The FTC Just Did The UNTHINKABLE | $75M Returned to Customers | Episode 1046

It's noon here in Venter City, New Jersey, at our nation's capital, Washington, D.C.,

and this is Car Edge Live for Friday, April 3rd with your host, me, Ray, here in Venter,

and well, Zach, hanging out in Washington, D.C. How are you doing today, young man?

My eyes are still pinkish. Yeah, pretty messed up, but you know what, Dad?

I'm in a great mood. Happy Friday, everyone. Thanks so much for tuning in for another episode

of Car Edge Live. The FTC is the unthinkable, Dad. Holy cow. We have a hell of a show

in store for you today, so please stay tuned. A friendly reminder, folks, today's show is brought

to you by caredge.com. For those of you that are unfamiliar, we provide car buying services

that take care of research, dealer outreach, and even negotiation. We learn what matters to you,

contact dealers, compare real offers, and help get the best deal without the stress. So, Dad,

just a couple of weeks ago, the FTC made a lot of headlines because they sent a letter

to 97 auto dealership groups about deceptive pricing. Well, now, Dad, more than a year,

almost like a year and a half after the FTC and Maryland Attorney General went after

Lindsay Automotive Group for falsely touting low prices and overcharging consumers for unwanted

fees and add-ons. Again, this complaint is from December 27th, 2024. What press headline did we

get yesterday, Dad? FTC, Maryland Attorney General, secure full refunds and additional penalties

against Lindsay Auto Group for deceptive pricing practices and unwanted add-ons. More than 75

million in charges may be eligible for refunds. Today is a watershed moment for the auto industry.

This is the largest potential settlement and refund we have ever seen,

and by magnitudes more than ever before. Dad, what the heck is going on this morning?

Well, I don't know. I guess there's a couple of states out there that are willing to stand

up for their residents, for their constituents, and that when they encounter

bait-and-switch advertising at dealerships, they're going to do something about it. Now,

when you read the article, certainly Lindsay Auto Group does not admit any wrongdoing. They just

felt that, well, up to $75 million in settlement, it just made more sense to be able to have to

write a check than to actually have to go to court. But we'll refund those people.

Can we take a moment though, Dad, before we get too deep into this, go super high level here.

Explain to us what has happened before we get into the minutiae and the details of,

sure, Lindsay settling rather than going to court, all that. Explain to us what happened here and

why it is a watershed moment. Well, they would advertise prices that most people did not qualify

for, or they would advertise prices and then tell the customers when they came in,

oh, well, no, you have to finance through this. Oh, you don't have a trade. You have to pay extra

if there's no trade. Well, we have these mandatory add-ons that you have to pay for. Well, that

wasn't included in the ad price. Well, we're sorry, but that's what you have to pay for.

And so, like a lot of dealerships, this went on for a while. And I forget how many thousands of

customers it has impacted, but ultimately between the FTC and the Maryland Attorney General's Office,

they decided to fight back on behalf of the consumers and do something about it. I mean,

obviously, in Maryland, there are rules and regulations regarding how you're allowed to

advertise the price of vehicles. And they realized that Lindsay was in violation and wanted to do

something about it and hold them accountable. And this is like the second or third group,

because I think they got Koon's Volvo at one time and they got the Passport Auto Group

not too long ago, but not to the extent of close to or exceeding $75 million. That's huge.

Yeah, think about the impact. Like $75 million is a massive, massive number. And for context here,

Lindsay paying a $3.1 million civil penalty just to the state AG's office.

That is separate from customers who were charged a total of more than $75 million

between April 1, 2020 and December 31, 2025. Can I say one thing? The first article you pulled up

was dated December 24, 2024. So even after there was a notice given to Lindsay Auto Group

about what they were about to be investigated for, they continued to do it for another year.

I will say, Dad, I want to give Lindsay some credit here for a second. Obviously,

y'all know we have built the CarEdge dealer rating program. And I'm going to come here and show you.

You can search for all Lindsay dealerships here. And you're going to see they all have good grades

with the exception of one down here. Let's click on, though, for example, this Cadillac

dealership that, and you can see if we go down here to the quotes, no add-ons on any of their

vehicles. So just throwing that out there, it seems like they've cleaned things up, at least

from what we see in the data that we've collected, which obviously is good news. But Dad, the fact-

it's not like they didn't know the fine was coming.

I think that's what probably influenced them. But let's think about this for a second. $75

million. This is why you've always said this is a cost of doing business for many car dealers.

