Mazda dealerships to settle F&I pricing case with Mass. AG for $350K

The parent company of two Massachusetts Mazda dealerships will pay $350,000 to settle allegations the stores charged Black and Latino customers more for finance-and-insurance products than white customers, the state attorney general's office said Tuesday.

Hometown Auto Framingham in Massachusetts, which operates North Shore Mazda in Danvers, Mass., and Wellesley Mazda in Wellesley, Mass., has also agreed to enact fixed margins on all F&I products for three years. It may adjust these prices downward — but never upward — for an individual customer only under "good faith" scenarios, according to the settlement.

"Consumers need to know that their race or ethnicity will have absolutely no effect on the type of service they receive from Massachusetts auto dealerships or the prices they will be charged," Massachusetts Attorney General Andrea Campbell said in a statement Tuesday.

Hometown said it has "vehemently denied" for years any impropriety, and its law firm disputed the agency's methodology in concluding discrimination occurred. The dealership group said it settled to quit spending time on the case.

"We have expended considerable effort and resources defending our integrity against these allegations and reached a decision that continuing to do so would take more of our valuable time away from our customers and their automotive needs," Hometown said in a statement Tuesday. "We remain committed to training our diverse staff on our products, pricing, and operations to ensure that we are transparent in all our transactions and provide our customers with the exceptional service and high-quality vehicles they deserve."

Though owned by Hometown, Wellesley Mazda and North Shore Mazda are affiliated with the larger Shaker Auto Group of Watertown, Conn., though the details of that affiliation are unclear. Hometown Auto attorney Paul Harris, a partner at Burns & Levinson, told Automotive News that Shaker does not own Hometown or any dealerships in Massachusetts. The settlement carries no accusations against the Shaker company.

However, the Shaker Auto Group website counts the two Mazda stores among its locations, and both stores' websites describe themselves as part of the Shaker group.

The attorney general's office said an analysis of sales records between Jan. 1, 2016, and March 31, 2018, found Black customers of the two Mazda dealerships paid an average of $280 more than white customers for the same products. Latino customers paid an average of $197 more than white customers at the two locations, it said.

Hometown attorney Harris said the attorney general's office would not share their report or identify their experts.

"As a result, we hired Charles River Associates to analyze the same data we provided to the Attorney General's Office," Harris wrote in an email Tuesday. "Our experts ...came to a contrary conclusion that did not support the Attorney General's allegations."