A Maryland Kia dealership could owe customers more than $1 million in refunds after settling allegations it charged fees and shipping costs on top of the advertised vehicle price.
Owings Mills, Md.-based Koons Kia admitted no wrongdoing under the settlement announced Tuesday by Maryland Attorney General Brian Frosh. The dealership said its advertising complied with Maryland law and denied it violated the state's Consumer Protection Act.
The settlement requires Koons Kia to refund the disputed fees to customers, an amount the state estimated could collectively exceed $1 million. The dealership must also pay the Maryland Attorney General's Consumer Protection Division up to $200,000 to cover the agency's investigative costs. If Koons Kia meets the settlement terms and stays in compliance for a year, the state will waive $100,000 of that bill.
"Car dealers must honor the price they advertise for their vehicles," Frosh said in a statement Tuesday. "I am glad that Maryland consumers will receive refunds for the fees that they paid above the advertised price."
Koons Kia said it had been displaying sticker price, not sales price, and the distinction between the two was understood.
"The Attorney General alleged that the Manufacturer's Suggested Retail Price (MSRP) that was displayed represented the sales price Koons Kia was offering," Koons Kia spokeswoman Beth Kerr said in a statement Wednesday. "We disagree with this allegation. MSRP is a well understood term with its own definition and was clearly disclosed as such. Koons KIA fully disclosed the pricing properly on the window of the vehicle as well as all purchase documents. Nevertheless, we agreed to the settlement to avoid the costs and disruption of litigation and because it requires us to make clearer in our advertising that the MSRP is not the sales price, which Koons KIA fully supports and in our opinion has no impact on our customer or the dealership."
Under the terms of the settlement, Koons Kia can't charge any fees that aren't reflected in a vehicle's advertised price, with the exception of taxes and title fees. It also can't charge shipping fees if those fees had already been included in a vehicle's advertised price.
Any price Koons Kia advertises must represent the "full delivered cash price" a customer will pay outside of taxes and title fees, according to the settlement.
Maryland law requires dealerships advertising vehicles for sale to include such information in the price displayed.
"Further, for new vehicles, that advertised price must also include any dealer processing charge and freight charge, unless the dealership clearly and conspicuously discloses the amount of these charges in the advertisement," the settlement states.
Charging more than the advertised price violates the state's Consumer Protection Act, according to the division.