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N.Y. Dealer to Pay $27K for Bogus Customer Fees

KINGSTON, N.Y. — Attorney General Eric T. Schneiderman reached a settlement Monday with Prestige Toyota, which was adding an improper $650 “processing fee” to the purchase price of leased vehicles bought by customers at the end of their leases.

No additional services were provided for payment of this fee, which was not properly disclosed.

“The law is clear: auto dealers must treat consumers fairly and honestly, and not cheat them by charging bogus fees,” Attorney General Schneiderman said. “This is one more step in our work to stop deceptive marketing practices in New York State and ensure that victims can recover their hard-earned dollars. There must be one set of rules for all New Yorkers, and that includes auto dealers.”

Pursuant to the settlement, Prestige Toyota will pay $17,250.47 in restitution to 27 customers who were charged the bogus processing fee. The dealership will also reform its practices and pay $10,000 in penalties to New York State.

In 2012 and 2013, Prestige Toyota entered into leases with customers that set a price for purchase of the vehicle at the end of the lease. However, when the leases expired, Prestige Toyota added $650 to the purchase price without disclosing it had done so.

In addition, the fee was added to the price tag despite the fact that nothing had happened during the course of the lease to increase the cost to the dealership. When one customer caught the dealer doing this, he was told the $650 was a “processing fee.”  After the consumer was given only a partial refund, he complained to Attorney General Schneiderman’s Poughkeepsie Regional Office, which investigated the matter.

The Attorney General’s investigation found 27 consumers who are entitled to refunds — most of them for $650 — with 9% interest starting from the date of purchase.


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