‘Phantom Freight’: Class Action Alleges Certain Chrysler, Jeep, Dodge, Maserati Vehicles Subject to Inflated Transport Charges [DISMISSED]

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FCA US has been hit with a proposed class action that alleges the automaker and parent Stellantis N.V. have deceptively charged certain newer Chrysler, Jeep, Dodge, Ram, Fiat and Maserati buyers an inflated “phantom freight” fee for the cost of transporting their vehicles to dealerships. 

The 54-page lawsuit alleges that FCA has been “emboldened” in recent years to return to the long-derided practice of charging a “phantom freight” fee, or “destination charge,” in connection with new vehicle sales. The suit says FCA’s phantom freight charge, in particular the one applied to model year 2018 or later Chrysler, Jeep, Dodge, Ram, Fiat and Maserati vehicles, is an inflated, undisclosed cost that allows the company to unfairly drive additional revenues “that they could not have generated by simply raising the vehicles’ sales price.” 

The lawsuit claims new car buyers are unaware that FCA’s destination charges are substantially higher than the true cost for the automaker to deliver a vehicle to a dealership. 

“Neither Defendants, nor any of their dealers or representatives informed Plaintiffs, during or after purchase, of the fact that the destination charge contained phantom freight,” the complaint alleges. 

According to the filing, automakers’ practice of charging consumers a phantom freight fee came to a halt in the late 1950s, when Congress passed the Automobile Information Disclosure Act. Once in effect in January 1959, the law required companies such as FCA to place a label, known today as the Monroney sticker, on the window of each new vehicle before making it available for sale, the suit states. 

Per the lawsuit, a vehicle’s Monroney sticker lists, among other costs, a destination charge, which is to represent the actual cost of delivering a vehicle to a dealership for sale.

The case, citing a 2021 Consumer Reports article, relays that destination fees increased by an average of “90 percent on Chrysler, Dodge and Jeep vehicles; 74 percent on Ram trucks since 2011 and 114 percent on Fiats since 2012.” An independent consultant quoted in the article stated that “[i]t does not take a mathematician to understand the value of a $100 increase to a company that sells 2 million units a year.” 

The suit claims that FCA, in reality, charges hundreds of dollars more per vehicle for delivery than its competitors, including Ford, GM, Honda and Toyota. According to the case, consumers can do little to fight against these destination charges given the costs are “misleadingly labeled” on each vehicle’s Monroney sticker and are not subject to negotiation like a vehicle’s base sale price. 

“Just as it did in the early 20th century, FCA is using these inflated destination charges to effectively lower its [manufacturer’s suggested retail price], misleading the public into underappreciating the cost of Class Vehicles, and thereby achieving greater revenues,” the suit claims.

The case argues that if FCA “were to act lawfully,” in particular by increasing its MSRPs and lowering destination charges to erase phantom freight, the automaker “would be unable to charge as much per vehicle and would also decrease the overall demand for its vehicles.”

Further, the suit alleges that in addition to “substantially outpacing” its competitors as far as its destination charges, FCA has also consistently outpaced inflation. 

The lawsuit looks to represent consumers who bought new a 2018 model year or newer Chrysler, Jeep, Dodge, Ram, Fiat or Maserati vehicle in Florida, Georgia, Illinois, Iowa, Missouri, Ohio, Pennsylvania or Texas.

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