Federal regulators have secured a landmark $20 million settlement from AutoCanada’s U.S. subsidiary, Leader Automotive Group, marking the largest-ever penalty in a Federal Trade Commission case involving auto dealership practices. The settlement, announced Wednesday, addresses allegations of discriminatory lending practices and deceptive sales tactics at the Illinois-based dealership group.
The FTC’s investigation revealed a pattern of practices that disproportionately affected minority customers and violated multiple consumer protection laws between 2018 and 2023. Leader Automotive Group, which operates six dealerships in the greater Chicago area, allegedly engaged in price discrimination, payment packing, and unauthorized add-on charges that resulted in thousands of customers paying inflated prices for vehicles and financing.
This settlement sends a clear message that discriminatory practices and deceptive sales tactics will not be tolerated in the automotive retail industry,” said FTC Chair Lina Khan. Dealerships must ensure fair treatment for all consumers regardless of their background, and maintain transparent pricing and financing practices.
According to the FTC’s complaint, Leader Automotive Group implemented a tiered pricing system that resulted in minority customers paying an average of $3,500 more for the same vehicles compared to non-minority customers. The investigation found that sales staff were instructed to quote higher starting prices to certain customers based on demographic factors, violating the Equal Credit Opportunity Act.
AutoCanada, which acquired Leader Automotive Group in 2018, has accepted responsibility for the subsidiary’s actions and agreed to implement comprehensive reforms across its U.S. operations. The settlement requires the company to establish new compliance programs, provide regular reports to the FTC, and undergo third-party audits for the next five years.
Paul Antony, CEO of AutoCanada, expressed remorse over the situation in a statement: “We acknowledge these serious violations and are committed to implementing sweeping changes to ensure such practices never occur again within our organization. The actions uncovered by the FTC investigation do not reflect our corporate values or commitment to ethical business practices.
The settlement money will be distributed to affected customers through a claims process managed by an independent administrator. The FTC estimates that approximately 12,000 customers who purchased vehicles from Leader Automotive Group during the period under investigation may be eligible for compensation.
Consumer advocacy groups have praised the settlement while emphasizing the need for continued vigilance in the automotive retail sector. “While this penalty is significant, it represents just one example of the discriminatory practices that persist in auto sales and financing,” said Maria Rodriguez, executive director of the Consumer Auto Rights Foundation.
The investigation also uncovered systematic payment packing schemes where customers were charged for additional products and services without their knowledge or consent. These add-ons included extended warranties, gap insurance, and protection packages that were often inserted into contracts without proper disclosure or customer approval.
Legal experts note that the size of the settlement reflects both the severity of the violations and the FTC’s increasingly aggressive stance on consumer protection in automotive retail. “This penalty sets a new precedent for enforcement actions in the auto retail sector,” said Robert Chen, a consumer protection attorney with Harrison Law Group. “It demonstrates that the financial consequences of discriminatory practices can be substantial.”
The settlement requires Leader Automotive Group to implement specific reforms, including standardized pricing procedures, mandatory fair lending training for all sales staff, and enhanced disclosure requirements for all fees and add-on products. The company must also establish a dedicated compliance department reporting directly to senior management.
State regulators in Illinois have launched their own investigation following the FTC’s findings. The Illinois Attorney General’s office announced plans to review licensing requirements and strengthen oversight of dealership practices across the state.
The impact of this case extends beyond the immediate parties involved. Industry analysts suggest that other dealership groups are likely to review and revise their sales and lending practices in light of this settlement. This case will serve as a wake-up call for the entire industry,” noted Sarah Thompson, an automotive retail analyst with Global Market Intelligence.
AutoCanada’s stock price fell 8% following the announcement, reflecting investor concerns about both the financial impact of the settlement and potential reputational damage. The company has announced plans to host an investor call next week to address questions about the settlement and outline its compliance reforms.
The settlement also mandates the creation of a consumer education program focused on car buying and financing. Leader Automotive Group will fund the development of educational materials and resources to help consumers understand their rights and make informed decisions when purchasing vehicles.
Looking ahead, industry observers expect this case to accelerate the trend toward more transparent and digitalized car-buying processes. The settlement’s requirements for standardized pricing and clear documentation of all charges align with growing consumer demands for greater transparency in automotive retail transactions.
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