‘Phantom Freight’: Class Action Alleges Certain Chrysler, Jeep, Dodge, Maserati Vehicles Subject to Inflated Transport Charges [DISMISSED]
Last Updated on October 26, 2023
Beeney et al. v. FCA US, LLC et al.
Filed: April 22, 2022 ◆§ 1:22-cv-00518
A class action alleges FCA US has charged certain Chrysler, Jeep, Dodge, Ram, Fiat and Maserati buyers an inflated “phantom freight” fee for the cost of transporting vehicles to dealerships.
Illinois Consumer Fraud and Deceptive Business Practices Act Florida Deceptive and Unfair Trade Practices Act Georgia Fair Business Practices Act Missouri Merchandising Practices Act Pennsylvania Unfair Trade Practices and Consumer Protection Law Texas Deceptive Trade Practices Act Ohio Consumer Sales Practices Act Iowa Consumer Frauds Act
Delaware
October 26, 2023 – FCA “Phantom Freight” Fee Class Action Dismissed
The proposed class action detailed on this page was dismissed by a federal judge on October 20, 2023.
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In a 20-page memo opinion issued that day, United States Circuit Judge Todd M. Hughes granted FCA US’s December 2022 motion to dismiss the first amended complaint, finding that the plaintiffs failed to adequately allege that FCA’s “destination charge” practices were deceptive and unfair. According to Judge Hughes, no reasonable consumer would understand the fee to represent the actual cost of transporting the vehicle to the dealership and include no profit for the manufacturer. In fact, the term “destination charge” clearly and accurately communicates that the listed amount is what the manufacturer charges the dealership for transporting the vehicle, the judge stated.
Judge Hughes also said that the plaintiffs presented no facts to show that FCA had a duty to outline what is included in its fee and failed to show that this information would have substantially impacted their purchasing decisions.
In addition, Judge Hughes concluded that the plaintiffs failed to establish that FCA’s destination charge practices caused them perceivable injury.
“Even though a destination charge which includes a profit to FCA will be higher than one which does not include a profit, Plaintiffs have not plausibly established that a higher destination charge to the dealership caused them to pay more in total for their vehicles,” the judge wrote, pointing out that dealerships still had the freedom to set final vehicle prices regardless of how much they paid to FCA in destination charges.
Court records show that on September 1, 2023, the plaintiffs voluntarily dismissed without prejudice their claims against Stellantis N.V.
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FCA US has been hit with a proposed class action that alleges the automaker and parent Stellantis N.V. have deceptively charged certain newer Chrysler, Jeep, Dodge, Ram, Fiat and Maserati buyers an inflated “phantom freight” fee for the cost of transporting their vehicles to dealerships.
The 54-page lawsuit alleges that FCA has been “emboldened” in recent years to return to the long-derided practice of charging a “phantom freight” fee, or “destination charge,” in connection with new vehicle sales. The suit says FCA’s phantom freight charge, in particular the one applied to model year 2018 or later Chrysler, Jeep, Dodge, Ram, Fiat and Maserati vehicles, is an inflated, undisclosed cost that allows the company to unfairly drive additional revenues “that they could not have generated by simply raising the vehicles’ sales price.”
The lawsuit claims new car buyers are unaware that FCA’s destination charges are substantially higher than the true cost for the automaker to deliver a vehicle to a dealership.
“Neither Defendants, nor any of their dealers or representatives informed Plaintiffs, during or after purchase, of the fact that the destination charge contained phantom freight,” the complaint alleges.
According to the filing, automakers’ practice of charging consumers a phantom freight fee came to a halt in the late 1950s, when Congress passed the Automobile Information Disclosure Act. Once in effect in January 1959, the law required companies such as FCA to place a label, known today as the Monroney sticker, on the window of each new vehicle before making it available for sale, the suit states.
Per the lawsuit, a vehicle’s Monroney sticker lists, among other costs, a destination charge, which is to represent the actual cost of delivering a vehicle to a dealership for sale.
The case, citing a 2021 Consumer Reports article, relays that destination fees increased by an average of “90 percent on Chrysler, Dodge and Jeep vehicles; 74 percent on Ram trucks since 2011 and 114 percent on Fiats since 2012.” An independent consultant quoted in the article stated that “[i]t does not take a mathematician to understand the value of a $100 increase to a company that sells 2 million units a year.”
The suit claims that FCA, in reality, charges hundreds of dollars more per vehicle for delivery than its competitors, including Ford, GM, Honda and Toyota. According to the case, consumers can do little to fight against these destination charges given the costs are “misleadingly labeled” on each vehicle’s Monroney sticker and are not subject to negotiation like a vehicle’s base sale price.
“Just as it did in the early 20th century, FCA is using these inflated destination charges to effectively lower its [manufacturer’s suggested retail price], misleading the public into underappreciating the cost of Class Vehicles, and thereby achieving greater revenues,” the suit claims.
The case argues that if FCA “were to act lawfully,” in particular by increasing its MSRPs and lowering destination charges to erase phantom freight, the automaker “would be unable to charge as much per vehicle and would also decrease the overall demand for its vehicles.”
Further, the suit alleges that in addition to “substantially outpacing” its competitors as far as its destination charges, FCA has also consistently outpaced inflation.
The lawsuit looks to represent consumers who bought new a 2018 model year or newer Chrysler, Jeep, Dodge, Ram, Fiat or Maserati vehicle in Florida, Georgia, Illinois, Iowa, Missouri, Ohio, Pennsylvania or Texas.
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