Commissioner Salas And Mayor de Blasio Joined Forces To Combat Predatory Used Car Practices

October 16, 2017

The Department of Consumer Affairs (DCA) Commissioner Lorelei Salas today joined Mayor Bill de Blasio at City Hall as he signed Introduction 1539 and 1540 to combat predatory practices in the used car industry from Harlem to Hollis. These new laws require used car dealerships, which DCA licenses, to post a Consumer Bill of Rights and disclose information about financing and pricing, provide all required notices to the consumer be in the language used to negotiate the contract, and provide consumers with the option to cancel their contract within two days of the sale. This package of legislation was introduced by Council Member Rafael Espinal, Jr., Chair of the Council Committee on Consumer Affairs, Council Member Dan Garodnick, and Council Member Jumaane D. Williams following a public hearing hosted by Commissioner Salas and Council Member Espinal.

“This law provides much needed transparency in an industry plagued by deceptive and illegal sales practices,” said DCA Commissioner Lorelei Salas. “For many, buying a car is one of the largest purchases they will ever make. By requiring second-hand automobile dealers to post and distribute a bill of rights to consumers, as well as offer a cancelation policy, we can better ensure that hard-working New Yorkers have time to evaluate their purchase and aren’t being taken for a ride by predatory dealers. DCA is committed to educating consumers of their rights, and will continue to hold the industry accountable so that those businesses that do comply with the law are not unfairly competing with those that do not.”

This package of laws will help protect consumers by:

1. Enhancing consumer knowledge through disclosures:
Prior to executing a Retail Installment Sales Contract dealers must disclose to the consumer annual percentage rates, charges imposed by the dealer for arranging financing, itemized costs of add-ons and accessories, and the total cost and monthly payments of the transaction. Dealers must provide all sales documents to the consumer in the language used to negotiate the sales contract; DCA will provide model notices in multiple languages.

2. Prohibiting predatory practices:
Dealers may not mandate that the consumer obtain financing through the dealership, offer conditional contracts that allow the dealer to cancel them after execution, price-pack contracts by slipping in expensive add-ons or accessories without itemizing the price, or falsify consumer information on credit or loan applications to qualify consumers for loans they cannot afford.

3. Empowering consumers to consider options:
Dealers are required to offer each consumer a contract cancellation option, which, if agreed to, will give the consumer the right to cancel a sales contract within two days of the sale and before taking delivery of the vehicle, subject to certain conditions. This option will give consumers the option to think over the purchase and financing if they choose to do so.

4. Incentivizing compliance and authorizing effective enforcement:
DCA now has the authority to suspend or revoke a dealer license for any violation of these new laws and are required to suspend or revoke a license if the licensee violates the law three or more times within a three year period.

5. Requiring robust recordkeeping and reporting:
Dealers are now required to keep detailed records and make them available for DCA inspection and can be required to report annually to DCA about the use of contract cancellation options.

6. Educating consumers about their rights:
DCA is now required to create a “consumer bill of rights” to inform consumers about their rights, and dealers’ responsibilities, under the law. Dealers are required to conspicuously post the bill of rights at their place of business and provide a copy of the document to buyers in the language used to negotiate the contract. Dealers must also keep an initialed copy of the bill of rights provided to consumers on file.

DCA currently licenses 784 used car dealerships and has received nearly 5,800 complaints from consumers about used car dealerships over the past four years. The complaints range from instances of forgery on contracts to a lack of material disclosures by dealership staff. As a result of the mediation of consumer complaints, investigations and settlements, DCA has secured more than $2.7 million in consumer restitution and assessed nearly $1.8 million in fines against used car dealerships over the past three years. These new laws will help tackle common predatory practices engaged in by used car dealers such as deceiving consumers into loans with longer-than-necessary repayment terms and failing to disclose hidden dealer markup rates.

“Second hand auto dealers will now come to understand that while their cars may be used, our consumers will not be abused,” said Council Member Rafael Espinal, Chair of the City Council Committee on Consumer Affairs. “I am proud to pass Intro No. 1539-A, which will increase disclosure requirements, strengthen penalties for violators of the law and create a two-day contract cancellation option, allowing consumers precious time to think through their decision. The fallout from a bad car loan could be worse than the mortgage crisis, but now vulnerable New Yorkers will have the empowerment tools they need to make good financial choices. I thank Mayor de Blasio for continuing to support vulnerable New Yorkers and signing this bill into law.”

“Used car dealers who operate unscrupulously often target New Yorkers who are from low income, under-banked, immigrant communities,” said Council Member Dan Garodnick. “All consumers—especially our most vulnerable neighbors—must be protected, and these deceitful sales tactics must come to an end. Our new Consumer Bill of Rights will empower purchasers of used cars and clamp down on predatory practices in this industry.”

Advocacy is one prong of DCA’s efforts to combat these predatory practices, which also includes enforcement and education. In March 2017, DCA announced charges against Major World, one of the largest local used car dealerships in the city with multiple locations in Queens, for using deceptive financing and sales practices that resulted in predatory lending targeting immigrants and New Yorkers with low incomes. In May 2017, DCA announced charges against multiple used car dealerships in Brooklyn,, which are all under the same ownership, and their owners for engaging in deceptive and unlawful trade practices that preyed on New Yorkers. DCA alleges these dealerships mislead consumers about the price and safety of their cars, and failed to disclose financing terms. DCA also, for the first time, sought consumer restitution from finance companies— Credit Acceptance Corp., Clover Commercial Corp, and Westlake Financial Services—involved in subprime lending. In September 2017, DCA announced a settlement agreement with Credit Acceptance Corp. who agreed to pay restitution to the victims of these illegal practices. These cases are both pending trial.

DCA offers an online guide to Getting Your Finances in Gear to Buy a Used Car, which is available inEnglishSpanishArabicBengaliChineseHaitian CreoleKorean, and Russian. The guide informs New Yorkers of their rights when arranging financing for their used car purchase and provides general tips about used car dealerships. DCA also offers a comprehensive Used Car Buyer Guide  with tips about shopping for a used car. Any New Yorker who is trying to get their finances in order before buying a car or who is struggling with debt, can make an appointment for free, one-on-one financial counseling at one of the City’s Financial Empowerment Centers by calling 311.

With auto loan debt being the fastest-growing household debt (Federal Reserve Bank of New York), DCA is now pursuing new approaches, like obtaining restitution from the financing companies involved in the used car lending, in order to make consumers whole. Seeking restitution from the financing companies, which, by contract, take on any consumer claims against the dealerships, helps to assure that consumers will be made whole after the losses they suffered from the dealerships’ deceptive practices. Deceptive and illegal practices by dealerships hurt both consumers and lenders, and lenders would be wise to scrutinize the dealerships with which they do business. DCA encourages any consumer who feels a used car dealership has misled them about the price of their car or sold them an unsafe automobile to contact the agency by calling 311, or by filing a complaint at

For more information about DCA and its work, call 311 or visit DCA at

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