A $1.17 million-plus consumer refund agreement involving two New York dealerships shows how costly questionable fees and add-on practices can become for dealers. New York Attorney General Letitia James announced Sept. 16 that DARCARS Lexus and DARCARS BMW in Mount Kisco, N.Y., will provide more than $1.17 million to consumers following an investigation into fees and products the state said were not properly presented as optional.
The dealerships also agreed to pay $700,000 in penalties. One issue involved a 2% charge identified in customer purchase and lease documents as a “sales commission.” The attorney general’s office said the charge was optional, did not go directly to the salesperson and was not required by law.
The investigation found that customers were not consistently told they could decline the fee. According to the state, some customers who questioned the charge were given explanations suggesting it was a standard dealership charge or compensation for sales staff.
The investigation also examined DARCARS Assurance, a package that included products such as collision credit and protection related to vehicle theft. The state alleged that customers were sometimes told the package was required even though it was optional.
Under the agreement, the dealerships must discontinue the sales commission charge and provide clearer disclosures for fees and optional products. DARCARS also agreed not to sell DARCARS Assurance or a similar bundled product at its New York dealerships.
The restitution includes $892,671.26 for customers who paid the sales commission fee between October 2021 and May 2022, along with another $281,847.72 designated for other affected consumers. Additional customers may receive money through a claims process. The agreement also calls for annual fair-business-practices training for employees working in sales, finance, marketing and advertising.
The case comes as the Federal Trade Commission has separately issued new guidance addressing vehicle price advertising, mandatory charges and the presentation of optional products. The FTC guidance says mandatory fees should be reflected in advertised prices and optional products should not be represented as required.
