Customers who bought a vehicle from a number of Lithia Motors dealerships in Alaska could see some fees reimbursed after the business agreed to settle misleading advertising claims raised by state investigators.
The Oregon-based company has agreed to pay a $300,000 fine after the Alaska Department of Law’s Consumer Protection Unit investigated the automotive group for charging fees not included in a vehicle’s advertised price at five of its Alaska dealerships, according to a proposed settlement provided by the department Monday.
Lithia also advertised new BMW vehicles at the manufacturer’s suggested retail price on third-party websites but charged higher prices at the dealership, according to the settlement.
Hundreds of Lithia customers who paid a hidden fee since January 2019 could also receive a restitution payment, the Department of Law said Monday.
The proposed action appears to mark the second time in under 20 years that Lithia has agreed to a settlement with the state after illegally charging customers for fees not listed on a vehicle’s advertised price. In a 2006 case, Lithia agreed to pay a $500,000 fine and refund affected customers, the Department of Law said in a statement at the time.
The new proposed settlement includes a commitment to release Lithia “from all civil claims that the State could have brought based on Lithia’s potential violations of the consent judgment” in the 2006 case.
Lithia, which said in June that it was the world’s largest automotive dealer, “took ownership of its mistakes” and worked with state investigators to determine the scale of most recent problem, the Department of Law said this week.
The company has seven locations in Alaska.
A Portland-based attorney for Lithia listed on the settlement document did not immediately respond to an email requesting comment. Messages left for managers at multiple Anchorage Lithia dealerships were not immediately returned Tuesday.
Department of Law spokesperson Patty Sullivan said the settlement would apply to customers who purchased a vehicle and paid a “document fee” at five Lithia locations: Lithia Chrysler Dodge Jeep Ram Fiat of Anchorage, also known as Lithia Superstore South Anchorage; Lithia Chrysler Jeep Dodge Ram of Wasilla; Chevrolet of South Anchorage; BMW of Anchorage; and MINI of Anchorage.
Those fees typically were $200, though it’s not yet clear the total Lithia is expected to pay in restitution, she said.
If the proposed settlement is approved by an Anchorage Superior Court judge, Lithia will have 270 days to identify and pay customers who are eligible for reimbursement.
Most eligible customers will be contacted directly by Lithia, Sullivan said.
But some customers who bought vehicles at three Lithia dealerships — Lithia Chrysler Dodge Jeep Ram Fiat of Anchorage, Chevrolet of South Anchorage and Lithia Chrysler Jeep Dodge Ram of Wasilla — may have to take additional steps to claim a refund because Lithia doesn’t have some sales records for those locations, according to the department.
The customers who will have to take extra steps are those who bought vehicles at Lithia Chrysler Dodge Jeep Ram Fiat of Anchorage from Jan. 3, 2019, to Nov. 30, 2019; Lithia of Wasilla from Jan. 3, 2019, to March 31, 2021; and Chevrolet of South Anchorage from Jan. 3, 2019, to Feb. 28, 2021.
In order to qualify for a refund, state officials say, those customers will have to email several documents to state officials, including a copy of the purchase contract and a signed and notarized affidavit stating they personally saw an ad for the vehicle they bought “which stated a price less than the sum of the price and document fee reflected in the contract minus any optional accessories and add-ons.”
The documents will have to be emailed to consumerprotection@alaska.gov, alexandra.giza@stoel.com and docfeeinquiry@lithia.com within 100 days of the settlement’s approval, officials say.
For future sales, Lithia will also have to clearly list any fees in advertisements and distinguish between the manufacturer’s retail price and its asking prices, according to the proposed settlement.
The department said it anticipates a judge will approve the settlement in the next several weeks.
Anyone with questions can contact the Department of Law’s Consumer Protection Unit at consumerprotection@alaska.gov or 907-269-5200.