Desert Toyotaof Tucson, Ariz., will pay $60,000 in penalties, restitution, costs and fees to settle allegations it refused to sell vehicles at advertised prices, the Arizona Attorney General’s Office announced last month.
Attorney General Kris Mayes said the store’s prices failed to include the full reconditioning fees the dealer charged and the cost of mandatory additions such as exterior coating and door edge guards.
“Dealerships cannot lure consumers in with a low online price, then fail to honor that price once consumers arrive at the dealership,” Mayes, a Democrat, said in a statement March 18. “All mandatory ‘add-on’ accessories must be included in any advertised vehicle price.”
Desert Toyota did not admit to any wrongdoing in accepting the settlement.
“Although Desert Toyota disputes the State’s allegations, it desires to resolve this matter by entering into this” consent decree, it said.
An attorney for Desert Toyota has not responded to a request for comment.
The dealership must pay $40,000 in civil penalties, $10,000 in consumer restitution and $10,000 in attorneys fees and costs. The state will keep any unused restitution for a consumer protection fund.
Desert Toyota installed accessories, “often including an exterior protective coating, door edge guards, door cups, and window tint,” on every new vehicle, the consent decree said.
“The price of these add-ons was not included in the internet price, and Desert Toyota posted a disclaimer on its online advertising that states that ‘Prices do not include dealer installed options,’ which suggested that the add-ons were optional,” the consent decree alleged. As these items were already installed, they “were therefore mandatory” and increased the price above the amount advertised, the document said.
Desert Toyota also applied a reconditioning fee to all used vehicles. However, it allegedly didn’t clarify to consumers this was merely an estimate if the reconditioning hadn’t yet occurred. Final reconditioning prices sometimes exceeded the amount advertised.
These alleged discrepancies between what Desert Toyota advertised and the prices it charged customers represented violations of the Arizona Consumer Fraud Act, according to the attorney general office’s complaint against the store.
The consent decree requires Desert Toyota to include “the cost of any mandatory fees” in all advertised prices — “including fees for add-on products or services and market adjustments.” These would include charges for any mandatory finance and insurance products such as guaranteed asset protection and service contracts.
The dealership also must for a year preserve recordings of communications with customers which quote vehicle prices. It is required to hand over these conversations to the attorney general’s office upon request.
As for reconditioning fees, Desert Toyota must include them in advertised prices “to the extent such fees are known,” according to the consent decree. If the dealership doesn’t know the amount of the fees, advertisements must carry “a disclaimer explaining that the vehicle cost will include at least the cost of reconditioning,” the document stated.
Discrepancies between advertised and actual vehicle prices have drawn national regulatory attention. The Federal Trade Commission’s Combating Auto Retail Scams, or CARS, Rule — currently on hold pending a court challenge from the National Automobile Dealers Association and Texas Automobile Dealers Association — would require dealerships to list an “offering price” for every vehicle it will honor for all customers. This price must include all mandatory fees and add-on costs except for governmental charges.
And a proposed FTC “junk fee” rule would impose a similar requirement on multiple industries — including auto retail if the FTC CARS Rule or a similar dealership disclosure rule doesn’t come to fruition.