But Dad, over five years and $75 million of a high profit margin revenue, if this starts to become

the norm or the FTC and state AGs actually go after and then get, is it restitution? Is that

the right word? They get the money back for the customers? I mean, this could set a new precedent

here for how car dealerships operate because this is seven and a half times bigger than the last

biggest FTC enforcement, which was what, $10 million for Napleson Automotive Group, $9.8 million,

something like that, that they tried to claw back. This is $75 million over five years. If you live in

the state of Maryland, or I guess it's actually state agnostic, if you bought a car from Lindsay

Automotive Group, you're going to get a letter soon. That's literally what the state AG said.

You're going to get mail and you ought to answer a couple of questions. And if you do,

you're eligible potentially to get the $75 million back. That's crazy.

Yes. The customers are supposed to get back what they overpaid, the difference between

the advertised price and what they ultimately had to pay for the vehicle. They're supposed to get

back. And so, yes, when this could end up costing this group $75 million, I can guarantee the group

is not making $75 million a year. I'm not saying they're not making a lot of money. They are.

They're making millions. It's just probably not $75 million. And so they wouldn't want to have to

write that check all at once. And in some cases, they might never have to write a check because

people have moved, people may never get the mail. But it would be nice if they actually

have to write a check as opposed to, say, offer the equivalent sum that they were overcharged

in the way of a credit when they come back and buy another car from the Lindsay Group.

I don't know if it's going to be, hey, they're going to have to actually write a check to each

one of these customers or the answers to the questions correctly, or if they're only going to

have to offer them a credit. But the point is, it is so significantly higher than any type of

fine or civil agreement that we've seen. The dealerships always, we're not admitting any

wrongdoing. But we're stroking a check for $3.1 million because we didn't do anything wrong.

We're just going to write a check. But if ultimately, that ends up being $78 million,

that's a bigger check than they ever had expected to write. And that is, I would think,

enough of it that turned for most dealerships to say, we can't afford to have to write checks that

might total $78 million over however many years it is that this restitution has to take place.

The only thing better in my mind would be that they take the principles to court

and actually convict them and send them to prison. There's shame associated with

having to write checks totaling $78 million. There's a stigma associated with, well, I can't see my

neighbors for the next three years because I'm sitting in a prison somewhere. And so I think

I'd rather see the stigma along with the shame as opposed to them being able to deny any wrongdoing

and just write checks to make up for their bad behavior. That's just me, in my opinion. I can't

hear you. Thank you for sharing your opinion. Deb, let's come here to the Automotive News

article about this. You can see here more than 88% of customers in a random sample of deals from

April 2020 to March 2023 paid more than the price Lindsey advertised on car gurus and cars commerce,

the complaint said. Of those consumers, both paid over $2,000 more. A survey of Lindsey customers

found 38% were told they had to use Lindsey's financing to get an advertised price even though

quote confirmed to an advertising partner that its advertised prices are not contingent on financing

through Lindsey, the complaint stated. So this is exactly what we've talked about. Finally,

the Lindsey both placed add-ons such as service contracts into deals without the consumer's

consent and misrepresented an optional additional add-ons as required, the complaint stated. A

survey found one of these scenarios happened at 68% of the time for Lindsey customers charged

with add-ons, the complaint alleged. So think about that, Deb. This is the exact stuff we

talk about ad nauseam. Every freaking day we're talking about this. And to your point,

think about it for a moment here. They made $75 million in revenue. They didn't make $75

million in profit, but $75 million in revenue. And the fee to them, if they didn't have to

there was a redress back to the consumer was $3.1 million. I'm not good at math, man.

Neither are you. But if you told me I could spend $3.1 million and make $75 million, I'd do it.

I'd do it. Yeah, would you pay $3.1 million to bring in $75 million? I'm pretty sure I would.

So you can see the commercial incentives, like the capitalist incentive for these dealerships is

so clear. But if there's redress to the customers, that's where it becomes really

interesting. And you know what? This model probably will continue to exist for a long time because

many customers will never hear this press release. Many customers will never look at the mail that

they got saying, hey, you could be eligible for X number of thousands of dollars back.

Many customers are too lazy to fail out and answer those questions. It'll still probably be profitable

for them to have gone through all of this. And this is thus the reason why programs like ours,

the dealer transparency index, everything are so important to bring awareness to this.

