Fla. Refund Plan Nets $1.7 Million

November 1, 2004

Florida’s Chief Financial Officer Tom Gallagher announced that more than 1,200 Central Florida residents have received a total of $1.7 million under a refund plan for consumers who paid for various insurance products without their knowledge, during the purchase of an automobile.

“Floridians shopping for a car deserve to be treated fairly and dealt with honestly,” Gallagher said. “Our goal in pursuing a refund program was to make affected car-buyers whole financially and ensure the dealerships were no longer engaging in abusive sales practices.”

The Department of Financial Services, which Gallagher oversees, recently completed a two-year investigation of two Clearwater-based dealerships (Clearwater Mitsubishi and Clearwater Toyota, U.S. Hwy 19 N), which resulted in the refund program and a corrective action plan being ordered by the department. Sonic Automotive Inc., which purchased the dealerships, agreed to work with the department to quickly implement the refund program.

Department investigators reportedly discovered that sales personnel at the two dealerships added ancillary insurance products, such as vehicle service agreements, scheduled maintenance plans, gap protection plans and vehicle VIN etch glass protection, to sales contracts without the customer’s knowledge.

In some cases, customers were reportedly asked to sign blank applications for these products but were told there was no charge. Others never knew they purchased these plans, in which case they would not utilize any benefits.

According to Gallagher, refunds were ordered for affected consumers who purchased vehicles from the above two dealerships between April 1998 and March 2002.

In addition, department investigators found that consumers were sold insurance products from an insurer not authorized to offer the products. As part of the corrective action plan, the dealerships were required to ensure that all insurance products offered are from insurers holding appropriate Florida licenses.

More than 1,200 consumers received refunds for the previously listed products totaling more than $1.7 million. As part of the refund program, Sonic also implemented a corrective action plan for the dealerships, including:

* Provide customers who are offered an insurance product a copy of department-approved product forms and require customers to sign only completed forms. Sonic must also retain a copy of executed forms.
* Ensure that all insurance products offered to consumers are from insurers holding valid Florida licenses.
* Ensure that each dealership selling insurance products is properly licensed as required by Florida law.

Some of the abuses were first reported to the department by investigative reporter Mark Douglas, WFLA-TV in Tampa.

Further investigations were conducted to confirm the company’s compliance. The department also conducted an investigation of another Sonic-owned dealership, but similar practices were not found.

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