COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. …

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SUFFOLK, ss.

COMMONWEALTH OF MASSACHUSETTS SUPERIOR COURT

COMMONWEALTH OF MASSACHUSETTS,

Plaintiff,

V,

COMPLAINT

VENTURCAP INVESTMENT GROUP V, LLC d/b/a JD BYRIDER and VENTURCAP FINANCIAL GROUP, LLC d/b/a CNAC,

Defendants.

CIVIL ACTION NO. 17-S?^\/ (bl

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I. INTRODUCTION

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1. The Commonwealth of Massachusetts, by and through its A Ijtojrnfey General^ ^ Maura Healey, brings this enforcement action pursuant to the Massachusetl JConsumer Protection Act, G.L. c. 93A, ? 4 against Venturcap Investment Group V, LLC d/b/a JD Byrider and Venturcap Financial Group, LLC d/b/a CNAC (collectively, "JD Byrider"). The Commonwealth seeks restitution, injunctive relief, civil penalties and reimbursement of its costs and expenses as remedies for JD Byrider's unfair and deceptive acts and practices.

2. JD Byrider is a "Buy Here Pay Here" used car dealership; it provides inhouse car loans to consumers who purchase its cars. JD Byrider sells consumers only one deal, a bundled car sale, financing and repair service arrangement that is known as the "JD Byrider Program".

3. Consumers purchasing the JD Byrider Program get saddled with poor quality cars for which they often pay more than double the cars' fair market retail value. Compounding this

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expense, consumers, regardless of their credit characteristics, must sign for a loan from JD

Byrider which always comes with a fixed interest rate of 19.95%.

4. JD Byrider then bundles in its extended service contract at a fixed price of nearly

$1,300,00 per car. Not only does the extended service contract have limitations which make it of

questionable value, it generates additional interest for JD Byrider at 19.95%.

5. Consumers are unaware of the true costs of the unfavorable and unsustainable JD

Byrider Program because JD Byrider employs misleading marketing and sales tactics that

purposefully obfuscate material components of its package, including the car price, the car's true

value and condition, the nonnegotiable highrate loan terms and the limitations on its extended

service contracts.

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The probability of any consumer to succeed after purchasing a car at JD Byrider

is no better than a coin toss, with over half of JD Byrider's deals ending in repossession.1

7. JD Byrider's practices cause substantial and longterm economic harm to

consumers not just due to the costs of the JD Byrider Program, but also because when deals fail,

consumers lose their transportation together with the investment they have made in their cars.

Almost without exception, entanglement with JD Byrider leaves consumers with damaged credit

and with limited or nonexistent options for alternative transportation.

1 "Repossession", as used here, includes involuntary and voluntary repossessions after the regular monthly payments required by the financing contract are due, as well as deals that are "backed off (with voluntary or involuntary return of the car to JD Byrider) during the deferred down payment period, (a period during which, as described below, the consumer is making non refundable payments to JD Byrider to cover the required down payment before the regular monthly loan payments are first due).

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II. JURISDICTION AND VENUE 8. The Attorney General is authorized to bring this action pursuant to G. L. c. 93 A, ? 4, and G.L. c. 12, ? 10. This Court has jurisdiction over the subject matter of this action pursuant to G.L. c. 93A, ? 4, G.L. c. 12, ? 10, and G.L. c. 223A, ? 3. 9. Venue is proper in Suffolk County pursuant to G. L. c. 223, ? 5, and G. L. c. 93A,

III. THE PARTIES 10. The Plaintiff is the Commonwealth of Massachusetts, represented by the Attorney General, who brings this action in the public interest. 11. Defendant, Venturcap Investment Group, V, LLC is a Rhode Island Limited Liability Company with a principal place of business at 615 Reservoir Avenue, Cranston, Rhode Island. 12. Defendant, Venturcap Financial Group, LLC d/b/a Car Now Acceptance Corporation or CNAC is a Rhode Island Limited Liability Company with a principal place of business at 615 Reservoir Avenue, Cranston, Rhode Island. 13. The Defendants operate four dealerships in Massachusetts, located in Brockton, Dorchester, Dartmouth and Springfield. Each dealership does business as "JD Byrider."

IV. FACTS A. JD Byrider's Business Model Traps Vulnerable Consumers in Unsustainable Deals,

Resulting in a Repossession Rate of Over 50%. 14. JD Byrider's Buy Here Pay Here business comprises two corporate entities which have identical ownership, Venturcap Investment Group, V, LLC and Venturcap Financial Group,

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LLC d/b/a CNAC. CNAC is the exclusive inhouse lender JD Byrider uses to provide financing for each car it sells.

15. The Buy Here Pay Here model avoids the counterbalancing role that a third party lender or finance company generally plays to ensure that transactions are financially sound and affordably underwritten.

16. JD Byrider targets lowincome consumers with tarnished credit histories and promises them affordable loans, quality cars and an opportunity to improve their credit score. E.g., JD Byrider Website, available at, payherecardealer (last visited September 20, 2017) ("...inhouse financing, [means]...easier credit approval for people who can't qualify for a traditional bank or finance company loan based on their lack of credit history, low credit score, income, job stability, etc."; "...JD Byrider may be better than a buy here pay here [because we provide]... affordable payments... serviced, computer tested and reconditioned cars... [and we] will put you in a position to improve your credit score.").

17. Consumers who go to JD Byrider to buy a car have no choice but to accept all the pieces of the JD Byrider Program. Consumers cannot negotiate any component of the deal. Every car on the lot is virtually the same price, every loan has the same interest rate and nearly identical terms, the price of the required extended service contract is uniform and when consumers' cars require repairs after purchase, they must use JD Byrider's service center to get coverage under statelaw warranties or the extended service contract.

18. To sell the JD Byrider Program to consumers, JD Byrider uses a standardized sales pitch set forth in a "Flip Chart," that is fraught with false promises including that consumers will get "better cars," "affordable payments" and "better car care."

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The Flip Chart intentionally omits material information, such as car prices and credit terms, so consumers are kept from understanding or evaluating the cost of these uniform deals until closing.

19. JD Byrider's Program harms consumers. As discussed below, the combination of components that comprise the Program makes it unaffordable and unsustainable for consumers. B. JD Byrider's "One Price" Model for its Cars Conceals Excessively Marked-

up Prices for Poor Quality Cars. 20. JD Byrider purchases used cars for approximately $5,000.00 to resell to consumers. 21. Each car generally has over 100,000 miles on it and is more than 7 years old. 22. Consumers pay a single, fixed, nonnegotiable price for JD Byrider's cars, the amount of which increases with JD Byrider's profit goals and is currently more than $12,000.00. 23. On average, JD Byrider's customers pay more than 150% of the suggested retail value of the car they buy from JD Byrider when compared to commonly referenced industry standards such as the one published by the National Automobile Dealers Association ("NADA"). 24. JD Byrider does not advertise its car prices or inform consumers that it charges a fixed price for its cars. Nor does it tell consumers the price of the car in most circumstances until the closing. Among other things, this diminishes the opportunities for consumers to use available pricing tools to evaluate whether JD Byrider's predetermined price is fair and consistent with those offered by other dealers. 25. Due to the uniform car pricing and financing terms, when a consumer qualifies for financing, he or she typically qualifies for any car on the lot.

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