In a series of recent rulings, a New Jersey trial court imposed more than $10 million in penalties against an auto dealer found to have committed more than 500 violations of the New Jersey Consumer Fraud Act in a case filed by the Attorney General (AG) and Division of Consumer Affairs — only to slash those penalties by more than 98% after granting two motions for reconsideration.

The decisions in Platkin v. Federal Auto Brokers, Inc. d/b/a BM Motor Cars offer insights relevant beyond the auto industry in New Jersey. The decisions illustrate courts’ broad discretion in assessing consumer protection penalties, which is common across jurisdictions and industries, and courts’ willingness to impose steeper penalties on a repeat offender. At the same time, the dismissal of claims predicated on a federal rule that was stayed and then set aside points to drawbacks for state AGs relying on federal law to establish state consumer protection violations in an era when federal regulations are frequently invalidated or rescinded.

Background

In 2023, New Jersey’s AG and Division of Consumer Affairs filed a complaint against Federal Auto Brokers d/b/a BM Motor Cars (BM Motor Cars) alleging that the auto dealership engaged in unlawful practices that violated the New Jersey Consumer Fraud Act (NJCFA) and a 2018 consent order that resolved a prior investigation into the auto dealer.

The consent order had addressed BM Motor Cars’ alleged sales of “gray market” vehicles (i.e., vehicles not intended for U.S. markets), advertising practices, price disclosures, and representations concerning warranties, among other allegations. The consent order imposed injunctive obligations including detailed gray-market disclosure requirements and warned that future violations of the consent order or New Jersey’s consumer protection laws would be treated as “second or succeeding” violations, exposing BM Motor Cars to enhanced civil penalties pursuant to New Jersey law, which generally provides for penalties of up to $10,000 for a first NJCFA violation and $20,000 for a second or succeeding violation.

The state’s 2023 complaint alleged that BM Motor Cars had continued to sell gray market vehicles without proper disclosures, charged hidden fees, failed to provide required odometer disclosures, and illegally had consumers waive their right to purchase a vehicle that meets state inspection standards. Based on these allegations, the state asserted violations of the NJCFA predicated on unconscionable and deceptive commercial practices, violations of the State’s Motor Vehicle Certificate of Ownership Law and the federal Odometer Law, violations of the State’s Motor Vehicle Advertising Regulations, and violations of the consent order. The state sought injunctive relief, restitution, and “maximum statutory penalties for each and every violation of the CFA,” as well as fees and costs.

Over the course of the litigation, the state eventually sought to prove the unconscionability of certain practices by BM Motor Cars in part by arguing that they violated the Combating Auto Retail Scams (CARS) Rule adopted by the Federal Trade Commission (FTC) in December 2023.

Summary Judgment on Liability

In April 2025, the court granted partial summary judgment in favor of the state but dismissed the state’s unconscionability claim insofar as it relied on the CARS Rule.

As to the CARS Rule, the court stated that New Jersey courts have treated violations of FTC rules as per se violations of the NJCFA and that New Jersey law generally treats any commercial practice that violates state or federal law as a violation of the NJCFA in actions brought by the AG. However, two considerations specific to the CARS Rule precluded the state from relying on it to establish BM Motor Cars’ liability. First, the conduct at issue in the case occurred before the CARS Rule was adopted and took effect. And second, the CARS Rule was invalidated by the Fifth Circuit on the ground that the FTC had violated its own rules for rulemaking, and the rule’s effectiveness was stayed by the FTC. Therefore, the state could not show that the alleged conduct by BM Motor Cars violated a valid federal regulation that was in effect at the relevant times.

In addition, the court granted summary judgment to the state on its claims of per se NJCFA violations predicated on violations of state and federal laws other than the CARS Rule.

Although the court concluded that the state could continue to pursue claims that BM Motor Cars’ practices were unconscionable for reasons other than purported violations of the CARS Rule, the state later voluntarily dismissed its unconscionability claims to facilitate the entry of final judgment and assessment of penalties on the claims for which it had been awarded summary judgment.

