BUFFALO, N.Y. (WIVB) - The State Attorney General is pumping the brakes on an illegal practice at a local car dealership.
For years, the owners of Master Motors would set up their own installment loans to sell used cars to their least credit-worthy customers.
Master Motors lawyer Joseph Makowski said, "Master Motors created a market, effectively, by financing the vehicles, itself."
The problem with that is officials insisted they needed a license from the State Banking Department, an important tool to protect consumers.
Assistant Attorney General James Morrissey said, "To handle, for example, very confidential information that, when a consumer is making a loan, they are giving out their Social Security number, their employment information, banking account information."
The Banking Department put the owners on notice. Then last summer, the Attorney General subpoenaed Master Motors records from their lots on Bailey Avenue, and in Lockport. Morrissey points out that without a license, the car dealer can fly under the radar of state regulators.
Morrissey said, "We want to make sure, if you are licensed, you know the disclosures you have to give consumers, disclose the APR, or the interest rate."
So the owners agreed to stop doing their own financing and paid a $25,000 fine.
"These loans were made to high-risk individuals, where traditional sources of financing, i.e. bank financing, or secondary sources were not available," said Makowski.
Makowski said the owners actually gave up the financing end of the business more than a year ago and chose not to fight the state.
Makowski said, "There were alternative ways to get their product to the end user customers without procuring a state finance license."
Now Master Motors is working with banks and credit unions to finance their cars while the Attorney General monitors those loans still in effect. You can call the Consumer Hotline at 853-8404. Master Motors is a member of the Better Business Bureau, with an A-plus rating. Now that rating is under review.
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