In this seller’s market where the dealers seem to hold all the cards, some stores are getting away with even more nonsense than ever before. However, some states are taking notice and going after them. In some cases, this results in hefty fines or settlements like this IL dealer group that settled for 10 million dollars, and now an MD Kia dealer is caught the ire of the local attorney general’s office.
Of course, few buyers would be surprised that a Kia dealer has put themselves in the cross-hairs of the Maryland Attorney General’s Consumer Protection Division as the brand has an unfortunate reputation for stores that are a bit notorious for “stealership” tactics.
A press release was issued that described the settlement:
“Maryland Attorney General Brian E. Frosh announced today that his Consumer Protection Division has entered into a settlement with Koons of Reisterstown Road, Inc., the owner of the Koons Kia dealership located in Owings Mills, Maryland. The settlement addresses allegations that Koons Kia charged consumers hidden fees not included in its advertised prices, and it collected fees for shipping their vehicles (known as “freight charges”) from consumers, although the shipping cost was already included in the advertised price of the vehicle.
The settlement requires Koons Kia to stop charging car purchasers fees, other than taxes or title fees, if the fees were not included in the advertised price for a vehicle. The dealership also agreed not to charge consumers for shipping if such freight charges were already included in any advertised price for the vehicle. The company also agreed to return all fees it collected from consumers other than taxes and title fees that were not included in the advertised price of the vehicle, as well as all amounts it collected for freight charges that were already included in the advertised price of the vehicle.
The Attorney General estimates that, as a result of the settlement, more than $1 million will be returned to consumers. Koons Kia also agreed to pay the Division $100,000 for its costs incurred in investigating the matter. “Car dealers must honor the price they advertise for their vehicles,” said Attorney General Frosh. “I am glad that Maryland consumers will receive refunds for the fees that they paid above the advertised price.”
The crux of the case comes down to the use of “freight charges” which seems to be more prevalent with the MD/VA area dealers. How it works is that they back out the manufacturer’s “destination fee” from the front of the price, and then add it back in later in the quote. In a market where discounts were possible I would see dealers in this area give a quote like this.
Notice the $895 “freight charge,” which means that the posted discount of $3,698 is really only $2,803.
In this current market where a sticker price deal is often the best-case scenario, the proper disclosure of these fees can make the difference as to whether or not a consumer is really getting the most competitive price. Hopefully, this settlement sends a message to other dealers in this region, and beyond, that they need to post prices in accordance with state law.