A proposed class action alleges FCA US and Stellantis N.V. have misled consumers into overpaying for their vehicles by inflating the amount they must pay for delivery to a dealership.
At issue in the 19-page lawsuit is a vehicle’s “destination fee,” which the case says is generally understood to reflect a manufacturer’s average cost of delivering a vehicle to a dealership. The destination fee is typically charged to the dealer and then passed onto the consumer who buys or leases a vehicle, the suit relays, adding that consumers similarly expect to pay a car’s destination fee as part of their purchase.
According to the complaint, the destination fee charged by FCA and Stellantis since at least 2015 for new Chrysler, Dodge, RAM, Jeep and Fiat vehicles (the “class vehicles”) has “increased sharply,” and currently sits at what the case calls “a whopping” $1,495 per car. Consumers looking to buy or lease any of those vehicles are, as a result, “forced to pay the exorbitant” delivery fee, which the defendants call a “destination charge,” on the belief that it is a legitimate charge directly related to the cost of delivering a Chrysler, Dodge, RAM, Jeep or Fiat vehicle.
Notwithstanding industry standards and the “reasonable expectations” of drivers, FCA and Stellantis, an automaker formed as the result of the merger of Fiat Chrysler and Peugeot S.A. last year, have folded into their destination charge without disclosure a “significant amount of profit” for themselves, and, in doing so, have deceived consumers into paying “far more than the actual cost” of vehicle delivery, the lawsuit says.
“In fact, Defendants’ Destination Charge has little correlation to the cost of delivering the Class Vehicles to their intended destination (i.e., Defendants’ dealerships) at all, and instead, has become a huge profit center for Defendants,” the complaint, filed in New York, alleges. “Indeed, the Destination Charge Allows Defendants to extract hidden markups on the sale of the Class Vehicles from unsuspecting consumers.”
The plaintiffs, consumers from New York and New Jersey, say they reasonably understood the defendants’ “destination charge” for their vehicles to be the true pass-through cost the companies paid for delivery of the cars to the dealerships. Each plaintiff also says they were required to pay and unable to negotiate the $1,495 “destination charge” as part of the overall price of their respective vehicles, a 2018 Jeep Wrangler and 2019 Jeep Grand Cherokee. Neither consumer knew FCA and Stellantis folded into the delivery charge profit for themselves, the suit claims.
The case goes on to argue that the labeling of the defendants’ “destination charge” is deceptive in that it leads reasonable consumers to believe it reflects actual vehicle shipping costs, and not such costs plus profit. Further, the defendants, the suit says, break out the destination charge from the base MSRP on each vehicle’s price sticker.
“With this chicanery, the vehicle itself appears less expensive, and Defendants’ artificial ‘Destination Charge’ can be used as a vessel for profit that would otherwise appear in the cost of the vehicle,” the complaint says, claiming “simple math” shows that the “destination fee” has little to do with a vehicle’s delivery:
“While fuel and shipping costs have remained fairly constant over the last decade, the increase in Defendants’ Destination Charges during that same period has been astronomical. A recent study by Consumer Reporters revealed that Destination Charges rose an average of 90 percent on Chrysler-, Dodge-, and Jeep-branded vehicles since 2012. Destination Charges also rose 74 percent on RAM trucks since 2011, and 114 percent on Fiat-branded vehicles since 2012. The charges on the Jeep Cherokee, specifically, rose to $1,495 in 2019, up from $995 in 2016—a fifty percent increase in just three years.
In sum, the increase in Defendants’ Destination Charges over the past decade has not and is not correlated with the actual increase in costs of shipping. That is why other automakers ‘destination fees’ have not increased at the same pace during this same ten-year period. Audi, BMW, Infiniti, Lexus, Lincoln, Mercedes-Benz and Volvo each grew their fees by less than 20 percent over the past decade.”
The complaint can be found below.
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