New York Dealer Ordered to Refund Over $1 Million to Buyers Over Shady Selling Tactics
DARCARS to refund customers over $1 million due to deceptive sales practices.
Key Takeaways
- DARCARS applied a 2% sales commission fee to new cars without informing buyers.
- The dealership must refund customers from 2021 and 2022.
- Car buyers received conflicting statements when they asked about the fee.
- DARCARS will pay $892,671.26 to reimburse affected customers.
- The dealer must also pay $116,849 back to customers who paid for ‘DARCARS Assurance.‘
What Led to the Investigation?
An investigation into DARCARS of Railroad Venue (DARCARS Lexus) and MT Kisco Automotive, LLC (DARCARS BMW) was initiated in February 2022 when the Office of the Attorney General (OAG) received a complaint that the dealer had added a ‘sales commission charge’ of more than $700 to the purchase of a new vehicle, without informing the buyer.
Ordinarily, sales commission fees are paid directly to the salesperson, but that wasn’t the case here. Instead, the fees never went to the employee responsible for the sale.
How Much Did the Dealership Profit?
The investigation also revealed that when consumers asked the dealership group about the charge, ‘they were met with inconsistent, vague, conflicting or misleading explanations.‘
The sales commission fee was set at 2 percent of the vehicle’s price, allowing DARCARS to generate millions in extra revenue.
What Are the Consequences for DARCARS?
New York Attorney General Letitia James has ordered DARCARS Lexus to pay $892,671.26 to reimburse all customers who were charged this commission fee between October 23, 2021, and May 30, 2022.
In addition, customers who informed OAG about the dodgy sales tactics will share in $164,998.72 worth of refunds.
What Does This Mean for Car Buyers?
The case serves as a reminder for car buyers to carefully review their sales contracts and ask questions about any additional fees.
It also highlights the importance of transparency in the car-buying process and the need for dealerships to clearly disclose all fees and charges.
How Does This Affect the Automotive Industry?
The case against DARCARS is a wake-up call for the automotive industry, emphasizing the need for dealerships to prioritize transparency and honesty in their sales practices.
It also underscores the importance of regulatory bodies in protecting consumers and promoting fair business practices.
Frequently Asked Questions
Q: How much will DARCARS have to refund to customers?
A: DARCARS will have to refund $892,671.26 to customers who were charged the sales commission fee between October 23, 2021, and May 30, 2022.
Q: What was the sales commission fee charged by DARCARS?
A: The sales commission fee was set at 2 percent of the vehicle’s price.
Q: What is the consequence for customers who paid for ‘DARCARS Assurance’?
A: The dealer must pay $116,849 back to customers who paid for ‘DARCARS Assurance,’ which bundled together several products and services.
