I was overcharged a mystery $599 by the dealership when buying out my car – ‘industry standard’ fee was actually illegal

CAR dealerships have been allegedly charging hundreds of dollars in extra fees on customers looking to buy out their car leases.

But the legality of these fees is now under scrutiny as customers have noticed a slew of hidden charges.

WMGH

WMGH

WMGH

WMGH

Jason Taylor, a Colorado resident looking to buy out the lease on his 2019 Mercedes-Benz , told local ABC affiliate KMGH-TV , that he discovered unexpected costs when he contacted dealerships throughout the state.

“The lease contract clearly spells out the costs of buying out the lease,” Taylor explained.

“It should have just been the residual, plus the $150 fee, plus any official titling and taxes,” he continued.

However, both dealerships he went through in Loveland and Westminster implied additional charges, including a $599 dealer and handling fee.

The Loveland dealership even required a service appointment due to a check engine light, something not accounted for by the Westminster location.

Feeling trapped, Taylor filed complaints at both the state and federal levels.

“The dealership said, ‘It’s industry standard, nothing we can do about it,’” Taylor explained.

“So I kind of felt like, if I wanted to realize the equity in my car that I was stuck.”

Colorado Attorney General Phil Weiser has since clarified that undisclosed lease fees, such as the ones the dealers claimed were industry standard, are illegal.

“If you buy any product or service, and you’re not told about some fee, and then later, they say, ‘Oh, you’ve got to pay this fee, a hidden fee.’ That’s illegal. That’s deception,” Weiser stated.

Similar add-on fees have also come under fire in Florida for allegedly violating the Federal Consumer Leasing Act.

The Colorado Auto Dealers Association agreed with Weiser’s sentiment, stating that dealers should not be charging D&H fees on lease buyouts.

However, they did say that there may be exceptions.

“That’s the gray area for us because in this case, the dealer who sold the vehicle was not the dealer who leased the vehicle, and therefore they were not a party to the leasing contract,” explained Matthew Groves, president of the association.

The association has since sought guidance from the attorney general’s office due to state consumer protection laws, which dealers interpreted to mean all transactions must incur the same fee.

“We’re a uniform consumer credit code state, which says if you’re looking at a new transaction if it is cash or credit, you must charge D&H on all transactions uniformly,” Groves said.

How to report junk fees in Colorado

If you were charged additional Dealer & Handling fees or service charges on your lease buyout that were not disclosed in the lease. You can report it at https://www.stopfraudcolorado.gov/

“We do need some guidance on how we should treat those transactions.”

After going public with his story, Mercedes-Benz of Westminster has since refunded Taylor the $599 D&H fee.

Kevin Steward, the dealership’s owner and general manager, affirmed that the dealership values its relationship with customers and issued a refund as a result.

However, the dealership did not clarify whether it would continue to charge D&H fees on lease buyouts.

Mercedes-Benz Financial Services, which financed Taylor’s lease, told KMGH-TV that dealerships should not charge more than the purchase amount outlined in the lease agreement.

“MBFS has a policy that prohibits Mercedes-Benz dealerships from charging lessees more than the purchase option outlined in the lessee’s Lease Agreement,” the statement read.

“The only exception to this policy is when the lessee chooses to purchase additional products or services through the dealership, and those products and services have an additional charge, as well as governmental fees like title and registration that are passed onto the customer,” MBFS said.

The Colorado Attorney General’s office is now urging anyone who has been charged additional D&H fees or service charges on a lease buyout, which were not disclosed in the lease agreement, to report it at Stop Fraud Colorado.