California AG sues dealer for deceptive practices | Auto Finance News | Auto Finance News

California AG sues dealer for deceptive practices

California Attorney General Xavier Becerra is suing a used-car dealer for allegedly defrauding auto lenders and low-income Californians, according to court documents filed with the County of Alameda Superior Court.

Paul Blanco, owner and CEO of Paul Blanco’s Good Car Co., operates seven used-car dealerships in California and two in Nevada. The dealership chain, which predominantly arranges “subprime auto financing for economically distressed, credit-challenged consumers,” allegedly aired deceptive advertising to “lure unsuspecting consumers to dealerships,” the filing stated.

In one case, the chain targeted senior citizens, falsely advertising a “Seniors Gold Program” provided by credit unions, that requires no proof of income or down payment, according to the filing.

One manager revealed that the dealership chain taught employees to lie to third-party lenders in order to obtain consumer financing on false pretenses. The sessions, which the manager called “lessons in larceny,” purportedly encouraged employees to deceive lenders by lying about the value of vehicles financed and by misrepresenting consumer income on credit, the filing said.

“It might be called Paul Blanco’s good car company, but for many families that name could not be further from the truth,” Becerra said in a statement.

Additionally, the documents said the defendants tricked customers into paying “thousands” for add-on products, such as GAP insurance, by telling customers these products were required by law or included in the sale price; in some cases the defendants concealed the hidden charge altogether.

Following the civil suit, Blanco’s wife Putu — who is the dealership’s chief financial officer — issued a statement denying the allegations. “We will fight this misguided action vigorously to demonstrate to the attorney general and his lawyers that our customers and California consumers come first,” said Putu Blanco.

The lawsuit seeks an injunction and fines each of 15 defendants — including Paul Blanco and the seven dealerships — civil penalties of $2,500 per violation. The next court proceeding for this case is scheduled for February 5, 2020.

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