Attorney general issues subpoenas

Complaints about auto-lease buyout fees prompt the action

As complaints mount accusing Florida car dealers of charging undisclosed and possibly illegal fees to consumers seeking to buy their leased vehicles, Florida’s top law enforcement officer is requesting information from three dealers and three automotive finance companies about their policies.

Attorney General Ashley Moody issued subpoenas to the six companies Nov. 2 and gave them until Nov. 16 to comply. The subpoenas seek documents related to fees charged when customers buy out their vehicles at the end of their lease terms.

Consumers have filed about 120 complaints about the matter with Moody’s office since 2021. In addition, numerous lawsuits have been filed in state and federal courts charging Florida auto dealers and manufacturers’ finance

“We have an active investigation of hidden fees charged to some consumers buying out car leases. The investigation focuses on gathering information about industry practices statewide, as well as what state or federal statutes might dictate jurisdiction over such matters.”

companies with violating the federal Consumer Leasing Act of 1976, which prohibits dealers from charging fees not disclosed in the buyout clauses of auto-lease contracts.

The subpoenas were sent to Gunther Volkswagen of Fort Lauderdale, Homestead Hyundai, Lexus of Clearwater, VW Credit Leasing, Toyota Motor Credit Corp. and Hyundai Capital.

They seek a long list of documents related to post-lease buyouts, including “excess fee” disclosures, documents showing policies, guidelines, account records, customer complaints and related lawsuits and arbitrations.

WPLG-Ch. 10 first reported on the subpoenas as part of a series of stories that began last spring. In a Nov. 14 report, the station quoted Moody acknowledging that the investigation is looking at possible “deceptive and unfair trade practices” that violate Florida civil laws.

Each subpoena states it was issued as part of an official investigation pursuant to the Florida Deceptive and Unfair Trade Practices Act.

In a statement Friday, Moody spokeswoman Kylie Mason said, “We have an active investigation of hidden fees charged to some consumers buying out car leases. The investigation focuses on gathering information about industry practices statewide, as well as what state or federal statutes might dictate jurisdiction over such matters.”

The office’s Consumer Protection Division has been researching the matter for the past several months and contacting state and federal entities that “might play a role in regulation or enforcement in this area,” Mason said.

Moody’s office, she said, will explore potential enforcement and regulatory issues “and whether or not statutes need to change to better address this matter.”

A good time to buy your leased car

The number of consumers exercising their options to buy their leased vehicles at the end of their lease terms has exploded since 2021 as new-car shortages have driven up used-car prices. Consumers approaching the end of leases signed before the pandemic are realizing that their buy-back option price, identified in lease contracts as a vehicle’s residual value, can be thousands of dollars below what the car would cost on today’s retail market.

Car dealers realize it too, critics say, and have developed strategies to profit off the buyout transactions.

A sampling of consumer complaints forwarded by Mason to the South Florida Sun Sentinel included five complaints against Fort Lauderdale-based Gunther Volkswagen.

Jonathan Kane, of Hollywood, wrote that when he went to the dealer in February to buy his car at the end of his 36-month lease, Gunther and Volkswagen Credit told him he must get it “certified” and “pay whatever they deem necessary to certify the vehicle.” In addition, they required a $989 dealer fee.

“Neither of these items are listed oraddressedintheoriginalcontract,” Kane said.

Elizabeth Pelevin, of Aventura, wrote that she went back to Gunther in June to buy out her vehicle and was charged $1,000, “which was never agreed upon in my lease contract.”

NicoleVernon,ofFortLauderdale, said when she went to Gunther “they ‘appraised’ my vehicle,” then told her she would have to pay $1,301 more than the residual lease balance plus a $989 dealer fee — for a total of $2,290 over the residual balance in the lease contract.

“We have a contract that they refuse to honor and now they refuse to respond to me,” she wrote.

An attorney for Gunther did not immediately respond to a request for comment about the subpoena and the complaints.

Most lease contracts require consumers to enter arbitration over disputes, but that requires consumers to hire attorneys.

