A pair of Johnston car dealerships along Hartford Avenue have reached an agreement with state prosecutors following an alleged violation of consumer protection laws.
Rhode Island Attorney General Peter F. Neronha announced last week the resolution of “three enforcement actions against Rhode Island car dealerships for charging automatic add-ons and fees not included in the advertised price and other advertising practices.”
The AG calls the agreement “an Assurance of Voluntary Compliance,” which was filed in Rhode Island Superior Court on July 26.
Neronha’s office alleged that Hartford Avenue dealerships “Grieco Honda, Grieco Toyota, and Grieco Hyundai engaged in sales and pricing tactics that violated the Deceptive Trade Practices Act (DTPA), including charging more for vehicles than they were advertising on their website, automatically charging every customer a fee for a $249 paint and fabric spray (a ‘Zurich Shield’), and describing vehicles as available for ‘auction’ or ‘wholesale’ prices.”
Neronha filed two lawsuits against the dealerships in March of last year.
“As a result of the Agreement, the three dealerships will pay a combined $557,815 to resolve the claims brought by the Attorney General,” according to a press release from Neronha’s office. “This includes $457,815 in direct restitution to consumers and $100,000 to the Office of the Attorney General to pay for the costs of its investigation and suits.”
The agreement “also prohibits the dealerships from engaging in these practices in the future,” according to prosecutors. “Dealerships will refrain from charging consumers for any products or services without first obtaining their express informed consent and will not advertise any price for a vehicle unless it is available for purchase at that price and as described in the advertisement.”
According to the AG’s office, the dealerships “voluntarily agreed to implement many of these changes: after Neronha filed suit in 2022.
The Ocean State’s top prosecutor alleged the dealerships were automatically charging every customer for a $249 paint and fabric spray and warranty product known as a “Zurich Shield.”
“This service and its costs were not included in advertisements, and customers would only learn about this fee later in the purchasing process,” according to Neronha’s office. “Customers who paid for the basic Zurich Shield product since January 1, 2021 at one of these Grieco dealerships will be able to keep the product, including the warranty, and also receive a check worth 28% of the price of the product ($69) from Grieco. The $69 payment represents what consumers paid to Grieco over and above the cost of the product itself.”
Reached by phone on Tuesday, Auto Group Partner and Pre-Owned Director Robert Grieco provided a written statement and insisted it be “used in its entirety.”
“Metro Motors, Inc., Grieco Hyundai LLC, and MAG Ventures, LLC, (doing business as Grieco Honda, Grieco Hyundai, and Grieco Toyota) have reached an agreement with the Rhode Island Office of Attorney General (OAG) to refund $69 of a $249 charge for customers who purchased the Basic Zurich Shield paint and fabric protection product/warranty,” according to the dealerships. “While this product was preinstalled in the vehicles, and was clearly disclosed on the itemized dealer invoice, the OAG’s position was that this option could have been more transparent to the customer. The refund will be a seamless process, with checks being automatically sent to those affected (affected customers should contact the settlement administrator hired by the dealerships by calling Anthony Gomez at Optime Administration at (844) 625-7313 with any questions or concerns regarding this refund).”
The statement continues: “The eco-friendly Zurich Shield product provides valuable interior and exterior protection for the vehicle, which led many customers to purchase an upgraded version of the Zurich Shield product at an additional cost. Grieco Honda, Hyundai, and Toyota are pleased to have resolved this issue, and we are continuing to provide excellent service and quality vehicles to its customers. Although the dealerships do not agree with the OAG findings, an agreement to amend certain trade practices was reached, without the dealerships admitting to any violation of any Regulations. The dealerships look forward to continue to sell and service quality vehicles in a consumer-friendly and professional atmosphere. “
When asked for further comment form the Neronha’s office, Attorney General spokesman Brian Hodge said he had “nothing further to add beyond what’s in the release and the agreement.”
Grieco Automotive Group owns dealerships in Johnston, East Providence and Middletown, as well as a Seekonk, Massachusetts location.
“I cannot comment on the case as it is a state issue not a town issue,” said Johnston Mayor Joseph Polisena Jr.
One of the Grieco brothers is also tied to the refurbishment of the strip mall next to Johnston Town Hall, which formerly housed a gym, café and the Johnston Democratic Headquarters.
“Regarding the property next to Johnston Town Hall, I don’t have a timeline but I believe it will be a plaza with a combination of restaurant and retail,” Polisena said. “Almost any change is better than the way the property previously looked.”
The property has been fenced off for months; businesses closed. The fence-line perimeter was recently extended closer to Atwood Avenue.
Robert Grieco confirmed the property was not directly owned by the auto group, but one of his brothers was involved with the project. He promised to have plans sent to the Johnston Sun Rise by Wednesday morning, but they did not arrive by press-time.
The case against Grieco was part of Neronha’s “industry-wide effort to crack down on unfair and deceptive practices in the auto sales industry with a particular focus on junk fees and unwanted add-on products,” according to the press release. “The Attorney General seeks to put an end to practices like dealerships advertising one price on their website and window sticker, and then either refusing to honor that price or tacking on unwanted fees and services once a customer decides they want to buy the car.”
The AG’s Office urges Ocean State residents to report rip-offs to the state:
“If any Rhode Islanders were charged for a product or service in connection with their purchase of a vehicle that they did not want or agree to, we urge you file a complaint with the Office’ Consumer & Economic Justice Unit.”
According to his office, in 2021, Neronha “worked with the General Assembly to pass legislation that restored the authority of the Office of the Attorney General to protect Rhode Island consumers against violations of the DTPA. Other efforts led by the Attorney General under the newly-strengthened DTPA include a lawsuit against a solar company for allegedly scamming Rhode Islanders, a suit against a contractor for alleged unlawful behavior, halting a Certificate of Good Standing scheme, as well as other investigations.”
Grieco Automotive Group owns six dealerships in Rhode Island and Massachusetts, six more in Florida and one in California, according to their public relations firm.
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