- within Strategy, Government, Public Sector and Tax topic(s)
Late last month, New York Attorney General Letitia James announced that she had reached settlements with five Nissan car dealerships in New York City, resolving allegations that they overcharged consumers who wanted to purchase their leased vehicles when their leases expired. As part of the settlements, the dealers agreed to pay more than $1.6 million in restitution and more than $300,000 in civil penalties.
In announcing the settlement, James said, "Ignoring agreements and adding bogus fees harms New York consumers, and that is something my office won't allow to go unchallenged."
Apparently, consumers leased cars from these dealers with the understanding that they could purchase their cars at the end of the lease term for a specific price. When they went to buy their cars, however, the dealer allegedly charged them more than had been originally promised. Specifically, the NYAG alleged that the dealers added miscellaneous "dealership fees" or "administrative fees" and also inflated the vehicle's price on the invoice. The NYAG also alleged that the dealers misrepresented that fees being charged by the dealer were government fees.
Why is this enforcement action important for advertisers to understand?
First, this case is yet another example of the fact that so-called "junk fees" are a top priority for regulators right now. If you're advertising a price to consumers, now is the time to ensure that you're including all charges in that price (unless it fits within some narrowly defined exceptions). (For more information about junk fees, check out, for example, our recent blog posts on the FTC's proposed rule and California's new junk fee law.)
Second, be careful about how you characterize any-add on charges. Here, the NYAG challenged the dealers' addition of "government fees" to consumer's invoices, when those fees included mark-ups charged by the dealer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
