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Financial Services Law Insights and Observations

New Jersey AG sues used-car dealerships for predatory selling practices

State Issues State Attorney General Consumer Finance Auto Finance Fraud

State Issues

On March 5, the New Jersey Attorney General's Office and Division of Consumer Affairs filed a lawsuit against two auto dealerships and their owner for allegedly targeting financially vulnerable consumers through the use of predatory sales and loan practices. According to a March 7 press release issued by the New Jersey AG, the defendants allegedly targeted consumers who were unable to qualify for credit at more traditional auto dealerships by offering in-house loans on used vehicles with inflated prices, high interest rates, and terms that presented a high risk of default. When the consumers were unable to make the required payments, the defendants allegedly reclaimed the vehicles and restarted the “sell, finance, and repossess” churning cycle. The AG claims that the defendants’ practices violated the New Jersey Consumer Fraud Act, the Used Car Lemon Law, and the state’s motor vehicle advertising regulations. The complaint asks the court to permanently shut down the defendants’ operations and permanently enjoin the owner from owning, managing, and/or operating any business that advertises and/or sells motor vehicles in the state. The complaint also seeks restitution, civil penalties, and attorneys’ fees.

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