Yeah, orange, Robert Duck, 75 minus 3, 72. Yeah, making a lot of money, making a lot of money.

Yeah. And the fact that it could exceed $75 million, everybody knows the likelihood of that,

of even approaching anything near $75 million is like maybe there's a 1% chance that could happen.

They know that there's a rather large percentage of people who are going to be contacted

that are never going to respond to the letters, that are going to look at the letters as junk

mail, that aren't going to believe the letters. You know, we're talking about going back nearly

six years in many cases. How many of those people have moved? How many of those people have gotten

rid of those cars? How impossible is it going to be to track down some of the people that

I'll try and put it in a nice way that they stole from? There is no financial reward for the customer

if they can't track the customer down. But it is an important step, I think, in setting an example

for others out there who operated the same way or still operate the same way, that your day

is coming, might not be tomorrow, might not be a month from tomorrow, might be five years from now,

but your day, your day is coming and it won't be a day in court because you will admit no

wrongdoing and you will agree to a settlement. Okay, but your day is coming and that's what's

important here, that the dealers understand that, that the letters that were written apparently

had a little more teeth in them than any of us, especially me, would have thought.

This is a big one-two punch. The letter comes out three weeks ago and now this news happens

today. That's huge. That's a huge one-two punch. I will say that it's also very damning for car

gurus and cars commerce. 88% of the customers had the listed price and it changed at the dealership.

Well, you know what? Let's put ourselves in the dealership shoes for a second. They're trying to

get leads, leads, leads, leads, leads. How do you get leads? Great price, great price, great price.

How do you get great price? You got to put BS prices on those websites. I blame those websites

and they don't get caught up in this at all. I mean, they get subpoenaed to share data.

The last time I checked, none of this has anything to do with them having to clean up their act.

It's not as if the FTC or the Merlin State Attorney General is going after car gurus

or cars commerce. They're the ones that know it's happening and when dealers aren't getting much

action on the cars that they're advertising, the reps from car gurus and all the others are going

to say, well, your prices aren't low enough. If you want to get clicks, you need to advertise a

lower price. The reps are telling the dealers that, the dealers are going, okay, well, we want to get

clicks and they are convinced, many are convinced that the only way that they can advertise online

is fraudulently in order to get the clicks that they need to sell the cars. Every dealer will

say it, especially every dealer will say, well, it's the only way we can get clicks. People say

the same thing about us with our hyperbolic thumbnails and stuff. Well, why do you do that?

Well, it's the only way we get clicks. That's not really a good excuse,

but it is the excuse that dealers use and it's the excuse that we use. It's unfortunate. The

difference is that it doesn't cost you anything when you click on us. It costs if you click on one

of those dealers and you go in to actually buy one of those cars and then suddenly the price is

jacked up. If I may, dad, isn't it interesting in the Automotive News article, they actually went

to one of Lindsey's store's website, one of their Ford stores. You can see the banner on the home

page now of this dealership is Mrs. Lindsey Ford. Time transparency and honesty matter all in price,

freight and processing charge are included in the advertised price. You can see they really,

really have done a 180 here and they didn't really have a choice, but obviously,

they did this 180 and now they're leaning in heavily, which again, we can validate

with the CarEdge dealer transparency index, CarEdge dealer reviews. Obviously, all you

got to do, we pull it up on the screen really quickly, search for a Lindsey dealership back on

the CarEdge dealer ratings website and you're going to see they all have pretty good grades.

And I can't complain in the sense that I'd rather them become champions of fairness and

transparency after having gotten caught being the opposite than never becoming champions of fairness

and transparency. You can't be hating on them now that they're doing things good. You've got to

be happy that they're doing things well. Yes, I just wish they would have realized it sooner

rather than later, but I am certainly thankful that they've realized it. It's just the fact

that it takes so many of these dealers so long and many times the only reason it changes is because

well, they got caught with their hand in the cookie jar and then they have to give back all the

cookies. Well, usually they don't. I think that's what's so interesting is finally it seems like

they do. Why don't we switch gears? Dad, we talked about a little bit yesterday. We'll spend a few

more minutes here today on it. The first quarter car sales numbers were really bad, really, really

bad after weeks started, 2026 automakers braced for more volatility with ion affordability

in fuel prices. So obviously, FTC got that out of the way, Lindsey Automotive Group got that out

of the way. Hopefully the 75 million bucks go back to all those customers that can help them maybe

buy their next car because the auto industry needs more shoppers all of a sudden as affordability

continues to be a challenge. Affordability is not a challenge. The manufacturers don't give a damn

about affordability. They'll put in every press release that they're concerned about affordability.

