Earlier this year, the news that the FTC had sent warning letters to nearly a hundred dealerships, warning them against charging junk fees, was well-received by the public. Not long after, some Nissan dealerships were forced refund millions after being caught charging junk fees, and now the same sort of thing is happening with a Westchester, New York-based dealerships, one selling BMWs and one selling Lexus products, both owned by the same company, DARCARS. According to the statement released on behalf of New York Attorney General Letitia James, the A.G. has secured over $1 million in refunds or customers who were unfairly charged by the dealers, and more will be paid in fines.
How Two New York Dealers Lied Their Way Into Customers Pockets
BMW/Lexus
According to the A.G., the Mt. Kisco dealers’ first offence was adding a two percent charge to vehicle sales, listing it on paperwork as a sales commission, but excluding it from their webites, making pricing appear cheaper than competitors until buyers were ready to sign. That’s concerning, but the next bit makes the fee even more distasteful: the so-called sales commission wasn’t paid directly to the dealer representative who sold the vehicle, and worse still, the charge was entirely optional, though they clearly obscured and obfuscated that fact. The dealerships tried to cover their bases by including language stating that the charge was “not required by law,” and when customers asked about it, the explanations were reportedly varied. Some said it was a standard dealer charge, others said it was for the salesperson, and others said it covered employee commissions, but the A.G.’s investigation dismissed all of these stories as false or misleading.
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The other junk fee that came to light was a bundle called “DARCARS Assurance,” which sounds good, promising features including a payout of $2,500 towards an insurance deductible if the vehicle being bought was totaled. All good so far, except customers were led to believe the optional package was mandatory, and worse still, to get the payout, customers would need to buy or lease another vehicle from the same dealer within 60 days of receiving their insurance settlement. So what seemed to be mandatory but potentially useful cover was actually an optional bundle that would have forced buyers to return to the same dealer.
DARCARS Could Be On the Hook for Millions
Lexus
The A.G. says that DARCARS Lexus will pay a total of $891,671.26 to reimburse customers who were charged a “sales commission fee” between October 21, 2021, and May 30, 2022. On top of that, both dealerships will pay $116,849 to customers they misled into paying for DARCARS Assurance and complained to the Office of the Attorney General, while additional consumers who informed the OAG about the deceptive sales commission fee will get a total of $164,998.72 in refunds. But the claims could just be getting started, and other buyers who paid the deceptive fees will be mailed claims forms to get their restitution fees. This, says the A.G., could result in millions of dollars of refunds. Furthermore, DARCARS has been instructed to stop its deceptive practices and clearly disclose all future fees and add-ons, while its “Assurance” product or any similar junk bundle must never reappear. All employees, including anyone involved in marketing or advertising, must get annual fair business practices training. Finally, DARCARS must pay $700,000 in penalties. These sorts of penalties only bring change if the responsible dealers are made to bleed from their pockets, so hopefully, this story reaches at least a few more affected customers.
