Today Don McGill of Katy and Don McGill of West Houston agreed to pay $78,000. to customers for restitution plus another $20,000 to cover the cost of the Attorney General’s Investigation.
The AG summed it up in this news release he sent out today:
According to complaints received by the Office of the Attorney General, certain customers believed they were entering into vehicle purchase agreements. However, customers indicated they were actually signing three-year lease agreements. The situation drew complaints because the customers wanted to own their vehicles outright, and the lease agreements were more expensive than an ordinary vehicle purchase. Among other relief in this settlement, the defendant agreed to implement a restitution fund of more than $78,000 for consumers harmed by this financial scheme.
After reviewing the complaints, the Office of the Attorney General investigated the allegations. That investigation revealed that some McGill sales personnel folded sales contracts in a manner that obscured the customers’ ability to view the entire document. Salespersons told customers that they would receive lower interest rates if their sales contract was prepared on a lease-type document. As a result, though customers were reassured their contract was a purchase, it was actually a lease. Investigators learned that salespeople targeted customers who didn’t speak and read English well.
In other cases, some customers complained that they were misled about key financial details involving the transaction. Certain lease customers were told that the term “residual value,” which appeared on the contract, meant the amount customers would receive if they sold the vehicle back to Don McGi ll after three years. However, “residual value” is actually the balloon amount customers have to pay to purchase their vehicles after the lease expired.
Finally, customers complained that the defendant added expensive options to vehicles, even if those options were not authorized by purchasers. For example, a “LoJack” vehicle security system was routinely included in the purchase or lease price – even if customers did not agree to purchase the security system. In some cases, salespersons assured buyers that the LoJack system would be included at no additional cost, however customers were nonetheless charged up to $2,000 for this system. The cost to the dealership for the system was less than $400.
I have to admit I’m surprised because I don’t receive all that many calls about Don McGill. I’m glad our AG is investigating these types of complaints.