Their actions don't match their words ever. You can't say, oh my goodness, we realize that our

cars have become way too expensive for most people to be able to afford them and the way

we're going to address that is we're actually going to lower prices. We have seen just the opposite

that average asking prices keep going up. The manufacturers, they speak with a forked tongue,

okay? And one of the things they talk about in the article is, well, it's kind of like there's a

fork in the road. Well, I can assure you, whichever side of that fork they're going to choose will

be the wrong one, okay, because they always do in my opinion. I mean, just come on. How many times

do we have to see in automotive news where the manufacturers are, you know, we're going to address

affordability? No, we're not. We're going to say it, but we never do. So, you know, the industry

afforded me a pretty decent life, the automobiliers. But damn it, I wouldn't care if they all failed.

And the reason I wouldn't care if they all failed is because they all lie, okay? Because they won't

do the things that they say they're going to do. They won't do things to make vehicles more

affordable for people, but they'll keep sending out these press releases indicating that they will.

During COVID, when dealers were gouging the hell out of their customers with additional

dealer markups and things of that nature, and the manufacturers would send sharply worded letters to

the dealership saying, you know, this isn't in your best interest and this is bad business.

So, they could send the letter. They could say we sent the letter, but they didn't have any authority

or any power over the dealers. And the same thing is true here, where they say they're going to do

something and then they don't. And so, if they fail, they failed because they chose to fail.

They failed because they have chosen to leave the vast majority of people behind.

And so, shame on them. You know, it wouldn't bother me in the least if any of them go out

of business or if all of them go out of business. That's just me. That's just my opinion.

All of them, man. That's too many. All right, let's switch gears. Let's end this week on a high

note. How about that? Well, I'll do my best. Do I need to get any of my aides?

No, you're good. Let me hear your best rendition of.

Really? You have got to be kidding me.

Exclusive. RIS lending closes $300 million warehouse facility plans to increase originations to $200

million in 2026. For those of you that are unfamiliar, RIS lending is the financial institution

that's giving you up to 20-year auto loans. Excuse me? What? 20 years? Yeah, because the only

way you can get the charisma that you're looking for is to finance it for 20 years. That's how

much of a loser you are, sir and madam. Come on. RIS lending. Yeah, even I know that RIS is a slogan

for charisma and really showing a Porsche and saying, hey, so it's going to take you 20 years

to pay for it. But think of the women you're going to impress. Think of all your friends that you're

going to impress. Yeah, I hope they get the hit their $200 million worth of loan originations for

all the morons out there who need to boost their ego by, well, spending way too much for things

they really can't afford. It is really interesting because RIS lending, the really got to be kidding

me here is that one is the fact that it's called RIS lending and yes, that it is only for specialty

vehicles. I hate to agree with you, but yeah, it's to boost your ego essentially because I can't

afford a Ferrari, but I can if I finance it over 20 years. That's really what this is saying. And

the really got to be kidding me is the fact that they got a $300 million warehouse facility. That

means there's another bank behind them that is giving them $300 million to lend out.

What private investors? What private investors? Yeah, there's a financier behind RIS that's saying,

yeah, you know what this does make sense, which means somewhere there's a spreadsheet that says

it's going to make a lot of money. That's what that ultimately means. There's a financial model

that says they're going to make a bunch of money, but this is bonkers, man.

How much interest do you pay back over 20 years? And I get that they said, well, we'll be able to

offer the lowest payments out there. Well, of course, you're stretching it out for 20 years,

dammit. 240 months. Yeah. If you can't get the payment low over 240 months,

I can't wait to see your 30 year loans. Let's look at this very second, dad. Here's our favorite,

calculator.net. Yes. All right. So let's say we're financing an expensive car. So what do you

get? So you can get a relatively cheap Maserati. Say a buck 50.

Buck 50. And dad, someone knocked at my door. Give me one second. Let's see who's at my door.

Somebody knocked at your door. Somebody knocked at my door. Are we too loud? I don't know. Let's see.

Let's find out. Ladies and gentlemen, his door obviously is not far from where he sits.

And the door closed. So I guess we're good. This is fantastic. It is male for someone who

is not made. So that's great. Okay, why did you accept it? It was on the floor. All right.

