Two DARCARS dealerships in Mt. Kisco, New York, are facing more than $1 million in customer refunds after a New York Attorney General investigation found that buyers were charged fees they were allegedly misled about. The dealerships sell BMW and Lexus vehicles and are owned by the same company.
How the DARCARS Fees Were Presented to Customers
According to a statement released on behalf of New York Attorney General Letitia James, one of the dealerships added a 2% charge to vehicle sales and listed it on paperwork as a sales commission.
The fee was not disclosed on the dealerships’ websites, making their advertised prices appear lower than those of competitors until customers were ready to complete a purchase.
The investigation also found that the so-called sales commission was not paid directly to the dealer representative who sold the vehicle. The charge was also optional, although customers were reportedly not clearly informed of that fact.
The dealerships included language stating that the fee was “not required by law.” When customers asked about the charge, they reportedly received different explanations. Some were told it was a standard dealer charge, while others were told it went to the salesperson or covered employee commissions.
The Attorney General’s investigation determined that those explanations were false or misleading.
Customers Were Also Charged for DARCARS Assurance
The investigation also uncovered another fee bundle called “DARCARS Assurance.” The package included benefits such as a $2,500 payment toward an insurance deductible if a purchased vehicle was totaled.
However, customers were led to believe the optional package was mandatory. Under its terms, customers seeking the $2,500 payout would also have to buy or lease another vehicle from the same dealership within 60 days of receiving their insurance settlement.
As a result, what customers were led to view as required coverage was actually an optional package with conditions attached to its benefits.
DARCARS Faces Refunds and $700,000 in Penalties
The Attorney General’s office said DARCARS Lexus will pay $891,671.26 to reimburse customers who were charged the “sales commission fee” between October 21, 2021, and May 30, 2022.
Both dealerships will also pay $116,849 to customers who were misled into paying for DARCARS Assurance and complained to the Office of the Attorney General.
Additional consumers who informed the OAG about the deceptive sales commission fee will receive a total of $164,998.72 in refunds.
The restitution could ultimately be much larger. Other customers who paid the deceptive fees will be mailed claims forms so they can seek restitution, which the Attorney General’s office said could result in millions of dollars in refunds.
DARCARS Must Change Its Practices
DARCARS has also been ordered to stop the deceptive practices and clearly disclose all future fees and add-ons.
The company’s “Assurance” product, or any similar junk-fee bundle, must not be offered again. All employees, including those involved in marketing or advertising, must also receive annual fair business practices training.
In addition to the customer refunds, DARCARS must pay $700,000 in penalties under the agreement announced by the Attorney General’s office.