Joshua Feygin, a Hollywood attorney who said he represents about 80 consumers with similar complaints, filed a lawsuit against Coral Springs Honda on Nov. 10 on behalf of lease customer Christopher Allen Roldan. The suit states that Roldan signed a

36-month lease agreement with the dealership in June 2019.

The contract stated he could buy the 2019 Honda Accord at any point duringtheleasefortheresidualvalue of $15,178 “plus any required taxes and fees.” If he exercised the option before the lease term ended, the residual value would be recalculated to an “adjusted lease balance” plus “any taxes or fees required by law.”

But when he went to the dealership to exercise his purchase option, the dealer charged him a $992 “predelivery service charge” and a

$449 “electronic registration filing fee” that were not disclosed in the lease, the suit states.

Intotal,Roldanwascharged$1,141 in undisclosed fees, the suit states.

Coral Springs Honda did not respond to a request for comment about the case, nor has the company filed a response to Roldan’s claim.

A cheaper option

In complaints to the Attorney General’s Office, in online forums, and in phone calls and emails to the Sun Sentinel, consumers reported being told by their automakers’ finance companies that a Florida law prohibits the finance companies from selling directly to customers.

In his complaint to the Attorney General’s Office, John Baker said that the company servicing his loan “stated that since I live in Florida, it is required [that the] lease purchase must be done through a dealer.”

The Sun Sentinel reached out to the Florida Department of Highway Safety and Motor Vehicles, which regulates auto sales in the state, and the Florida Automobile Dealers Association, and asked whether they were aware of such a law.

The auto dealers association did not respond, and a spokeswoman for the Department of Highway Safety and Motor Vehicles said it does not regulate lease finance companies.

Allison Reed, a spokeswoman for JP Morgan Chase, which is contracted to provide financing for Subaru customers, said Chase is under no such legal obligation to send its lease customers to dealers if they want to buy their vehicles.

End-of-lease options are offered “directly through Chase,” she said.

GM Financial spokesman Jake Stevens said the company does not require customers to go to a dealership to exercise the purchase option. Customers can contact GM Financial’s lease-end team and obtain a payoff quote, then mail a check to complete the transaction without visiting a dealership, Stevens said.

American Honda Finance Corp. spokesman Chris Martin stated that his company and Honda’s customers are bound by terms of leasing contracts, which “may require that the lease vehicle be returned to an authorized Honda dealer.”

In 2021 “may” became “will,” Martin said. The reason, he said, was “tight supply of new and used cars.”

Several national online services — including LeaseEnd.com, Tresl Auto Finance (MyTresl.com), and MyAutoLoan.com — offer to process consumer lease buyouts without requiring visits to dealerships.

The companies say they deal directly with finance companies and help consumers avoid paying steep add-on dealer fees.

In online forums, lease customers say finance companies sometimes suggest that they shop various dealers to find one who won’t charge exorbitant fees.

Dealers urged to comply with contract terms

Controversy over undisclosed fees have prompted warnings to dealers from some manufacturers’ financial arms and the National Automobile Dealers Association.

In a letter to dealers in June, the association urged dealers to “exercise caution to ensure that the price offered to the lessee for purchase, and any fees the dealer charges to the consumer related to the purchase of the leased vehicle” comply with provisions of the lease contract and the Consumer Leasing Act.

Those provisions, the letter said, “generally requires that the Lease Purchase Option Price be honored — inclusive of fees related to the exercise of the purchase option by the consumer.”

Statements to the Sun Sentinel by several other automaker-owned finance companies asserted similar policies.

“We expect Infiniti retailers to honor the lease agreement,” Infiniti said. Its sister company, Nissan Motor Acceptance Corp., sent a nearly identical statement.

GM Financial’s Stevens said his company shared the NADA letter with dealers to remind them of lessees’ contractual rights.

Ford Credit in May urged dealers not to hit buyout customers with additional fees.

The company’s policy, the letter said, “is for the customer to be charged only the purchase option price listed in the lease agreement, together with any applicable fees (title and registration) and taxes.”

Kylie Mason, spokeswoman for Attorney General Ashley Moody