The class-action lawsuit filed against GM in 2021 over destination freight charges (DFCs) has been dismissed.
According to a report from CarComplaints, two plaintiffs alleged that customers are disadvantaged when purchasing a new vehicle from General Motors because the Detroit-based automaker includes a DFC with every vehicle. They claimed that the average customer would be shocked to learn that The General profits from this fee. Additionally, both plaintiffs assert that they didn’t know GM made a profit from the DFC.
“Destination fee is generally understood in the automotive industry to reflect the manufacturer’s average cost of delivering one of its vehicles to a dealership,” the initial filing stated. “That destination fee is charged to the dealer and passed on to the purchaser or lessee of that vehicle. Consumers similarly have the expectation that they are covering an automotive manufacturer’s cost for the delivery of the manufacturer’s vehicles when paying the ‘destination fee’ as part of their new-vehicle lease or purchase.”
The district court where the lawsuit was filed dismissed the class action by ruling there was nothing deceptive about the DFC, with Judge William Q. Hayes stating that “reasonable or average consumers would not be surprised to learn that the price of goods often includes profit for the seller. The term ‘Destination Charge’ does not reasonably imply an absence of profit.”
Following Judge Hayes’ decision, the plaintiffs were granted an appeal to the U.S. Court of Appeals for the Ninth Circuit, where they were once again shot down because the appeals court found that they didn’t plausibly allege deception by GM.
“There is no allegation that GM charged the dealers a lesser amount than is represented to consumers, enabling the dealer to earn a secret profit from consumers,” the U.S. Court of Appeals for the Ninth Circuit said in a statement. “We hold that a reasonable or average consumer would not be deceived by the destination charge underlying each of Plaintiffs’ claims. Because there is no deception, the complaint fails to state a plausible claim for relief.”
Subscribe to GM Authority for more GM legal news and around-the-clock General Motors news coverage.
Comments
Anyone that truly believed that GM doesn’t strive to make a profit at every point is not very realistic. If you don’t profit you lose, that’s a no no.
I sure that it is very expensive to deliver a new vehicle from the assembly plant to the car dealership. Especially since an increasing percentage of GM’s products come from China, Mexico and Korea. Wonder what the percentage of GM foreign vehicles is now. 50-60%, maybe more. That boat ride should only be added to offshored vehicles.
Why would it even matter if GM charged dealers less than the advertised/listed Destination Charge? GM doesn’t charge dealers the list price or MSRP for the vehicles and no one seems to have a problem with that.
Additionally, anything and everything manufactured has a list price, that resellers then purchase for less, mark up, and sell at various price points below list, and still make a profit.
This is how the world works. Anyone that doesn’t know this is an idiot. And this lawsuit is completely frivolous, and rightly dismissed.
They still charge the full amount on a C8 museum pickup, and that car won’t be transported by truck at all.