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Post date: February 28 2002

Spitzer Obtains $125,000 In Refunds For New Car Buyers

Attorney General Spitzer today announced that a Rockland County auto dealer will pay nearly $125,000 in refunds to settle allegations that it imposed a hidden fee on more than 2,000 new car buyers. In the settlement, the affected consumers will each receive a payment of $61, and the dealer will also pay $22,000 in civil penalties and costs.

In February 2000, Rockland Auto Plaza of Nanuet began imposing a $100 "Customer Services" fee on each consumer who purchased a new vehicle. The fee represented payment for a packet of discount and reimbursement coupons that could be redeemed at the dealership toward payment for oil changes, towing and other automotive services. However, the dealer did not disclose this fee to consumers when they placed an order for a vehicle, and did not give consumers the opportunity to accept or reject the coupon packet. Instead, consumers were first given notice of the fee when they arrived at the dealership to pick up their new vehicle and to pay off the balance due on the invoice, on which the Customer Services fee was pre-printed so as to appear that the charge was mandatory.

"This dealership wrongly hit car buyers with a last-minute fee for a product they did not order, and then compounded the problem by making the fee appear to be mandatory," Spitzer said. "We will not permit auto dealers to impose hidden fees or to charge consumers for products or services they did not actually order."

Spitzer's investigation began after his office received a referral from the state Department of Motor Vehicles, whose employees uncovered the hidden fee charges in August of 2001. At the DMV's request, Rockland Auto Plaza stopped imposing the fee. However, the investigation ultimately revealed that 2,045 new car buyers had paid the Customer Services fee between February 2000 and August 2001.

Rockland Auto Plaza purchased the coupon packets at a cost of $39 each, and then marked the price up to $100. Pursuant to the settlement with the Attorney General, the dealer will refund its full profit margin of $61 per packet, while the coupons will remain available for use by consumers.

The dealer has also agreed not to charge a fee of any kind unless: the fee is for a bona fide product or service; at the time the consumer places an order for a new vehicle, the dealer clearly discloses, orally and in writing, the amount of the fee and the nature of the product or services offered; and the consumer affirmatively agrees to purchase the product or service. Rockland Auto Plaza will also be prohibited from utilizing sales documents which set forth pre-printed charges for any product of service, or which otherwise create the false impression that a charge is mandatory.

In announcing the settlement, Spitzer acknowledged that Rockland Auto Plaza cooperated fully during the investigation. Spitzer also thanked the Department of Motor Vehicles for uncovering the problem at the dealership and for its invaluable assistance in conducting the investigation.
The case was handled by Gary S. Brown, Assistant Attorney General in Charge of Spitzer's Westchester Regional Office. Mike Maher, Robert Menak, Ian Hay and Dean Panzarino of the Department of Motor Vehicles provided assistance in the investigation.