Anyway, let's come back. So we're saying $150,000. Yes. And dad, the loan term's not going to be

60 months. It's going to be your classic 240 more. What interest rate you think you're getting approved

for? Use 9.9. Who knows? 10%. Okay. We'll say we're doing a down payment. Sure. We'll do all

this. Include the type. Okay, calculate. This is hilarious. So you want to be a cool guy or gal?

Yes. And you want to drive that $150,000 car for 1500 bucks a month because you can afford

$1,500 a month. Yes. You're paying back.

$200,000 in the interest. But nobody's got more Riz than you do amongst your friends.

Okay. May I say this? If it's a guy that does this, my guess is... Be careful. No, no, no, no.

Don't go there. Don't go there. No, you don't know what I'm going to say. My guess is that he's

financing his fiance's engagement ring for the same amount of time. That's what I was saying,

you know, because if he can't afford the charisma of that car, he can't afford the charisma of the

type of engagement ring he would give. So yeah, I mean, why wouldn't you stretch every loan payment

out to 20 years if you can? Let's do one more. Okay. They've got some examples on their website.

Dad, let's say you are just... Oh, I love this. I love the typical bank. No, no, we're going to do

this in a second. You want a Lamborghini Urus Performante for $355,000. Could I? Could I? Could

I? You need that. A typical bank is going to charge you $3,509 a month. Your Riz payment

is going to be $2,172. All right, you ready? Yeah.

Let's come back over here. $3,555 is what it said, right? Yeah.

So we're financing $350,000, $5,000 over 240 months at a 10% interest rate. Drum roll, please.

Well, they're saying the payment's only going to be $2,100. How are they doing that?

Interest rate must be super low, man. We must be using a higher interest rate because we've got

you paying back almost half a million dollars. Well, a typical bank would have you paying back

almost a half a million dollars. Yeah, but Riz lending, not us.

If anyone works at Riz and you want to come on the show and help us understand your business model

and where we're all ears, you can email me, Zach at caredge.com. I find this fascinating.

And I can't even promise that I'll be nice. No, that'll be himself.

Yes, I will be myself and I will ask the tough questions and I will ask you if you were to

chart the IQ of your average borrower, would it be lower than the IQ of an average American?

Because my suspicion would be is that it will. All right, so what do I do? So this is like a FedEx

envelope. It's not like a FedEx envelope. It indeed is a FedEx envelope.

So and it's to someone who's not me. Okay. So what do I do? Give it back to FedEx.

Okay, that's what I'll do. Yeah, but is it somebody that used to live there?

No, it's a name I don't recognize. I would ask your landlord.

Okay, I'll ask my landlord. Yeah. All right. Well, thank you for the advice, Dad. Again,

my dad and our incredible team provide a car buying service. We'll contact dealers, negotiate,

learn what matters to you and help you get the best deals, save you some time and energy.

As well, you can learn more back at caredge.com. We're back on Monday with more Car Edge Live.

We appreciate everyone tuning in. Thanks for spending another week with us, Dad. I hope

you enjoyed the upcoming weekend and have some fun. You know, that's my plan. I've got big plans

for tomorrow. I'm cleaning, buddy. I'm clean. This apartment needs a good dusting and a good

vacuuming, and then the bathroom needs to be spiffed up. Not that anybody's showing up here

other than me, but, you know, I need to keep the place looking presentable so that God forbid,

if your mother were still alive, she would go nice job right now.

All right. Enjoy cleaning. Everyone enjoy your weekend. Dad, I'll see you back here on Monday.

Absolutely. Love you, handsome. Thanks, everybody. We'll see you Monday.

If you like the show, please take a moment to rate, review, and subscribe. It really does

help the show to grow. Thank you for listening.

The FTC Just Did The UNTHINKABLE | $75M Returned to Customers | Episode 1046

About this episode

deceptive pricing

FTC

Maryland Attorney General

Lindsay Automotive Group

unwanted add-ons

additional penalties

bait-and-switch advertising

settlement

advertise prices that most people did not qualify for

state AGs

Napleson Automotive Group

Cars.com

CarGurus

financing-contingent pricing

commercial incentives

leads

subpoenaed to share data

clicks

Ford

CarEdge

fuel prices

sharply worded letters

RIS lending

loan originations

warehouse facility

20-year auto loans

240 months

calculator.net

Lamborghini Urus

interest rate must be super low

paying back almost half a million dollars

Request an Explanation

Want to learn more?

Help improve this episode

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