A $1.25 million settlement agreement was reached with DMO Auto Acquisitions, LLC, dba Dan O'Brien Kia, to resolve allegations of unfair and deceptive acts or practices committed at the Dan O'Brien Kia dealership in Concord, NH, New Hampshire Attorney General John M. Formella announced Dec. 19.
The settlement, approved that day by the Merrimack Superior Court, requires DMO to comply with a series of strict injunctive terms over the next five years to ensure consumers are protected from similar practices in the future.
An investigation by the Consumer Protection and Antitrust Bureau revealed DMO employees engaged in three distinct types of deceptive acts or practices: they persuaded consumers into purchasing vehicles they could not afford, falsely inflated consumer income information on loan applications and forged the signature of a customer on loan paperwork.
The bureau started investigating the company's business practices after the volume of consumer complaints filed against DMO drastically increased between 2019-2021.
Use of Deceptive Sales Pitch
The investigation revealed that between 2019 and 2020, DMO used a sales pitch referred to as either the credit repair program, credit rehabilitation program or the six-month financing program.
The program was used as a last-ditch effort to close a sale when a customer informed DMO the terms of the approved financing were outside of their price range, and to convince customers to agree to accept loans they admittedly could not afford.
Customers were told they had qualified for the program and if they made timely payments on the loan for six months, the customer's credit would improve significantly and DMO would then be able to assist the customer in refinancing the loan to a more affordable rate.
The investigation revealed that program did not actually exist and was nothing more than a carefully calculated sales pitch. There were no written policies, procedures, literature or information available for the customers to review. The program was not endorsed or affiliated with any financial institution despite representations by salesmen that it was affiliated with well-known banks.
Customers who relied on employees' assurances they would refinance the customers' loans after six months of timely payments were ultimately left in a contractual obligation to pay a loan they could not afford.
Fraudulent Inflation of Customer Income
The investigation also revealed DMO was deceptively inflating the income of potential borrowers on applications for financing approval.
Between 2019 and 2020, customers interested in applying for financing were required to provide their monthly income as part of the application process. A DMO employee would then use the customer's monthly income, as well as other information, to solicit financing offers from various banks and credit unions.
On several occasions between 2019-2020, DMO employees would submit a customer's accurate information only to receive declinations from all potential financing sources. DMO employees would then resubmit customer applications shortly after receiving declinations and would falsely increase the income of potential borrowers on subsequent applications in order to increase the chances of obtaining approval.
Forgery of Loan Documentation
The investigation also revealed in one instance, a customer's signature was forged on loan documents then submitted without the customer's approval. In addition to forging the loan documents, the DMO employee signed the customer up for multiple insurance products the customer had expressly stated she did not want. The insurance documents were also submitted without the customer's knowledge or approval.
Settlement Terms
DMO will be required to:
- Make a payment of $1.25 million to the attorney general on behalf of the state.
- Reimburse the attorney general for $49,209.50 in legal costs incurred in the investigation of this matter.
- Hire an independent compliance monitor to review and report on its business practices for the next five years. The monitor will work closely with the Attorney General's Office to ensure DMO remains in full compliance with state consumer protection laws.
- Audio and video record all substantive financing discussions that occur between DMO employees and customers.
- Pay restitution to two consumers who were victims of the deceptive sales practices.
- Implement an approved training and education program for all DMO staff to ensure knowledge of and compliance with state consumer protection laws.
The case was investigated by Senior Assistant Attorney General Brandon Garod and Investigator Calice Ducey of the Consumer Protection and Antitrust Bureau.
If you or someone you know has experienced unfair or deceptive acts or practices by a New Hampshire business, contact the Consumer Protection and Antitrust Bureau of the Attorney General's Office by calling (603) 271-3641.
Source: New Hampshire Department of Justice
Abby Andrews