The attorney general’s office said it based its findings on an analysis of dealer records for 2016 to 2018.
“Jaffarian has consistently engaged in the same or essentially similar policies and practices since at least 2016,” says the lawsuit, which was filed in the Essex High Court.
In a statement released in response to the lawsuit, a lawyer for Jaffarian said, “We emphatically deny the allegations in this lawsuit … Jaffarian takes a strong stance against discrimination in all forms.”
Jaffarian said it has “never received a complaint from a customer regarding discrimination” and plans to “firmly defend the lawsuit…in court.”
Add-on sales usually come after a customer has: negotiated a price to buy or lease a car, and arranged financing as needed. At that point, the finance manager usually quotes prices for various add-ons — such as paint protection, key replacement, service agreements, and wheel and tire agreements — but customers “may not understand that these prices are negotiable, the suit says. The finance managers actually have” unlimited discretion” when pricing add-ons.
“As a result, two consumers can charge wildly different fees for the same thing [add-on] product,” says the suit.
Dealers generally make more money selling additional products than selling the car itself, the attorney general’s office said in the press release. Further, Jaffarian structures his compensation for financial managers to reward them for selling products at the highest prices, thereby leading managers to “induce consumers to buy more complementary products and place higher margins on those products,” the suit says.
“The higher the markups, the more a finance manager earns,” the suit says.
“In these circumstances, Jaffarian seeks and extracts disproportionately higher profits from black and Hispanic consumers,” the suit says.
“An extremely unfair phenomenon in today’s market is price differentials based on the buyer’s race of ethnicity,” the suit says. “Numerous studies show that those differences are caused when sellers are given discretion in setting the price.”
The attorney general’s office says it has studied more than 2,000 sales of add-ons at Jaffarian. By analyzing the customers’ first names, last names and addresses, along with census data, the attorney general’s office was able to “determine the predicted race and ethnicity of each consumer,” the suit says.
When selling add-ons to white customers, Jaffarian earned an average markup of about $1,000. But for black customers it was $1,500, and for Hispanic, $1,380.
The lawsuit accuses Jaffarian that he “failed to provide instruction or scrutiny to ensure fair, non-discriminatory treatment of his customers.”
“It has long been known that discretionary pricing policies that are not accompanied by regular audits, training and other controls to prevent conscious or unconscious bias from influencing pricing decisions leads to discrimination, particularly against consumers of color,” the suit says.
“Jaffarian knew or should have known that his pricing and compensation policies, alone and in combination, were likely to result in unfair and discriminatory pricing that harms consumers,” the lawsuit says.
The attorney general’s office says Jaffarian’s practices violate the state’s Consumer Protection Act and the Public Accommodation Act, which prohibits discrimination based on race, color and national origin in public places. In the lawsuit, Healey’s office is demanding an injunction to block these practices, along with restitution and civil penalties.
“We applaud the Massachusetts Attorney General for taking action to stop these troubling abuses,” said John Van Alst, a staff attorney at the National Consumer Law Center, according to the press release. the car sales and financial sector.”
Have a problem? Send your consumer number to sean.murphy@globe.com. Follow him on Twitter @spmurphyboston.
#sues #car #dealer #overcharging #black #Hispanic #customers #addons #Boston #Globe