August 5, 2020

States: Consumers must be able to return leased vehicles during outbreak

A group of state attorneys general, led by California’s Xavier Becerra, urged automakers Wednesday to curb “unlawful and predatory” practices regarding the timely return of off-lease vehicles to franchised dealerships during the COVID-19 pandemic.

In a letter distributed Wednesday — which includes signatures from attorneys general in Connecticut, Iowa, Minnesota, Nevada, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Virginia and Puerto Rico — Becerra directly responded to media reports that consumers are having trouble returning off-lease vehicles.

USA Today reported on April 16 that some dealerships were refusing to accept vehicles with expired lease contracts unless consumers purchased a vehicle in exchange. Some consumers were reportedly told that a lease extension would be their only option.

The states are pressing automakers’ finance arms and dealerships to adopt and maintain strict controls to ensure consumers can return off-lease vehicles in a timely manner, according to a statement. In addition to violating contractual lease obligations, failure to allow a customer to return a leased vehicle goes against federal laws. In California, consumers are protected from the practice under the state’s Vehicle Leasing Act and the Military and Veteran’s Code.

“Families are facing a once-in-a-generation economic crisis as a result of the coronavirus pandemic,” Becerra said. “There is no reason for automakers or their dealers to push individuals further into financial despair through unlawful and predatory leasing practices.”

Automakers and dealers are being urged to take the following steps:

  • Examine lease-return procedures, including those of affiliated dealerships, to confirm policies and procedures comply with the terms of lease agreements and applicable law
  • Assist consumers with prompt and convenient lease returns by providing alternative arrangements, such as home pickup or a return facilitated by a third party
  • Provide consumers with a clear point of contact to assist with concerns regarding the return of a leased vehicle or with lease issues
  • Provide consumers harmed by these leasing practices a process via which to return a vehicle
  • Refund harmed consumers any additional monthly payments incurred beyond the original leasing term and reimburse customers for incidental costs resulting from refused lease returns.

The letter was sent to Fiat Chrysler Automobiles, Ford Motor Co., General Motors, Honda, Hyundai, Mazda, Nissan, Subaru, Toyota Motor Co. and Volkswagen.

An estimated 1.8 million lease customers are scheduled to turn in their keys from March to July, J.D. Power says. Many states temporarily banned auto sales in the early weeks of the outbreak, and some dealerships remain closed except for remote transactions.

Automakers say they granted tens of thousands of lease extensions in the first quarter as a result of the crisis, though the attorneys general suggest consumers feel pressure from the dealership and captive finance companies to extend lease terms.

“Consumers are left with vehicles that they do not need or do not want to keep,” the attorneys general said in the statement.