Rhinelander Auto Center Fined Over $1 Million for Discrimination, FTC Provides Refunds to Customers
Among other things, the Wisconsin dealership group was accused of applying a higher ‘markup’ to their interest rates for American Indian customers.
The Federal Trade Commission (FTC) said on Tuesday that it is distributing more than $1 million in refunds to customers affected by car dealer Rhinelander Auto Center’s alleged discriminatory practices and junk fees.
The company was also accused of deceiving customers by charging them junk fees without their consent. About half of Rhinelander’s customers reported being charged for add-ons without their knowledge, according to the complaint.
These add-ons include vehicle service contracts, guaranteed asset protection (GAP) insurance, prepaid maintenance, tire and wheel protection, key replacement, nitrogen tire fills, and theft recovery.
The FTC stated that a consumer claimed she was deceived into paying for GAP insurance on her car purchase without her authorization, costing her more than $1,000 in fees and additional interest on her loan.
The complaint alleged that American Indian customers were charged for unwanted add-ons more frequently than non-Latino white customers. It stated that since March 2019, those customers paid an average of $1,374 more than white customers.
As part of the settlement, Rhinelander is required to create a “comprehensive fair lending program” that enables consumers to seek outside financing and limit the amount of additional interest markup the company may impose.
In response to the complaint last year, Rhinelander denied the allegations but said that it agreed to a voluntary resolution to avoid lengthy litigation. The company also affirmed its commitment to treating “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,” the company said in a statement in October 2023.
“That’s not who we are, and there is a great deal of evidence to reinforce the fact that Rhinelander Auto Group and its employees are ethical, decent, and very good people.”
Rhinelander said that the settlement agreement with the FTC includes no admission of wrongdoing and expressed relief at moving on from the matter.
