FTC Refunds More Than $1 Million to Customers for Discrimination by Rhinelander Auto Center

Among other things, the Wisconsin dealership group was accused of applying a higher ‘markup’ to their interest rates for American Indian customers.
FTC Refunds More Than $1 Million to Customers for Discrimination by Rhinelander Auto Center
The Federal Trade Commission (FTC) building in Washington on Sept. 19, 2006. Paul J. Richards/AFP via Getty Images
Aldgra Fredly
Updated:
0:00

The Federal Trade Commission (FTC) said on Tuesday that it is distributing more than $1 million in refunds to customers affected by car dealer Rhinelander Auto Center’s alleged discriminatory practices and junk fees.

The refund resulted from a complaint filed by the FTC and the State of Wisconsin in October last year, which alleged that Rhinelander and its general manager had discriminated against American Indian customers by charging them higher financing costs and fees, including a “markup” to their interest rates that resulted in their paying approximately $401 more in interest payments compared to non-Latino white customers.

The company was also accused of deceiving customers by charging them junk fees without their consent. About half of Rhinelander’s customers reported being charged for add-ons without their knowledge, according to the complaint.

These add-ons include vehicle service contracts, guaranteed asset protection (GAP) insurance, prepaid maintenance, tire and wheel protection, key replacement, nitrogen tire fills, and theft recovery.

The FTC stated that a consumer claimed she was deceived into paying for GAP insurance on her car purchase without her authorization, costing her more than $1,000 in fees and additional interest on her loan.

The complaint alleged that American Indian customers were charged for unwanted add-ons more frequently than non-Latino white customers. It stated that since March 2019, those customers paid an average of $1,374 more than white customers.

The FTC said the refund will be distributed among 7,531 consumers and it advised refund recipients to cash their checks within 90 days, according to its statement.

As part of the settlement, Rhinelander is required to create a “comprehensive fair lending program” that enables consumers to seek outside financing and limit the amount of additional interest markup the company may impose.

In response to the complaint last year, Rhinelander denied the allegations but said that it agreed to a voluntary resolution to avoid lengthy litigation. The company also affirmed its commitment to treating “all customers with dignity.”

“We totally reject that our people—many of whom are long-term members of the local community—would engage in the practices alleged,” the company said in a statement in October 2023.

“That’s not who we are, and there is a great deal of evidence to reinforce the fact that Rhinelander Auto Group and its employees are ethical, decent, and very good people.”

Rhinelander said that the settlement agreement with the FTC includes no admission of wrongdoing and expressed relief at moving on from the matter.