Mamdani Administration Sues CarGurus For Deceiving New Yorkers With AI Chatbot and Hidden Junk Fees
October 15, 2026
Action Expands DCWP Efforts to Combat Junk Fees and Bait-and-Switch Pricing Across New York City
NEW YORK, NY – Today, Commissioner Samuel A.A. Levine and the New York City Department of Consumer and Worker Protection (DCWP) announced an enforcement action against CarGurus, Inc., an online comparison-shopping platform for cars. CarGurus is charged with deceiving customers by advertising falsely reduced prices as “Good Deals” or “Great Deals,” hiding hundreds or thousands of dollars in additional fees, downpayments, and trade-in requirements. The company uses its misleading price ratings system, as well as an AI chatbot, to dupe people into believing that they are receiving a bargain on a car.
DCWP found that CarGurus violated the New York City Consumer Protection Law more than 2,000 times over the course of its investigation. The lawsuit, filed in New York State Supreme Court, seeks to permanently stop CarGurus from deceiving New Yorkers and impose civil penalties. Since January, DCWP has secured $13.2 million for consumers, workers, and small businesses.
“New Yorkers should be able to trust that a ‘Great Deal’ is actually a great deal,” said DCWP Commissioner Samuel A.A. Levine. “Our lawsuit seeks to stop bait-and-switch pricing, eliminate hidden fees, and ensure customers aren’t getting fleeced when making one of the biggest purchases of their lives.”
Details of the Case
CarGurus presents itself as a neutral third-party platform that helps customers shop for new and used cars, compare prices across dealerships, and find deals on cars below the average market price.
In reality, the prices that the company puts forth deceptively fail to include hundreds or thousands of dollars in hidden mandatory fees. Listings often hide additional costs or conditions at the bottom of a vehicle listing’s webpage, or in partially obscured text boxes that can be fully viewed only if a consumer clicks a button and proceeds to a separate webpage or pop-up screen.
The company then compounds that deception through a misleading rating system that lists cars as “Great Deal” or “Good Deal.” Consumers encounter further deception when they use an AI chatbot available on CarGurus’ website, which also generates lists of supposed “deals.” Meanwhile, the company profits by giving fake assurances to customers, providing misleading ratings, and supporting these searchable comparison listings.
CarGurus claims that it takes steps to remove such deceptive listings from its website. However, DCWP found CarGurus failed to take adequate steps to enforce its own guidelines, leading to increased consumer confusion.
For example, in June 2026, CarGurus listed a 2018 Honda offered for sale by Elite Mitsubishi as $2,212 below market value, and thus a “Great Deal.” However, at the bottom of the listing was an additional disclaimer section that revealed an itemized list of mandatory hidden fees. The actual price for this listing was therefore much higher, and meant that consumers would end up paying $1,473 above market value.
These practices enable used car dealerships—an industry already rife with deception. In the past five years, DCWP has investigated more than 106 used car dealerships and secured $1.79 million in consumer restitution. A recent analysis of over 40,000 online listings found that the listed price for a car was marked up on average by about $1,100 in mandatory fees.
Enforcement Against Deceptive Pricing, AI Tools, and Junk Fees
DCWP enforces the New York City Consumer Protection Law, which prohibits unfair trade practices in the sale of consumer goods and services, including false advertising, phony sales, and special offers with hidden conditions.
As outlined in a joint policy statement issued in September, this includes representations made by chatbots and other agentic systems and the design, marketing, sale, or deployment of AI-enabled products and services.
In July, DCWP proposed a junk fee rule requiring businesses to advertise the total price for any good or service upfront, including all mandatory additional charges and fees. This follows Mayor Mamdani’s Executive Order 9, directing the agency to take action against hidden junk fees citywide, and builds upon the agency’s rule banning hidden hotel fees.
The NYC Department of Consumer and Worker Protection (DCWP) is the nation’s leading municipal enforcement agency charged with delivering economic justice. DCWP leverages its authority to bring New Yorkers real economic relief and protect them from predatory, deceptive, and unfair practices that violate their rights as consumers and workers. This includes pioneering cutting-edge protections, such as the City’s Consumer Protection Law, Protected Time Off Law, Fair Workweek Law, and Delivery Worker Laws, including the Minimum Pay Rate for delivery workers. Through licensing more than 45,000 businesses in over 45 industries, DCWP ensures fair competition and a level playing field for responsible small businesses that are integral to New York City’s vibrant communities. DCWP also provides essential services such as free tax preparation and financial counseling to ensure New Yorkers keep more of what they earn and can plan for their futures. DCWP is committed to making sure New York City is a fairer, more affordable place to live. For more information about DCWP and its work, call 311 or visit DCWP at nyc.gov/dcwp, sign up for its newsletter, or follow on its social media sites, X, Facebook, Instagram, YouTube, and TikTok.
Media Contact:
Stephany Vasquez Sanchez
Department of Consumer and Worker Protection
(212) 436-0042
press@dcwp.nyc.gov