Assessment of Penalties

The court ultimately issued three rulings imposing and then reducing the penalties for BM Motor Cars’ NJCFA violations. This series of rulings saw the penalties awarded reduced from more than $10 million in the initial final judgment to $155,800 upon reconsideration — a reduction of more than 98%.

Initial Decision

First, on October 23, 2025, the court entered a final judgment imposing the maximum statutory penalties of $10,000 for a first violation and $20,000 for each second or successive violation. The court assessed penalties totaling $10,190,000 upon finding 511 violations of the NJCFA, which were predicated on hundreds of violations of the Odometer Law and the Certificate of Ownership Law, a dozen violations of the Motor Vehicle Advertising Regulations, and 14 consent order violations. The court also required BM Motor Cars to pay the state’s investigation costs of $14,740.14 and attorneys’ fees of $111,278.

In assessing the civil penalties, the court applied the factors set forth in Kimmelman v. Henkels & McCoy, Inc. (1987), which New Jersey courts consider (among other factors) in calculating civil penalties within the range permitted by statute. These factors are: (1) the good or bad faith of the defendant; (2) the defendant’s ability to pay; (3) the amount of profits obtained from the illegal activity; (4) the injury to the public; (5) the duration of the defendant’s wrongdoing; (6) the existence of parallel criminal or civil proceedings based on the same conduct; and (7) the defendant’s past violations. The court emphasized BM Motor Cars’ persistent misconduct after the consent order, the high volume of violations in a short time frame, and the need to deter similar conduct in the marketplace.

First Decision on Reconsideration

The court granted reconsideration of its penalty calculation after BM Motor Cars noted that the court had issued its initial decision without permitting BM Motor Cars to respond to the state’s request to impose the statutory maximum penalties and its request for attorneys’ fees.

In January 2026, the court issued a revised final judgment, which reduced the civil penalties awarded to $793,500 (from the initial $10,190,000) and the attorneys’ fees to $34,536 (from the initial $111,278). The New Jersey AG announced this resolution in a press release.

As in its initial decision, the court again applied the Kimmelman factors to arrive at its assessment of civil penalties. As to the first factor — the defendant’s good or bad faith — the court found “a lack of good faith and observance of fair dealing” based on the defendant’s hundreds of violations over a two-month period, which the court characterized as reflecting “a pattern of non-compliance” and a “systemic failure to adhere to consumer protection laws, particularly after the entry of a prior Consent Order.” The court also concluded that BM Motor Cars’ conduct had harmed the public even though the record lacked evidence of consumer complaints, finding that the dealer’s widespread violations harmed the public trust and integrity of the marketplace more broadly. And the court found the company’s violations of a past consent order to be “a significant aggravating factor” that “indicates a reluctant attitude toward legal compliance and strongly supports the need for a deterrent penalty.”

The court gave little or no weight to the remaining Kimmelman factors. Regarding ability to pay in particular, the court noted that BM Motor Cars presented no evidence of inability to pay and conceded that the factor was “neutral or does not apply.”

After considering the Kimmelman factors, the court concluded that BM Motor Cars should pay a civil penalty that is “substantial enough to punish and deter, but not so astronomical as to be entirely unjust” or “completely unprecedented.” Accordingly, for the first violation of each category of offense, the court exercised its discretion and assessed a penalty of $500 per violation. For each subsequent violation, the court awarded an enhanced penalty three times higher, of $1,500 per violation. This yielded total civil penalties of $793,500.

Second Decision on Reconsideration

BM Motor Cars again moved for reconsideration, arguing that “there is no consumer complaint or evidence of any harm to any consumer to support the Court’s award of $793,500 in civil penalties.” Additionally, BM Motor Cars argued that, while it “might have been able to pay a judgment in the range of the previously reported cases, it cannot pay an award of this magnitude.” In support of its second argument, BM Motor Cars argued that it did not previously submit proof of inability to pay because it had assumed that the penalties would be less than $20,000 based on the asserted lack of consumer harm and precedents in which courts had not imposed penalties above $75,000 even for hundreds of NJCFA violations involving consumer harm.

