Leader Automotive Group, along with its parent company AutoCanada, has agreed to pay $20 million to settle allegations of systematic fraud and deceptive practices targeting car buyers, the Federal Trade Commission (FTC) and the Illinois Attorney General announced today. The settlement, which marks the largest monetary judgment ever secured by the FTC against an auto dealership, aims to refund harmed consumers and implement new business practices to prevent future misconduct.
“This dealership network engaged in bait-and-switch tactics by luring consumers into their dealerships with lower prices only to either require consumers to purchase allegedly pre-installed add-on products or charge consumers for those products without their knowledge or permission,” said Kwame Raoul, Illinois Attorney General. “I appreciate the collaboration with the Federal Trade Commission to ensure bad actors are held accountable and our consumers are protected from deceptive business practices.”
The case, which also involves former U.S. operations VP James Douvas, centers around claims that the dealerships engaged in a “bait-and-switch” scheme, misleading consumers with low advertised prices that were later inflated through undisclosed add-ons and fees. Customers were often required to purchase unnecessary products, such as protective coatings and theft protection, which were added to vehicle prices without their consent. In some cases, these add-ons were sold at more than 99% profit.
“The dealerships misled consumers with false pricing, hidden fees, and fake reviews, exploiting people who were just trying to buy a car,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “This settlement holds them accountable and sends a clear message to the industry.”
In addition to the $20 million refund to consumers, the settlement mandates that Leader Automotive clearly disclose the true price of vehicles, including any additional fees, and obtain express consent from buyers before charging for add-ons. The settlement also requires the company to stop using deceptive advertising tactics, such as posting fake reviews, which were allegedly encouraged by management.
The complaint alleges that Leader’s deceptive practices went beyond pricing. Customers were charged for “certified pre-owned” vehicles without receiving the promised certifications, and cars were sold in the U.S. as if they had valid warranties, even though many were imported from Canada, voiding their original manufacturer’s warranty. Furthermore, salespeople were instructed to post fake positive reviews online to boost the company’s image.
“Through this joint effort with the FTC, we are ensuring that these bad actors are held accountable for deceiving Illinois consumers and exploiting them for profit,” said Illinois Attorney General Kwame Raoul.
Leader operates the following Illinois car dealerships:
- North City Honda
- Crystal Lake Chrysler Dodge Jeep Ram
- Hyundai of Lincolnwood
- Kia of Lincolnwood
- Bloomington Normal Auto Mall, which includes Mercedes-Benz of Bloomington, Lincoln of Normal, Volkswagen of Bloomington Normal, Volvo Cars Normal, Subaru of Bloomington Normal, and Audi Bloomington Normal
- Autohaus Motors, which includes Mercedes-Benz of Peoria, Porsche Peoria, Volkswagen of Peoria, and Audi Peoria
- Chevrolet of Palatine
- Hyundai of Palatine
- Toyota of Lincoln Park
- Toyota of Lincolnwood
The FTC’s settlement also prohibits Leader from using misleading pricing tactics in the future and requires them to ensure that all advertised prices are the actual amounts consumers can expect to pay. The case remains ongoing against former Vice President James Douvas.
Leader Automotive Group operates multiple dealerships, including North City Honda, Crystal Lake Chrysler Dodge Jeep Ram, and Hyundai of Lincolnwood, among others. The settlement is a significant victory for consumers, emphasizing the need for transparency and honesty in the auto sales industry.
