January 5, 2024 • By Dennis Beaver
“In 2022, executives at BMW came upon a brilliant, if perverted, idea to extract more money from customers,” observes Michigan attorney Steve Lehto, who 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 $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. These fees are not the same as the ones people pay for SiriusXM satellite radio service, which is similar to your cable TV bill.”
Lehto observes, “There could be no end to this, so, why not include a fee for using automatic high beams, other, often standard safety features that have been on cars for years. And the major auto manufacturers — Toyota, Audi, Porsche, Tesla and Volvo — have started subscriptions services of their own.
“Following that logic, the auto maker could turn every component into a subscription and continue to get money out of you after you’ve already paid for it.
“This angered BMW owners who asked, ‘I have heated seats and all I have to do is to turn it on, so what are you doing for me by charging a fee to use what I already have?’”
I learned from BMW salespeople across the country that due to enormous pushback from customers who voted with their checkbooks resulting in lost sales — the heated-seats fee was dropped in September 2023
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, “What is the manufacturer doing to justify me paying a subscription fee for something that I already own and works by pushing a button?”
Lehto says, “Let’s say I buy the car cash. I own it outright. What right do they have to turn things on or off on a car that I have just purchased?
“But with items that I paid for and work, the auto maker is not providing me anything extra, other than turning it on or off, which I can do by pushing a button. 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 they are adding some value.
“You can probably drive 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.”
Comments from BMW
In an example of double-speak, Pieter Nota, BMW board member for sales and marketing during the September, 2023 IAA Mobility conference in Munich, told Autocar, “People feel that they paid double – which was actually not true, but perception is reality. So that was the reason we stopped that.”
What part was not true?
I emailed BMW USA Media Relations, and asked, about “the justification for charging to use features you’ve already paid for. Contractually, this seems to be lacking consideration.”
Alexander Schmuck, product and technology communications manager, from Woodcliff Lake, New Jersey, replied:
“Unfortunately some things that were reported and written online in regards to this topic were not correct and continue to create confusion. In an effort to try to get the correct message out we issued a press release, and I have attached it to my email. I hope this helps clear up any confusion.”
The press release only added to my confusion.
“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,” Lehto concluded.
Pending New Jersey legislation
Lawmakers could step in to protect consumers from automakers’ added subscription 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.