New York Attorney General Letitia James has secured more than $1 million in refunds for New Yorkers who were overcharged by two Westchester County car dealerships, following an investigation into allegedly misleading fees and add-on products.
The dealerships, DARCARS Lexus and DARCARS BMW, both located in Mount Kisco, were accused by the Office of the Attorney General of charging consumers a 2% fee that was presented as a sales commission. According to the investigation, the fee was optional, was not paid directly to salespeople and did not provide a benefit to customers.
The investigation began in February 2022 after a consumer complained that DARCARS Lexus had added a sales commission charge of more than $700 to a vehicle purchase without properly disclosing it.
Investigators found that DARCARS Lexus began imposing the fee in October 2021, while DARCARS BMW began charging it in August 2022. The fee appeared as a preprinted line item in sales and lease agreements. Although documents stated the charge was not required by law, the dealerships allegedly did not clearly explain that customers could decline it.
The dealerships also offered a product called DARCARS Assurance. The package included benefits such as a collision credit and stolen vehicle credit. According to the attorney general’s office, customers were not properly informed that the package was optional and were led to believe it was required as part of their vehicle purchase or lease.
Under the settlement, DARCARS Lexus will pay $892,671.26 to reimburse consumers charged the sales commission fee between Oct. 23, 2021, and May 30, 2022. Both dealerships will provide another $281,847.72 in reimbursements, including $116,849 for customers who complained about DARCARS Assurance and $164,998.72 for additional consumers who reported the sales commission fee.
Other customers who paid the fees will receive claim forms and may qualify for additional restitution, potentially bringing total refunds into the millions.
DARCARS has also agreed to stop charging the sales commission fee and provide clearer disclosures about fees and optional products. The dealerships are prohibited from offering DARCARS Assurance or similar packages at New York locations and must provide annual fair-business-practices training to employees involved in sales, finance, marketing and advertising. The company will also pay $700,000 in penalties.
“New Yorkers save up for years to buy a car, and they deserve fair prices without junk fees that drive up the cost with useless add-ons,” James said.
The settlement adds to James’ recent consumer-protection actions involving automobile dealerships and lenders. Her office has previously secured settlements involving Nissan dealerships in New York City and Long Island that resulted in more than $4.5 million in consumer restitution.