NY AG Secures $1.17M+ in Consumer Refunds and $700K Penalty from DARCARS Dealerships for Deceptive Junk Fees and Add-Ons

Summary

New York Attorney General Letitia James secured a settlement with two Mt. Kisco car dealerships, DARCARS Lexus and DARCARS BMW, that deceptively charged a two percent 'sales commission' fee that was optional, provided no consumer benefit, and was never paid to the salesperson, and that misleadingly bundled a low-value aftermarket product ('DARCARS Assurance') into sales and lease agreements as if it were mandatory. The dealerships will pay more than $1.17 million in consumer refunds (with potentially millions more through a claims process) plus $700,000 in penalties. They must clearly disclose all future fees and add-ons, are banned from selling DARCARS Assurance or similar junk bundles at any New York dealership, and must conduct annual fair-business-practices training for all employees.

Remedy

DARCARS Lexus will pay $892,671.26 to reimburse all consumers charged the sales commission fee between October 23, 2021 and May 30, 2022, and both dealerships will pay an additional $281,847.72 ($116,849 to DARCARS Assurance complainants and $164,998.72 to deceptive-fee complainants). Consumers charged after May 2022 will receive claims forms, with restitution owed on all valid claims that could push total refunds into the millions. The dealerships must pay $700,000 in penalties, have stopped charging sales commissions, must clearly disclose all future fees and add-on products or services, are banned from offering or selling DARCARS Assurance or any similar junk bundle at any New York dealership, and must subject all employees (including sales, finance, marketing, and advertising personnel) to annual training on fair business practices.

Contract Impact

In-house teams—particularly at dealerships, franchise retailers, or any consumer-facing business that charges line-item fees—should review customer-facing sales contracts, lease agreements, and purchase paperwork for pre-printed fee line items (especially fees styled as 'sales commissions' or marked 'not required by law') and ensure each optional fee is expressly disclosed as voluntary, with its benefit and recipient clearly explained. Advertising and pricing policies should be aligned with transaction documents so advertised prices are not undercut by later-added mandatory-looking charges (all-in pricing). Contracts and point-of-sale disclosures for bundled aftermarket or add-on products should state plainly that the products are optional and describe their actual consumer value, and vendor agreements for those products should be checked for indemnification and refund/restitution obligations arising from mis-selling. Finally, employee training obligations and compliance-program clauses covering sales, finance, marketing, and advertising personnel should be added or updated to require annual fair-business-practices training.

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