On April 7, 2026, the court granted BM Motor Cars’ motion for reconsideration, this time reducing its assessment of civil penalties to $155,800. Although the court ultimately reduced the penalties assessed, it was critical of BM Motor Cars for not presenting evidence of inability to pay earlier in the proceedings and for affirmatively asserting that the ability-to-pay factor was neutral or inapplicable. Nonetheless, the court decided to “invoke its inherent equitable power to render a more acceptable penalty the Defendant can adequately satisfy without destroying its ability to conduct future business activities.”

Accordingly, the court reduced its penalties to $200 for the first violation of each category of offense and $300 for the subsequent violation of each category. The court described the resulting penalty — $155,800 — as “more than simply a ‘slap on the wrist.'” Rather, it is “a sum that is substantial enough to punish and deter, but not so astronomical as to be entirely unjust and lead to subsequent bankruptcy.”

Conclusion

Although the BM Motor Cars case arises in the context of an auto dealer in New Jersey, the series of decisions issued by the court has broader implications.

The court’s evolving analysis regarding penalties provides a relatively rare glimpse into both the power and the limits of civil penalty regimes in consumer protection enforcement. On the one hand, the case underscores that regulators and courts will treat violations that follow a consent order as especially serious, apply the relevant factors aggressively where they see repeat misconduct, and impose meaningful penalties even in the absence of individualized consumer complaints or harms.

On the other hand, the court’s willingness to revisit its initial $10 million judgment and to recalibrate penalties — not once but twice — to avoid an “astronomical” result confirms that penalty determinations remain a fact‑intensive, discretionary exercise, not a mechanical application of statutory maximums. And the court’s criticisms of BM Motor Cars for not presenting ability-to-pay evidence prior to the court’s initial imposition of penalties should be a warning to companies that they cannot simply assume courts will award penalties at the lower end of the permissible range.

For companies operating under consent decrees or in highly regulated consumer markets, the decision is a reminder that documentation, ongoing compliance monitoring, and early development of an ability‑to‑pay record can materially affect outcomes.

Finally, the court’s rejection of the state’s reliance on the FTC’s CARS Rule indicates some limits on states’ increasingly common tactic of predicating state consumer protection claims on violations of federal law. As illustrated here, states should not be able to establish violations of state law by pointing to federal rules that were not in effect at the relevant times or that were subsequently set aside as invalid.

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Troutman Pepper Locke State Attorneys General Team

