Sep. 20—HAVERHILL — Attorney General Maura Healey announced Monday that her office is suing a Haverhill car dealership for engaging in unfair, deceptive, and discriminatory pricing practices against Black and Hispanic customers by illegally charging them hundreds of dollars more for "add-on" products when purchasing a car.
The AG's complaint, filed in Essex Superior Court, claims that Jaffarian's Service Inc., "doing business as" Jaffarian Volvo Toyota, of Haverhill, charged Black and Hispanic customers on average hundreds of dollars more than white customers for "add-on" products such as paint protection, GAP insurance, and remote starters.
"Purchasing a vehicle is already a significant financial decision for many families and individuals — the last thing they should be worried about is unfairly paying more for a product because of their race or national origin," Healey said in a press release.
Gary Jaffarian, president and CEO of the dealership, responded to Healey's lawsuit Monday, saying "Jaffarian Volvo Toyota, which is a fourth generation family-owned and managed dealership, has never received any complaint from any customers regarding discrimination in its sales, pricing or services and denies the Massachusetts Attorney General's claims of discrimination."
Jaffarian's attorney, Christopher J. Marino, said in a statement the AG's allegations do not appear to be based upon any individual complaints about the pricing of the dealership's add-ons.
"Further, the AG's office never informed Jaffarian why they decided to investigate the dealership's sales, and it appears that the office picked Jaffarian's dealerships randomly," Marino said.
Additionally, Marino said, "We emphatically deny the allegations in this lawsuit and have been cooperating fully with the Attorney General's Office since they first contacted us."
"Jaffarian takes a strong stance against discrimination in all forms," Marino added. "Until Jaffarian Volvo Toyota recently received notice that the Attorney General's Office had elected to file suit, we were under the impression the Attorney General's Office was willing to sit down and listen to Jaffarian."
John Van Alst, staff attorney at the National Consumer Law Center, applauded the AG's office for taking action to stop what he referred to as "disturbing abuses."
"NCLC research shows that discrimination is widespread in the car sales and finance industry," Van Alst said. "Stopping discrimination is important to protect both car buyers and the honest dealers who charge people the same price no matter their race or national origin."
Van Alst said that in this case, the AG's complaint alleges that Black and Hispanic customers were charged hundreds of dollars more for add-ons like GAP protection, remote starters, and paint protection.
"It is urgent that state and federal regulators and enforcement entities act swiftly through both enforcement and rulemaking to end these abuses," he said.
Unbeknownst to many car buyers, dealerships generally make more money on the sale of add-on products than on the sale of the car itself, Healey's press release noted.
"When purchasing a car, most customers are focused on negotiating over the price tag of the car, and add-on products are often sprung on them at the end of the sale, when the customer can be tired after likely going through multiple rounds of negotiations over the price of the car and/or financing," Healey said. "Furthermore, consumers may not understand that dealerships are marking up pricing for add-on products."
The AG's complaint alleges that the dealership gave staff full discretion to markup the prices of add-on products, and its sales history shows that Jaffarian appeared to charge Black and Hispanic customers, on average, approximately $500 more and $400 more, respectively, for add-on products than similarly situated white customers.
According to the lawsuit, since at least January 2016, Jaffarian has structured all finance manager compensation plans such that finance managers are able to earn more money by selling add-on products to consumers at higher markups.
The higher the markups, the more a finance manager earns, the lawsuit states.
This alleged discriminatory sales practice resulted in more than $170,000 in improper profits for the dealership in a two year period, Healey noted. The complaint also alleges that the dealership provided no training or supervision of its pricing policies and practices to prevent pricing discrimination.
The AG's office alleges that Jaffarian's practices violate the state's Consumer Protection Act and the Public Accommodations Law, which prohibits discrimination on account of race, color, and national origin in public places.
The lawsuit also states "Jaffarian knew or should have known that its pricing and compensation policies, alone and in combination, would likely result in unfair and discriminatory pricing that harms consumers."
"Nearly one third (30%) of our dealerships' 104 employees are Latinx and another 12.5% are African American, Asian, or are of other non-white races or ethnicities," Gary Jaffarian stated in his response to the lawsuit. "Most of these employees purchase their cars through our dealerships. Our dealerships based in Haverhill cater to local consumers from Lawrence and the Merrimack Valley — areas with a significant Latinx population — so we would be hurting ourselves to discriminate in any way."
He added, "My son and I are in the dealership every day; we have telephones around the dealership that any consumer can pick up and talk to us or voice any concerns they have and we have never heard anyone say or suggest there has been any form of discrimination."
Marino said Jaffarian denies the allegations in the Attorney General's Complaint, plans to vigorously defend itself against the lawsuit, "and looks forward to presenting our defenses in court."
This case is being handled by Deputy Division Chief Mychii Snape and Assistant Attorney General Schuyler Daum, both of the AG's Consumer Protection Division; with assistance from Assistant Attorney General Jonathan Burke, of the AG's Civil Rights Division.
The lawsuit is seeking damages under the Consumer Protection and Public Accommodations laws and is asking a judge to issue an injunction preventing Jaffarian from engaging in similar practices in the future, to pay civil penalties, pay attorneys' fees and costs, and to pay restitution to consumers.