“In 2022, executives at BMW came upon a brilliant, if perverted, idea to extract more money from their customers,” Michigan attorney Steve Lehto told me in an interview. He has practiced in the fields of lemon law and consumer protection for over 30 years and hosts Lehto’s Law, a highly educational YouTube program. “They wanted to start charging customers $18 a month for subscription-based access to heated seats and, later, for using the remote-start feature — many of the things their cars already came with.”
Due to enormous pushback, BMW dropped the heated-seats fee in September. (Lehto notes that these fees are not the same as the ones people pay for SiriusXM satellite radio service, which is similar to your cable TV bill.)
“But there could be no end to this,” he says, “so why not include a fee for using safety features, such as blind-spot and pedestrian warnings, emergency stop, automatic high beams, power windows and other, often-standard features or options that have been on cars for years — that’s the fear. Following that logic, automakers could turn every component into a subscription and continue to get money out of you after you’ve already paid for your vehicle.”
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The practice is infuriating vehicle owners and car dealers, who ask, “I have paid for these features and can turn them on myself, so what are you doing for me by charging a fee to use what I already have?”
Serious legal/contractual issues
In law school, and in one of the most useful college courses you can take, Business Law, we learn that for a contract to be enforceable, there must be legally sufficient consideration on both sides of a transaction — each side must get something of value.
So the important legal question boils down to: How can an auto manufacturer justify a subscription fee for something that a vehicle buyer already owns and that works by pushing a button?
“Let’s say I buy the car with cash,” Lehto says. “I own it outright. What right do they have to turn things on or off on a car that I have just purchased? They are not adding any value, and in contract law, their demand for money to allow you to use what you already paid for is not supported by legally sufficient consideration, and their payment demand should fail.”
Want your navigation system to work?
Lehto believes automakers will try something to make it seem like they are adding some value. “You can probably drive fine with your navigation system or infotainment center shut off. I can imagine them saying, ‘If you don’t want to pay us for using your GPS navigation system, we will just shut it off, and by the way, not only does it show you what road you are on, but it shows you the nearest McDonald’s.’ They will likely claim that provides enough of a service to support their subscription fee.”
It has already begun
For some Toyota vehicles, using the remote-start option — already wired into the vehicle and previously free to use — will cost you $8 a month after a free trial. Other automakers — Audi, Cadillac, Porsche, Tesla and Volvo — are instituting a subscription model for certain options where a customer would pay a monthly or annual fee for such features as active driving assistance or voice recognition, even though they are already built into the car and, in some cases, have been free to use for years.
Do added fees like these seem fair or contractually legal?
I emailed media relations at some of the major automakers who have these subscription plans in place and asked about “the legal justification for charging to use features the buyer has already paid for — heated seats or safety items that never were subject to a subscription charge to use them in the past, such as driver safety and comfort options.”
Not one of them addressed the contractual issue, which is huge. One replied, “Unfortunately, some things that were reported and written online regarding this topic were not correct and continue to create confusion.” A press release was attached to that response that only added to my confusion.
Lehto points out another worry: “What if the infotainment center needs expensive repairs? Will the dealer fix it or require you to pay? Or they could say, ‘Cancel your service and leave it broken in your car.’ There are so many unknowns right now.”
Pending New Jersey legislation
Lawmakers could step in to protect consumers from automakers’ added subscriptions and fees. In New Jersey, pending bill A4519, sponsored by Assemblymen Paul Moriarty (D), Joe Danielsen (D) and Kevin Rooney (R), "prohibits a motor vehicle manufacturer or dealer from requiring subscriptions for certain motor vehicle features and from charging certain fees." Third-party services, such as infotainment features, satellite radio or in-vehicle Wi-Fi, are not included.
According to NJ CAR (the New Jersey Coalition of Automotive Retailers), “The legislation is intended to ensure consumers aren’t blindsided when purchasing vehicles with features already installed only to find out those features are subscription-based and not included in the sale price of the vehicle.”
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
Related Content
-
Stock Market Today: Stocks Stable as Inflation, Tariff Fears EbbConstructive trade war talks and improving consumer expectations are a healthy combination for financial markets.
-
What Trump’s 'Big Beautiful Bill' Means for Your Utility BillsIf passed, the 'Big Beautiful Bill' could make home energy upgrades more expensive and raise monthly costs. Here's how much more you might pay and how to prepare.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
The Six Pros This Adviser Says You Need to Sell Your BusinessSelling your business isn't as simple as getting the best price and walking away. These are the six professionals you'll need to get a deal across the finish line.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