	Ashley Taylor – Co-leader and Firm Vice Chair Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
	Clay Friedman – Co-leader Clay co-leads the firm’s State Attorneys General practice and is nationally ranked by Chambers USA for AG Government Relations and in Best Lawyers for Advertising Law. He has dedicated his entire career to state attorney general and federal work, serving for nearly a decade in a senior role and more than 25+ years in private practice. Clay focuses his practice on helping industry-leading companies mitigate the risks associated with state and federal regulatory investigations and associated litigation.
	Chris Carlson Chris advises clients on regulatory, civil, and criminal investigations and litigation. With a background as an assistant attorney general, he provides practical guidance to clients with matters involving state attorneys general and federal regulatory agencies.
	Lauren Fincher Lauren has vast experience handling state attorneys general investigations, navigating complex regulatory compliance matters, and providing strategic counsel in enforcement actions across various industries. She helps clients manage high-stakes regulatory matters and guides them through complex legal landscapes.
	Stephen Piepgrass Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, representing clients in single and multistate enforcement actions, including inquiries and investigations, as well as litigation involving state attorneys general and other state and federal governmental enforcement bodies. He has significant experience handling actions with federal agencies, including the CFPB and FTC, as well as single plaintiff and class action litigation for clients in highly regulated sectors such as financial services, health care, pharmaceutical, and education.
	Michael Yaghi Mike handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
	Matthew J. Berns Drawing on his experience in senior leadership roles in the New Jersey Attorney General’s and Governor’s Offices and as a trial attorney for the U.S. Department of Justice, Matt provides an insider’s perspective when guiding clients through complex government investigations, litigation, and other actions.
	Samuel E. “Gene” Fishel Gene is a former regulator with two decades of experience who has overseen state privacy and cybersecurity regulation enforcement, led national, multistate attorneys general privacy investigations, and prosecuted computer crimes at the state and federal levels. He has served at the forefront of state attorney general and federal enforcement, and utilizes this experience to proficiently represent client interests.
	Jeff Johnson Jeff helps clients navigate complex regulatory and litigation challenges with local, state, and federal authorities. His clients benefit from his decade of broad litigation experience, understanding of emerging state and federal regulatory issues, and strong relationships with attorneys general across the U.S. In addition to handling cases from trial through state or federal appeals, Jeff serves as amicus counsel in advancing legal rules to support his clients’ vital interests.
	Jay Myers Jay assists clients in heavily regulated industries, including health care, energy, insurance, emerging industries, and data privacy. He provides both regulatory legal advice and government relations strategies. Jay’s past and current clients include Fortune 10 companies, startups, nonprofits, industry associations, and advocacy groups. Recognizing that state government matters are often complex and multifaceted, he utilizes regulatory guidance, government advocacy, or both in tandem to deliver tailored solutions for each client’s unique needs.
	Zoe Schloss Zoe represents clients in litigation and government investigations. As former deputy attorney general for the Delaware Department of Justice, she is an experienced litigator who understands the enforcement priorities that impact her clients. Zoe works with individuals and corporate entities in highly regulated industries, including financial services, health care, and energy.
	Jessica Birdsong Jessica is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, magna cum laude, where she served as associate articles editor of the Journal of Law & Technology.
	Nick Gouverneur Nick is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. He received his J.D. from the University of Illinois College of Law, where he served as a member of the Journal of Law, Technology & Policy.
	Troy Homesley Troy is an accomplished litigator who has represented and defended clients across a wide range of complex, high-stakes disputes at both the trial and appellate levels. He has represented technology companies, business executives, law firms, investment funds, high-ranking federal officials, international non-profits, and asylum seekers. Troy draws on his broad litigation experience to advise clients before litigation arises, while claims are pending or threatened, and leading up to and through trial and appeals.
	Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising. Nam’s experience transcends multiple industries, including financial services, telecommunications, media, and sports betting.
	Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
	William LaRosa Bill represents clients in complex regulatory investigations, state attorneys general matters, and enforcement proceedings, drawing on his experience as a former assistant U.S. attorney and private sector litigator in high stakes, multistate AG and regulatory matters.
	Philip Nickerson Philip represents clients in sectors such as financial, tech, real estate, and energy in a range of litigation matters. He is experienced in matters involving trade secrets, government investigations, commercial contracts, construction and product defect.
	Lane Page Lane specializes in federal and state regulatory investigations and complex civil litigation. He focuses on representing financial institutions and other businesses, with a particular emphasis on consumer protection and fair lending issues.
	Dascher Pasco Dascher is an attorney within the Regulatory Investigations, Strategy, and Enforcement practice, based in the Richmond office. She joined our firm after working in personal injury and medical malpractice for a Virginia trial law firm. Dascher brings varied legal experience to the firm with strong litigation and regulatory strategy capabilities.
	Kyara Rivera Rivera Kyara is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, cum laude, where she served as publications and online editor of the Public Interest Law Review.
	Timothy Shyu Timothy is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group.
	Trey Smith Trey focuses his practice on representing and advising regulated utilities before state public utility commissions. He routinely helps clients obtain certificates of public convenience and necessity for transmission infrastructure. In this role, Trey works with his clients’ subject-matter experts to manage administrative proceedings, including by preparing initial filings; responding to discovery requests; drafting rebuttal testimony; and litigating any disputed issues.
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