission charged the owner and nine of its auto dealerships with using the term “yo-yo” financing tactics on customers and practicing unfair and deceptive sales on Thursday.
The complaint alleges the dealership pressured customers, who have already signed a contract and driven off the lot, to return and sign a different deal. The tactic is known as yo-yo financing and it’s the first time the FTC has made an action against an auto dealer for the practice.
The situation often results from a dealer passing off the keys to a customer before the financing has been completed. A short time later, the buyer is brought back into the dealership when the financing falls through to sign a new agreement often with higher interest rates and fees.
The complaint, filed in the U.S. District Court for the Central District of California, also states dealership employees added unauthorized charges for aftermarket products and services or falsely claimed the products were required or free.
It is also said to have misled consumers through its advertising by portraying lease offers as finance deals and falsely claimed the dealership would pay off customers’ trade-ins.
The dealerships named in the complaint are Universal City Nissan, Kia of Downtown Los Angeles, Glendale Nissan and Infiniti, Mercedes- Benz of Valencia, West Covina Toyota and Scion, West Covina Nissan, Covina Chevrolet, Sage Hyundai, and Sage Pre-Owned in North Hollywood.
The FTC said in a statement it is seeking to return money to the wronged customers while ending the dealership’s unlawful practices.
Retail reporter Subrina Hudson can be reached at firstname.lastname@example.org. Follow her on Twitter at @SubrinaH.