A $24,050 Car That Actually Cost $26,440: The Math Behind a D.C.-Area Dealer's Junk Fees

Passport Automotive Group, along with its president and vice president, agreed to pay more than $3.3 million to settle allegations that the Washington, D.C.-area dealership group added illegal junk fees to advertised vehicle prices and discriminated against Black and Latino consumers by charging them more in financing costs and fees.DOCUMENTED

The complaint alleged that Passport regularly advertised certified, reconditioned, or inspected cars at specific prices, then added extra certification, reconditioning, or inspection fees that the company falsely claimed consumers were required to pay.DOCUMENTED

The gap between advertised and actual price

According to the complaint, when customers tried to pay the amount advertised for a Passport vehicle, the company added hundreds or thousands of dollars in fees that either increased the price above what was advertised or negated any discount the consumer had negotiated.DOCUMENTED The complaint cites one specific example: a vehicle advertised for $24,050 was in fact sold for $26,440 due to these added charges — a difference of nearly $2,400 that a shopper comparing dealer prices online would have had no way to anticipate.DOCUMENTED

The discrimination allegations

Beyond the pricing allegations, the complaint charged that Passport discriminated against Black and Latino consumers by charging them, on average, hundreds of dollars more in financing costs and fees than non-Latino white consumers — a violation of the Equal Credit Opportunity Act and its implementing regulation.DOCUMENTED That pattern, in which dealership staff have discretion to mark up interest rates or fees above what a lender initially quotes, has been a recurring focus of auto-lending discrimination cases, since discretionary markups create room for unequal treatment that a fixed-rate financing structure would not.REVIEWED

The settlement's terms

Passport denied liability but agreed to pay $3.3 million to settle the case, which was used to refund customers, along with a change in business practices going forward.DOCUMENTED Regulators first sent refund payments in May 2023, distributing more than $2.9 million to affected consumers. Because money remained in the settlement fund, a second round of payments — more than $341,000 across 3,356 additional payments — went out to customers who had accepted their first round of payment, reflecting funds that became available after the initial distribution.DOCUMENTED

A car advertised at $24,050 was actually sold for $26,440 — a nearly $2,400 gap the complaint attributes entirely to fees the advertised price never mentioned.

Part of a wave of similar dealer actions

Passport's settlement arrived within months of a similar action against multistate dealer group Napleton, reflecting a period of concentrated regulatory attention to junk fees and discriminatory financing practices across the auto-dealer industry in the early 2020s.REVIEWED That wave of enforcement eventually led to a proposed rule specifically targeting junk fees and bait-and-switch advertising tactics across the broader economy, extending the same basic principle — that an advertised price should reflect what a consumer can actually pay — beyond car dealerships to other industries.REVIEWED

Why the case remains a reference point

Passport's nine dealerships across the Washington, D.C. metropolitan area gave the case a substantial geographic footprint for a single dealer group, and the detailed pricing example cited in the complaint — a specific vehicle, a specific advertised price, and a specific final price — offered a concrete illustration of how junk fees actually inflate a transaction beyond what any general description of the practice could convey. That level of specificity has made the case a frequently cited example in subsequent discussions of dealer pricing transparency requirements.REVIEWED

How the fee structure obscured negotiated discounts

One of the more consequential aspects of the alleged scheme was its effect on price negotiations: a consumer who successfully haggled down a vehicle's price at the negotiating table could still end up paying close to the original asking price once undisclosed certification and inspection fees were added back in at the paperwork stage.REVIEWED That dynamic meant the effort many car buyers put into negotiating a lower price could be substantially undone by charges added later in the transaction — charges the complaint says were frequently represented as mandatory rather than negotiable, leaving buyers with the impression they had secured a discount that the final bill did not actually reflect.REVIEWED

The commissioners who voted to authorize the case split 4-1, with the dissenting commissioner departing the agency shortly afterward — a reminder that even well-documented dealer pricing cases can draw disagreement over enforcement approach, even when the underlying facts about specific fee amounts and pricing examples are not seriously disputed.DOCUMENTED For consumers shopping at any dealership advertising a "certified" or "reconditioned" vehicle at a specific price, the Passport case is a reminder to ask directly, before signing anything, whether any additional certification or inspection fees will be added to that advertised number.REVIEWED

The staff attorneys who handled the case worked out of the agency's regional office structure, which typically handles matters concentrated within a specific metropolitan market — a structure that allows investigators with direct familiarity with a local dealer landscape to build cases involving detailed local pricing evidence, like the specific $24,050-to-$26,440 example cited in the Passport complaint, more efficiently than a purely centralized investigative team might.REVIEWED The case's monetary judgment, while modest compared to some of the larger multistate settlements that followed it, established a template other regional dealer cases would draw on in the years since — pairing a specific, itemized pricing example with survey or statistical evidence of a broader pattern, a structure that has become standard for building dealer junk-fee cases regardless of a dealer group's size.REVIEWED

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