The Plague of Hidden Junk Fees:

What a New York Settlement Means for Car Buyers in 2026

In 2023, I wrote about the plague of hidden junk fees. In 2026, the cure still starts with a simple promise: tell customers the real price before asking them to buy. A dealer deserves a fair profit. A customer deserves to know what that profit will cost.

Consider the New York attorney general’s DARCARS settlement, announced on Sep 16, 2026. The investigation focused on DARCARS Lexus and DARCARS BMW in Mount Kisco. According to the attorney general, the dealerships added a 2% “sales commission” to nearly every retail sale or lease while leaving it out of advertised prices. The fee was optional, but customers were not clearly told that. It was not paid directly to their salesperson.

On a $50,000 vehicle, 2% is $1,000. That is a meaningful difference between the price that attracts you and the price you are asked to pay.

The settlement requires more than $1 million in initial refunds, plus $700,000 in penalties. Relief includes specified Lexus buyers in 2021–22, additional complainants, and a claims process for other eligible consumers. It does not mean every DARCARS customer nationwide automatically gets a refund.

One phrase deserves special attention: “not required by law.” A legal analysis of the case warned that consumers could read that language as referring to government-related overhead. The settlement itself makes a more precise point: the phrase indicated the fee was not government-mandated, but failed to disclose that it was voluntary. Buyers could still believe the dealer required it to complete the purchase. Those are different questions: Does the government require it? Does the dealer require it? Can I decline it?

New York also challenged the DARCARS Assurance add-on package. According to the attorney general, buyers were not clearly told it was optional. An advertised collision benefit depended on buying or leasing another vehicle from the same dealership within 60 days of an insurance settlement. That is a substantial restriction to explain before selling someone “protection.”

My standard is straightforward: explain what an optional product costs, what it provides, its exclusions, and that the customer can say no. A signature does not substitute for an understandable explanation. Calling something optional means little if the sales process makes it feel unavoidable.

Be careful about what this case proves legally. This is a New York enforcement settlement under that state’s consumer-protection laws, including General Business Law sections 349 and 350 and Executive Law section 63(12). The respondents neither admitted nor denied the attorney general’s findings. The agreement stops their sales-commission charges and imposes specific add-on and disclosure reforms for their New York operations. It is not a nationwide ban on every dealer fee or every optional product. State requirements differ.

The federal picture also needs updating. The FTC’s CARS Rule was vacated by a federal appeals court on Jan 27, 2025 over the agency’s rulemaking procedure, then formally withdrawn effective Feb 12, 2026. It is not an operative nationwide car-buying rule. The FTC’s separate Rule on Unfair or Deceptive Fees covers live-event tickets and short-term lodging; it does not extend that rule’s requirements to automobile sales.

That does not give dealers permission to deceive. On Mar 13, 2026, the FTC announced warning letters to 97 auto dealership groups. Its warning letter explains that the FTC Act requires truthful advertised prices, including mandatory charges other than required government charges such as taxes. Those letters are warnings, not findings that every recipient broke the law. Existing federal enforcement continues alongside state enforcement.

For car buyers, my advice is practical. Before visiting, get a written, itemized out-the-door price for the exact vehicle, including taxes, title, registration, and every dealer charge. Ask which charges go to the government, which stay with the dealer, and which you can decline. Require each optional product to be priced separately and included only if you choose it. Compare that total across dealers, keeping trade-in value and financing terms separate so a monthly payment cannot hide a higher price.

Honest competition requires comparable prices. A dealer who advertises the real price should not lose your business to a competitor who looks cheaper only because part of the bill is concealed. Paying salespeople and covering overhead are normal costs of running a dealership. My position is that those costs belong in the price we quote you.

At Earl Stewart Toyota, we refuse to play games with hidden fees. We should earn your business through a fair price, good service, and respect for your intelligence. You should not need an attorney to find out what a car costs.


Earl Stewart