Two Westchester County car dealerships will return more than $1 million to New York buyers and lessees who were charged a hidden 2% “sales commission” fee and a costly add-on package, Attorney General Letitia James announced September 16. DARCARS Lexus and DARCARS BMW, both in Mt. Kisco, will also pay $700,000 in penalties and have stopped charging the fee. Customers from later periods will be mailed claim forms, which the state says could push total refunds into the millions.
How the 2% “sales commission” worked
According to the attorney general’s September 16 announcement, the investigation covered DARCARS of Railroad Avenue, Inc., which operates as DARCARS Lexus, and MT Kisco Automotive, LLC, which operates as DARCARS BMW. The office found that the dealerships added a charge equal to 2% of the deal that was presented as a sales commission, even though it was not paid directly to the salesperson, was completely optional and provided no benefit to the buyer.
The fee appeared as a pre-printed line in the sales and lease agreements and was labeled “not required by law,” but buyers were not told it was voluntary. When customers asked about it, employees gave what the state called inconsistent, vague or misleading answers, describing it as a “standard dealer fee,” as direct pay for the salesperson or as a charge needed to “offset costs and commissions.” The dealerships’ websites advertised prices that left the fee out, which made their deals look competitive with nearby stores.
The case began with a single complaint. In February 2022, a buyer told the attorney general’s office that DARCARS Lexus had added a “sales commission charge” of more than $700 without disclosure. Investigators found that the Lexus store began charging the fee in October 2021 and the BMW store in August 2022, and that it was applied to nearly every sale and lease. Because the charge was a percentage, it grew with the price of the car: on a \$50,000 luxury vehicle, 2% works out to \$1,000. The state says the tactics overall cost customers thousands of dollars apiece and generated millions in extra revenue for the dealerships.
Refunds here depend on when the car was bought. Customers from late 2021 and early 2022 are handled differently from later buyers, and the four-date rule for reading a settlement notice in The Settlement & Refund Recovery System helps match a sale date to the right refund track.
The “DARCARS Assurance” add-on
The second problem was a bundled aftermarket product called DARCARS Assurance. The attorney general’s office said the dealerships added it to sales and lease agreements without properly telling buyers it was optional, which gave the impression it was a required part of the deal.
The bundle included a collision credit and a stolen-vehicle credit that the state said had little value. The collision credit was advertised as covering up to $2,500 of an insurance deductible if a vehicle was totaled, but it paid out only if the customer bought or leased another car from the same DARCARS dealership within 60 days of receiving the insurance settlement. The attorney general’s office described that as essentially a loyalty coupon that offered no immediate financial help to someone who had just been in a crash.
“New Yorkers save up for years to buy a car, and they deserve fair prices without junk fees that drive up the cost with useless add-ons,” James said. “My office is making sure that every New Yorker who was defrauded by these dealerships gets their money back.”
Who gets money, and how
The settlement sets up several groups. DARCARS Lexus will pay $892,671.26 to reimburse every customer charged the sales commission fee between October 23, 2021, and May 30, 2022. Those customers do not have to file a claim.
Both dealerships will pay $116,849 to customers who were misled into paying for DARCARS Assurance and who complained to the attorney general’s office. Other customers who told the office about the commission fee will receive a combined $164,998.72. Together, those two amounts make up the $281,847.72 in additional reimbursements, bringing the total already committed to more than $1.17 million.
Customers who paid the fee after May 2022 are not left out. The state says they will be mailed claim forms, and the dealerships must pay restitution to anyone who submits a valid claim. Because the fee was applied to nearly every transaction, the attorney general’s office says that process could return millions of dollars more. Anyone who bought or leased from either store since late 2021 should watch the mail and keep the purchase or lease contract, the buyer’s order and the final payment breakdown, which show whether the 2% line or DARCARS Assurance appeared on the deal.
What changes at the dealerships
Beyond the refunds, DARCARS has stopped charging sales commissions and must clearly disclose all future fees and any add-on products. The dealerships are banned from offering DARCARS Assurance or any similar bundle at any New York location, and all sales, finance and marketing staff must complete annual training on fair business practices. The dealerships will also pay $700,000 in penalties to the state.
The case follows earlier actions by James against car dealers. Her office previously secured settlements with 15 Nissan dealerships in New York City and on Long Island that returned more than $4.5 million to consumers, and in June 2025 announced further settlements with Nissan to refund New Yorkers overcharged on leased vehicles.
For older buyers, who often finance or lease a vehicle on a fixed budget, the lesson is concrete. A fee labeled “not required by law” is, by its own description, not a government charge and is worth questioning before signing, and add-on products bundled into a contract should be priced and explained separately before signing. The attorney general’s office encourages anyone who believes a dealer misled them about fees or lease buyouts to file a complaint online.
A claim form in the mail is only the first step
Later DARCARS customers will need to return a claim form and then wait for payment, and a dealership refund can easily get lost among other notices and open claims.
The Settlement & Refund Recovery System includes a step-by-step filing walkthrough for completing the form, a claim log and payment tracker for following it to payment, and the scam-proof rules for telling a real notice from an imitation.
Track a dealership claim from mailbox to payment with The Settlement & Refund Recovery System.
This article was prepared with AI assistance and reviewed against the linked official sources.
