Honda Dealer Loses $2.8 Million Lawsuit Over ‘Closing Fee’

November 5, 2015 4 Comments

The Supreme Court has handed down a ruling against a Honda store over a dispute with a customer over what has been called a “closing fee.”

The state Supreme Court of South Carolina ruled 3-2 in favor of a customer who contested a $299 “closing fee” at Hendrick Honda in Easley, South Carolina. The allegation on the part of the consumer, Julie Freeman, is that others paid a similar fee when they shopped at the store between 2002 and 2006. Now the dealership will have to pay back consumers who paid a “closing fee” of between $249 and $399 per vehicle. The $2.8 million will calculate out to around $525 for the 5,315 customers who bought from Hendrick Honda from Aug. 29, 2002 to Aug. 29, 2006.

In legal documents related to the opinion by the South Carolina Supreme Court, Hendrick Honda general manager Don Pendleton testified about the “closing fee.” Hendrick testified he, “didn’t sit there and do the math,” as it relates to actual dealership incurred costs of retrieving and preparing documents for closing and that he doesn’t know the “exact charge.” The original lawsuit brought by Freeman alleged the “closing fee,” charged by Hendrick has no bearing on actual costs incurred by the dealership.

A jury previously awarded Freeman and other buyers $1.4 million, however, South Carolina Circuit court judge Doyet Early doubled that number to its current figure of $2.8 million. Hendrick Honda appealed the decision to the Supreme Court where they lost the ruling 3-2.

If this dealership had a “closing fee” that wasn’t part of their actual costs, do you think the Supreme Court ruling was correct? What do you think this store can do from a public relations standpoint after this headline-making court decision?

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    CKL

    I don’t think they are trying to dictate how much profit a dealer can make. But at some point someone is going to ask what it’s for. If a judge asks you what its for you probably should know that.

    Cardude

    I guess the court system is now gonna decide how much profit a dealer is allowed to make. I can for see the direction this is headed. Closing fees at banks and all loans will now be questioned.

    From a Maryland dealer. Do you think they may look at Process Fee’s as the same as a closing fee?

    Aaron

    From a public relations stand point maybe the dealership should just close (and not charge a fee for doing so).