Paul Blanco’s Good Car Company admits to hundreds of thousands of violations of state consumer protection laws
Oakland, Calif.—California Attorney General Rob Bonta has announced a settlement with the now-defunct Paul Blanco’s Good Car Company, a network of auto dealerships, and its principal executives Paul Blanco and Putu Blanco.
The settlement resolves allegations that the Blancos, who are a married couple, and their company engaged in unlawful business practices, including false advertising about credit and discount programs, making false statements on credit applications, and deceiving customers into purchasing add-on products. Through a judgment entered with the court, the dealerships admitted to and agreed to be held liable for 670,000 violations of California’s Unfair Competition and False Advertising Laws. The corporations will be permanently banned from the auto sales industry in California, and Paul Blanco will personally face a 10-year ban on participating in the auto industry in California. Should the Blancos ever return to the auto business in California, they would be required to adhere to strong injunctive terms.
“Many Californians rely on their car to travel to work, school, and to see their loved ones — it is an essential tool and one of the largest and most important purchases many families make,” said Attorney General Bonta. “While Paul Blanco’s claimed to be a ‘good car company,’ in reality they were in the business of putting Californians at risk, using deceitful advertising and illegal sales and lending practices. Today’s settlement ensures that Paul Blanco’s will no longer be able to operate in California and no longer be able to prey on people already struggling to make ends meet. It also, unfortunately, demonstrates a need for legislation establishing a restitution fund to make it easier for Californians to recoup their losses when they are harmed by predatory companies that later become insolvent. At the California Department of Justice, we will continue to do all we can to protect our people from deceptive and unlawful practices that harm Californians working hard to make ends meet.”
Prior to the Attorney General’s lawsuit, Paul Blanco’s Good Car Company was one of the largest independent used car dealership networks in California, operating seven dealership locations in the state. In September 2019, following an investigation, the California Department of Justice filed a lawsuit against Paul Blanco’s Good Car Company and its two individual owners, alleging violations of the Unfair Competition Law and False Advertising Law. The lawsuit alleged, and the court has now found, that Paul Blanco’s made extensive use of deceptive radio and television advertisements. Paul Blanco’s advertisements targeted vulnerable, predominantly low-income consumers with subprime credit, deceptively promising easy approval for unrealistically low interest rates to lure unsuspecting consumers to their dealerships. For many of these consumers, a vehicle is a necessity and can be the most expensive one-time purchase they ever make.
The 2019 lawsuit also charged Paul Blanco’s with making false statements on credit applications, including by deceiving lenders about the value of vehicles and the consumer’s ability to repay the loans. This allowed the company to boost their profits through improperly financed sales and increased the risk that the consumers would be saddled with loans that they could not afford. The complaint also alleged that Paul Blanco’s tricked customers into paying thousands of dollars for extra add-on products, such as service contracts, by telling customers that these add-ons were included in the vehicle price or required by law, or by simply concealing the extra charge. These practices increased the cost of an already substantial purchase, almost always made by taking out an expensive loan.
As part of the settlement, filed in the Alameda County Superior Court, the 14 corporations making up the Paul Blanco’s Good Car Company Auto Group admitted to, and the judgment finds them liable for, publishing 650,000 false advertisements, defrauding auto lenders by misrepresenting vehicle values on 20,000 occasions, and deceiving consumers regarding add-on products. In addition, Blanco admitted, and agreed to liability for, creating and publishing a false advertising campaign that targeted senior citizens with deceptive promises of special interest rates, prices, and credit conditions. The judgment finds that all of this conduct violated the Unfair Competition Law and False Advertising Law.
To resolve the lawsuit, Paul Blanco’s companies have agreed to entry of a $20 million judgment, and the Blancos agreed to entry of a further $7.5 million judgment against them individually. Consistent with their current demonstrated ability to pay, the Blancos may satisfy the judgment against them by making payments totaling $1.7 million. The defunct corporations are insolvent and are not expected to be able to pay their portion of the judgment.