Press Release

State Settles Consumer Protection Case with Lithia Auto Dealers

December 1, 2006

(Anchorage) Attorney General David Márquez announced today that the Department of Law has filed for court approval of a Consent Judgment to settle a year-long investigation of Lithia auto dealerships in Alaska for violations of Alaska's consumer protection laws. The state and Lithia entered a Consent Judgment that requires Lithia to pay a $500,000 civil penalty to the state and additional monies in restitution to consumers who were harmed by the illegal conduct.

The investigation focused on two issues. The first was Lithia's practice of charging an "administrative" or "document preparation" fee on all of its vehicle sales. These fees, called "doc prep fees" in the industry, are nothing more than dealer profit, and consumers often confuse this fee with state title, licensing, and registration fees paid to the DMV. Alaska Statute 45.25.440 prohibits Alaska auto dealers from charging doc fees unless they are included in the advertised price of the vehicle. Lithia has agreed to refund this fee, typically $200.00, to all consumers who purchased a vehicle from Lithia on or after October 1, 2002 if the fee was paid in addition to an advertised price.

The second issue focused on Lithia's failure to provide certain disclosures to consumers who purchased used vehicles. Alaska law requires all auto dealers to obtain accident and repair information from consumers who trade-in vehicles, then disclose this information to prospective purchasers. In addition, the law requires dealers to clearly post a disclosure on used vehicles that Alaska's lemon law does not apply to used car sales, that a manufacturer's warranty may not apply, and, if applicable, whether the vehicle was manufactured for sale in a foreign country, including Canada.

"We believe this resolution provides significant consumer benefits since it requires full restitution to consumers who have been harmed by paying a doc fee when they shouldn't have. It also provides a simplified process for consumers to make claims for restitution if they believe they have been harmed by Lithia's failure to disclose important information on used car sales," said Márquez.

If approved by the court, the Consent Judgment allows consumers to file claims for any harm caused by Lithia's failure to make used car disclosures that will be reviewed in a simplified process by an independent arbitrator.

For further information, contact Assistant Attorney General Ed Sniffen, 269-5200.

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