Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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AG FILES AGREEMENT WITH AAA OR/ID AUTOSOURCE FOR FALSELY CLAIMING SERVICE WAS FREE

December 13, 2006

Oregon Department of Justice continues efforts to clean up auto brokering business in the state

Attorney General Hardy Myers today continued his efforts to eliminate unlawful trade practices in the auto broker trade by filing an agreement with AAA Oregon/Idaho AutoSource, LLC for allegedly marketing its services as "free" or "no fee" when, in fact, the company charged consumers for the services but hid them in mark-ups in the sale price. Named in an Assurance of Voluntary Compliance (AVC) filed today in Marion County Circuit Court is AAA Oregon/Idaho AutoSource, LLC of Portland, doing business as AAA Oregon AutoSource. AAA AutoSource is owned by two members, AAA Oregon/Idaho of Portland and Centennial Management, Inc. of Littleton, Colorado. The settlement admits no law violation.

"AAA AutoSource sold vehicles throughout Oregon claiming its auto brokering services were 'free' when they were not," Myers said. "In Internet advertisements and in the AAA Via magazine, the company mislead consumers by claiming that they would 'negotiate the best deal possible' for its clients when in fact, they were hiding fees from them."

In an undercover investigation Oregon Department of Justice found that not only were the advertisements untrue but employees were making false statements that their service was free and AAA AutoSource charged nothing for its brokering service.

Investigators found AAA AutoSource marked up the sale price, which they negotiated with the selling dealer, when they sold vehicles to consumers. The company charged the consumer a purchase price that included the additional mark-up added by AAA AutoSource. Early documentation received from the company by the Department of Justice showed a regular pattern of loading the negotiated sales price with undisclosed backend profit.

In addition, investigators discovered that AutoSource sold used motor vehicles as a dealer and not a broker by training its employees in a practice that the company called "the switch." The practice consisted of consumers shopping for new cars being "switched" into buying used cars from the company's own inventory. The company did this to make more profit and the salesperson a higher commission.

As part of the agreement, AAA AutoSource agreed to participate in a restitution program that could affect up to several thousand consumers. As part of the AVC, the company has agreed to pay the full cost of an administrator to oversee the restitution process and determine who may be eligible for different amounts of restitution, depending on the circumstances of their transactions. The claims administrator is Scott Howard of Kivel & Howard LLP of Portland and may be reached at 1-866-286-1454.

Within the next 44 days, all consumers who purchased new cars from the company prior to January 2006 should receive claim forms from the administrator. Notice and claim forms also will be sent to those who purchased used cars from the company prior to August 19, 2004.

The company claims that consumers who purchased used cars between August 19, 2004 and January 2006 received and signed a disclosure form stating that the company was making a re-sale profit if the car came from its inventory. Some of those consumers may be eligible for restitution, but they are responsible for requesting forms directly from the administrator. The agreement does not mandate that notice of the claims process be mailed to this group. Any consumer with questions regarding the claims process should call the claims administrator directly.

Both the company and the Department of Justice have the right to force a claim into arbitration if a claim is denied or granted. The company has agreed to pay all costs of arbitration.

AAA AutoSource also agreed to obey the Unlawful Trade Practices Act and the Broker Law that went into effect January 2006. The company paid $50,000 to the DOJ Consumer Protection and Education Fund.

Consumer wanting information about consumer protection in Oregon may call the Attorney General's hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. Justice is online at www.doj.state.or.us.

Contact:

Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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