FTC Lawsuit: Wisconsin Auto Dealer Charged Secret ‘Racial Tax’ to American Indian Customers

The Non-Financial Ledger

Buying a car is stressful. It is one of the biggest purchases most people ever make. You spend hours researching, test driving, and negotiating. Then comes the paperwork. You are tired, your guard is down, and you are faced with a mountain of complex legal documents. This is the moment the Rhinelander Auto Dealerships, under the direction of general manager Daniel Towne, chose to strike, according to federal regulators.

The harm alleged in this case is not just financial. It is a calculated betrayal of trust. The Federal Trade Commission complaint details a business model that preys on exhaustion and complexity. It describes a company that profits from deception. For American Indian customers, the betrayal cut deeper. The lawsuit alleges a deliberate policy of discrimination, turning a major life purchase into an exercise in systemic extraction. This is the story of how a local dealership allegedly institutionalized racism for profit, charging people more simply because of who they are.

The Anatomy of the Scam

The FTC complaint lays out a two-pronged attack on customers’ wallets. Both methods relied on the confusion and pressure of the final moments of a car sale.

Part 1: The ‘Add-On’ Pack

The first part of the scheme was to inflate the price of the car with “add-on” products like GAP insurance, vehicle service contracts, or tire protection. These optional products, which can cost thousands, were allegedly forced on customers in two ways. First, employees would simply pack them into the financing contract without the customer’s knowledge or consent. Second, they would lie, telling customers the add-ons were mandatory to secure financing or to get a specific interest rate.

The numbers are damning. A survey cited in the lawsuit found that 53% of customers reported they were either charged for add-ons they never agreed to buy or were falsely told the products were required. One customer was told GAP insurance was required because of a co-signer, costing them $895 plus years of interest. Another was pressured into a $2,500 service contract they were led to believe was essential, ultimately adding nearly $4,000 in unwanted costs after interest was factored in.

“About half were charged for add-on products without their authorization or as a result of deception, which has resulted in hundreds or thousands of dollars in unlawful charges.”

Part 2: The Racial Markup

The second part of the scheme was more insidious. The dealership had a discretionary policy allowing its employees to mark up interest rates offered by third-party lenders. This markup was pure profit for the dealership. According to the FTC, Rhinelander Auto employees used this discretion to systematically charge American Indian customers higher rates than non-Latino White customers with similar credit profiles.

The complaint states this wasn’t an accident. It was a pattern. The lawsuit alleges Daniel Towne knew about the discriminatory practices. Staff reportedly raised concerns to him about the higher rates and fees charged to American Indian customers. Instead of stopping it, the suit claims Towne “encouraged and instructed staff to structure sales and financing to maximize profits obtained from American Indian consumers.”

The Cost of Discrimination

The financial impact of these alleged practices is stark. The FTC lawsuit quantifies the average additional cost imposed on American Indian customers compared to their non-Latino White neighbors. These figures represent a direct transfer of wealth, extracted through discriminatory practices.

These disparities grew even worse after a corporate ownership change in March 2019. After that date, the interest rate markup disparity climbed to 50 basis points and the add-on overcharge increased to an average of $1,374 per transaction for American Indian customers.

Legal Receipts: The Official Charges

The government’s complaint is not ambiguous. It directly accuses the defendants of violating federal and state law through unfair and deceptive acts. Here are the core allegations, straight from the legal filing.

Count I: Misrepresentations Regarding Add-On Products. “In numerous instances… Defendants have represented, directly or indirectly, expressly or by implication, that, in order to purchase, lease, or finance a vehicle, consumers are required to purchase add-on products. In truth and in fact… consumers have not been required to purchase add-on products.”

Count II: Unfair Practices Regarding Charges for Add-On Products. “In numerous instances, Defendants have charged consumers for add-on products without obtaining consumers’ express, informed consent. Defendants’ actions… have caused or are likely to cause substantial injury to consumers that consumers could not or cannot reasonably avoid themselves.”

Count III: Unfair Practices Regarding Discriminatory Costs. “In numerous instances, Defendants have imposed higher costs on American Indian consumers than on similarly situated non-Latino White consumers.”

Societal Impact Mapping: Economic Inequality by Design

This is not just about a few bad deals. The allegations describe a system of economic extraction targeted at a specific racial group. In a rural area with few competing dealerships, Rhinelander Auto allegedly used its market position to drain wealth from American Indian families. Every extra dollar paid in interest, every junk fee added to a contract, is money that cannot be used for housing, education, or saving for the future. When these practices are applied systematically over years, they compound inequality and reinforce cycles of financial precarity. This case is a raw example of how discriminatory business practices function as a direct mechanism for widening the racial wealth gap.

What Now? Accountability and Resistance

The lawsuit seeks to halt these practices and secure monetary relief for the victims. But justice from the courts is slow, and corporate accountability is never guaranteed. Here is where the power lies now.

Leadership On The Hook

• Daniel Towne: Identified in the lawsuit as the Owner, Executive Manager, and general manager since 2016. The complaint alleges he personally “formulated, directed, controlled, had the authority to control, or participated in the acts and practices” described.

The Watchlist

• Federal Trade Commission (FTC): As a plaintiff in this case, the FTC is the primary federal body pursuing action against the company. Their actions and the outcome of this case should be watched closely.
• Wisconsin Department of Justice: The state is a co-plaintiff, indicating a commitment to enforcing state-level consumer protection laws like the Wisconsin Deceptive Trade Practices Act.

Your Next Move

• Demand Transparency: Never sign a contract you have not read in full. Demand a printed copy of the itemized price and financing terms before you sign anything. Walk away if they rush you.
• Support Local Organizing: Find and support local consumer rights groups and mutual aid networks that help people who have fallen victim to predatory lending and deceptive sales tactics.
• Share This Story: The greatest defense against these practices is a public that knows they exist. Make sure everyone in your community understands how these scams work. Knowledge is the first line of defense.