SACRAMENTO – California Attorney General Xavier Becerra today, leading a coalition of 12 attorneys general, sent a letter to 10 major auto manufacturers addressing troubling reports that dealerships are engaging in predatory and harmful practices in connection with the return of leased vehicles amidst the COVID-19 pandemic. Today, the coalition calls on auto manufacturers to ensure that their financing arms and affiliated dealerships have proper controls in place to timely accept the returns of leased vehicles during the pandemic.
“Families are facing a once-in-a-generation economic crisis as a result of the coronavirus pandemic,” said Attorney General Becerra. “There is no reason for automakers or their dealers to push individuals further into financial despair through unlawful and predatory leasing practices. Consumers must be able to return their leased vehicles.”
Today’s letter confronts reports by the media that dealerships are refusing to accept lease returns and instead pressuring consumers into extending their leases or leasing entirely new vehicles. As a result, consumers are left with vehicles that they do not need or do not want to keep. Additionally, these practices can burden consumers with unexpected monthly lease payments and other costs associated with both new leases and extensions, such as insurance and registration. If these reports are true, automakers and dealerships that are engaging in these practices are violating contractual lease obligations and a number of state and federal laws including California’s Vehicle Leasing Act, California’s Military and Veteran’s Code, and the federal Servicemembers Civil Relief Act. With more than four million leases expected to expire this year, and the possibility that in the face of economic hardship, some consumers may decide to return their vehicles early, these troubling practices could affect hundreds of thousands of consumers.
In the letter, the coalition urges car dealerships to:
Attorney General Becerra is committed to ensuring that consumers are protected against unlawful business practices. In September 2019, Attorney General Becerra filed a lawsuit against Paul Blanco’s Good Car Company, alleging that the company engaged in false advertising, made false statements on credit applications, and deceived customers regarding add-on products and additional charges. In June 2019, Attorney General Becerra announced a lawsuit against Texas-based ClubCorp Inc. for failing to repay more than $10 million owed to its more than 9,000 California members. In June 2018, Attorney General Becerra filed a lawsuit against Navient and its subsidiaries for unlawfully misleading student loan borrowers, engaging in illegal collections practices, and steering borrowers to more costly repayment options. In November 2018, Attorney General Becerra led a coalition in sending a comment letter urging the Trump Administration to protect low and moderate-income communities against lending discrimination.
Joining Attorney General Becerra in sending the letter are the attorneys general of Connecticut, Iowa, Minnesota, Nevada, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Virginia, and Puerto Rico.