DENVER — Some Colorado auto dealerships are charging hundreds of dollars in fees to people who want to buy out their car leases. But are these fees legal?

When the lease was up for Jason Taylor’s 2019 Mercedes-Benz, he wanted to keep the car.

“The used car market is pretty hot, so cars are holding their values. It was pretty apparent at the end of my lease that I had quite a bit of equity,” said Taylor, who said the lease contract clearly spells out the costs of buying out the lease. “It should have just been the residual, plus the $150 fee, plus any official titling and taxes.”

However, he said, that when he called Mercedes-Benz dealerships in Loveland and Westminster, he found out about additional costs and fees.

“Both dealerships implied that there would be a $599 dealer and handling (D&H) fee. But Loveland also was requiring that I do a service appointment because I had mentioned that the check engine light was on,” he said. “And so they were going to force me to make the repair on that check engine light before I could even purchase the vehicle. Whereas, Mercedes of Westminster didn’t have that same requirement.”

While he filed complaints at the state and federal level, he felt his hands were tied.

“The dealership said, ‘It’s industry standard, nothing we can do about it,’” Taylor said. “So I kind of felt like, if I wanted to realize the equity in my car that I was stuck.”

Maybe not, according to Colorado Attorney General Phil Weiser, who said undisclosed lease fees are illegal.

“I’ve got a very simple message here: If you buy any product or service, and you’re not told about some fee, and then later, they say, ‘Oh, you’ve got to pay this fee, a hidden fee.’ That’s illegal. That’s deception,” said Weiser.

In fact, similar add-on fees in Florida have come under fire for allegedly violating the Federal Consumer Leasing Act.

The Colorado Auto Dealers Association said dealers should not be charging D&H fees on lease buyouts, but there may be exceptions, such as in Taylor’s case.

“That’s the gray area for us because in this case, the dealer who sold the vehicle was not the dealer who leased the vehicle, and therefore they were not a party to the leasing contract,” said Matthew Groves, the president of the Colorado Auto Dealers Association.

Groves said they have contacted the attorney general’s office because of a state consumer protection law dealers had interpreted to mean all transactions had to pay the same fee.

“We’re a uniform consumer credit code state, which says if you’re looking at a new transaction if it is cash or credit, you must charge D&H on all transactions uniformly,’ said Groves. “We do need some guidance on how we should treat those transactions.”

After Denver7 Investigates started making calls about Jason Taylor’s D&H fees, Kevin Steward, the owner/GM of Mercedes-Benz of Westminster sent an email stating: “I wanted to let you know the dealership values the relationship it has with its customers and that this customer received a refund.”

The dealership did respond to questions about whether customers would continue to be charged D&H fees on lease buyouts.

Humza Ahmad, a spokesperson for Mercedes-Benz Financial Services, the company that financed Taylor’s leas, sent a statement indicating the policy for Mercedes-Benz dealerships is clear that no additional fees should be charged regardless of which dealership handles the lease buyout:

“Mercedes-Benz Financial Services USA (MBFS) provides guidance to dealers about what amounts and fees can be charged to lease customers purchasing their leased vehicle. MBFS has a policy that prohibits Mercedes-Benz dealerships from charging lessees more than the purchase option outlined in the lessee’s Lease Agreement. The only exception to this policy is when the lessee chooses to purchase additional products or services through the dealership, and those products and services have an additional charge, as well as governmental fees like title and registration that are passed onto the customer,” the release read.

Taylor said he received a $599 check in the mail for a D&H refund with no other explanation, but he said that is not why he wanted his story told.

“I was grateful that you were willing to look into this a little bit and apply some additional pressure,” said Taylor. “Hopefully, they didn’t just send me the $599 to get me to go away. Because that’s not the goal. The goal was to stop the practice.”

The Attorney General wants to know if you were charged additional D&H fees or service charges on your lease buyout that were not disclosed in the lease. You can report it at https://www.stopfraudcolorado.gov/