If Your Car Lease Expired and Dealer Won't Take It Back, FTC Says You Have Rights

• Add to the list of unusual situations because of the coronavirus pandemic: If you’re at the end of a lease and having trouble getting the dealer to take it back, consumer leasing regulations don’t directly address that problem.
• However, as a Federal Trade Commission spokesperson told C/D, “If you have a responsibility to return [a vehicle], someone has a responsibility to accept it.”
• Read the fine print of your lease contract—but if worse comes to worse, you can file a complaint with the FTC, which says it is “very interested” in problems that are happening due to the coronavirus.

Activity on car dealer lots has crawled to a near standstill, which makes sense. During a pandemic with stay-at-home orders all over the country, buying a new car drops down many people’s to-do lists. But sometimes there’s vehicle movement that is supposed to go the other way, and that has become a difficult situation right now as well.

FAQ for Car Shoppers and Owners during COVID-19

Dealers Aren’t Letting Customers Return Leases

According to USA Today, an average of 340,000 car leases expire in the U.S. each month. With auto dealerships closed in some states, it is proving difficult for some people to return their vehicles once the lease has officially ended. The customers USA Today spoke with came up against a number of problems, from dealerships that said their lots were full and then refused to take the car back to dealerships trying to get people to take “free” one-month extensions as their only option.

Those free extensions, of course, aren’t necessarily free, since insurance payments and maintenance costs don’t stop. The picture painted by the article is one of difficult situations being made more challenging by dealerships not communicating clearly with the people they should be pampering to sell or lease them another vehicles.

What Does the Law Say?

It’s unclear what a person’s rights are if they’re in a situation like this. The rules, such as they are, differ from state to state, and each lease can have its own distinctions that make it a special case. An attorney USA Today spoke to said that the onus is on the dealership to take the cars back, even during a pandemic, but laws are not explicit about this. New York’s Motor Vehicle Retail Leasing Act, for example, covers New York consumers with “the most comprehensive law in the country protecting consumers who lease new or used vehicles,” according to the state attorney general, but it mostly focuses on making sure that customers are fully informed about the terms of the deal and have the right to compare offers before they sign on the dotted line. There are sections of the law that protect consumers who return the car on time and want to dispute wear and damage charges, but it says nothing about what happens when a dealer refuses to take the car back. In nearby New Hampshire, the state’s Motor Vehicle Leasing Act is specific on some issues (the lease contract needs to be in at least eight-point type, for example), but does not say what happens if the dealership refuses to take the vehicle back.

There is at least one federal law that could apply here: the federal Consumer Leasing Act. While the CLA does regulate liabilities the vehicle lessee may have at the end of the lease and the conditions under which the lessee or lessor may terminate the lease prior to the end of the lease, it does not spell out what is supposed to happen when the lease is up, the lessee attempts to return the vehicle, and the lessor refuses to take it back.

Carole Reynolds, an attorney in the FTC’s division of financial practices, told Car and Driver that the best thing you can do if you’re stuck with a car that’s come to the end of its lease and a difficult dealership is to read your contract, and she made clear that it is not the consumer’s responsibility for the dealer to have room on their lot.

“If you have a responsibility to return it, someone has a responsibility to accept it,” she said. “Where you’re supposed to return it, when you’re supposed to return it, all of those specifics would be in your contract. If there was going to be some sort of requirement for additional costs as a result of problems that develop, then you should have been apprised about that at the beginning of the lease.” And, as USA Today noted, some consumers have found success in returning a leased vehicle by going to other dealerships if the one where they leased a vehicle won’t take it back.

Payment Support from Automakers amid Pandemic

Every Automaker with Loan Support and Incentives

Best Lease Deals of the Month

Automakers were generally nonresponsive to C/D’s request for comment on this issue, but a Honda spokesperson told C/D that under normal circumstances, the American Honda Finance Corporation (AHFC) and Honda and Acura dealers attempt to make contact with the customer to ensure they know their options and what to expect as the lease term comes to an end. This is still how it’s working in most of the U.S. during the pandemic, Honda said. Where COVID-19 is impacting dealerships’ ability to stay open, Honda says it is working with its customers to “find the right solution for their individual circumstance.” These options might include extending the current lease, providing customers additional time to return the vehicle, or finding an alternative return location. AHFC says lease extensions may be requested online.

A spokesperson for the California New Car Dealers Association said she had not heard of any members not accepting leases back during this time. “To the contrary, our members have been ready and willing to assist customers with all vehicle needs, including lease returns to the extent public health orders have allowed them to do so,” she told C/D.

Reynolds said that the FTC has not received a noticeable number of complaints regarding this issue, but she has heard about this from the media. She encouraged anyone with a leased car that the dealer won’t take back to report a consumer complaint through the FTC site. “We don’t represent individuals, but we do strive to address issues, and we do bring law enforcement actions in appropriate situations,” she said. “This whole area of scams or problems that are developing because of the pandemic is something that we are very interested in.”