As I read through dealer websites, I’m often surprised at how many advertising violations I find. You would think that website providers would make sure that this doesn’t occur, right?
You should never assume that the company that creates and maintains your website follows all the laws and regulations governing advertising compliance. State advertising laws vary and the responsibility for compliance lies with the dealership, not the vendor. Here are some examples of what I’ve run into and issues to look for:
• Disclaimers - Website providers sometimes include boilerplate factory disclaimers on inventory pages that identify vehicles by a specific VIN and price, such as:
o “Advertised vehicles are subject to actual dealer availability. Certain vehicles listed may not be available, or may have different prices.”
o “Pricing and availability varies by dealership.”
o “Prices do not include dealer charges, such as advertising, that can vary by manufacturer or region, or costs for selling, preparing, displaying or financing the vehicle.”
o “Images displayed may not be representative of the actual trim level of the vehicle.”
o “Information provided is believed to be accurate but all specifications, pricing and availability must be confirmed in writing (directly) with the dealer to be binding.”
While these types of disclaimers may be appropriate when advertising a model line, they probably shouldn’t be associated with specific vehicles. Advertised vehicles that are identified by VIN are subject to prior sale, but they certainly should not be subject to “different prices”. You should also determine which charges are allowed to be excluded from an advertised price in your state.
• Check to determine if all necessary disclosures are present on your site. For example, “advertised prices exclude tax, government fees, etc.” Again, do not assume that your website provider is utilizing language that is acceptable in your particular state or including all of the required disclosures.
• Be sure that all disclaimers are clearly and conspicuously displayed and not buried away in a difficult-to-find link elsewhere on the site.
• If payments, downpayments or interest rates are advertised, make sure that all of the proper Truth in Lending and state disclosures are included.
• Ensure that lease programs are properly disclosed. Many factory national lease programs contain generic information that may not be sufficient or appropriate in your state.
• Some states require that vehicle history, such as prior rental or demonstrator, is disclosed on vehicle advertisements. Does your website provide a way to include these disclosures?
• Ensure that vehicles are promptly removed from the website after they have been sold. Some sites are linked to the dealer’s DMS and will remove sold units automatically, while others require vehicles to be removed manually. Sold units should always be removed promptly to avoid potential bait and switch advertising claims.
It’s never a bad idea to have your website thoroughly reviewed by a compliance professional. Remember, advertising violations can be easy for regulators to spot and difficult to defend against.
Sunday, December 19, 2010
Thursday, November 11, 2010
Updated Privacy Notices Due By Year End
On December 1, 2009 the federal agencies responsible for administering the Graham-Leach-Bliley Act (“GLBA”) and the Fair Credit Reporting Act (“FCRA”) issued revised regulations that financial institutions, including auto dealerships, may use to meet the new privacy notice requirements under the Acts. The focus of the revised regulation is on a new Model Form that will make it easier for consumers to understand how financial institutions collect and share information about consumers. The regulation provides a safe harbor provision for institutions that use the model form exactly as written.
Use of the new model form is not required. Dealers may develop their own updated Privacy Notice but they must ensure that their notices comply with all of the requirements of GLBA and the Privacy Rule. The benefit of the using the Model Privacy Notice is that, if completed as required by the instructions and delivered properly; it will provide a safe harbor for compliance. In order to take advantage of the safe harbor protection, dealers must begin using the new model form by December 31, 2010.
The Privacy Rule applies to car dealers who:
• Extend credit to someone (for example, through a retail installment contract) in connection with the purchase of a car for personal, family, or household use;
• Arrange for someone to finance or lease a car for personal, family, or household use; or
• Provide financial advice or counseling to individuals.
Fortunately, compliance should be reasonably easy. The agencies have developed a Privacy Notice Online Form Builder to assist in creating your new notice. Following are links to the Form Builders:
http://www.federalreserve.gov/newsevents/press/bcreg/privacy_notice_instructions.pdf
http://www.ftc.gov/privacy/privacyinitiatives/PrivacyModelForm.pdf
Use of the new model form is not required. Dealers may develop their own updated Privacy Notice but they must ensure that their notices comply with all of the requirements of GLBA and the Privacy Rule. The benefit of the using the Model Privacy Notice is that, if completed as required by the instructions and delivered properly; it will provide a safe harbor for compliance. In order to take advantage of the safe harbor protection, dealers must begin using the new model form by December 31, 2010.
The Privacy Rule applies to car dealers who:
• Extend credit to someone (for example, through a retail installment contract) in connection with the purchase of a car for personal, family, or household use;
• Arrange for someone to finance or lease a car for personal, family, or household use; or
• Provide financial advice or counseling to individuals.
Fortunately, compliance should be reasonably easy. The agencies have developed a Privacy Notice Online Form Builder to assist in creating your new notice. Following are links to the Form Builders:
http://www.federalreserve.gov/newsevents/press/bcreg/privacy_notice_instructions.pdf
http://www.ftc.gov/privacy/privacyinitiatives/PrivacyModelForm.pdf
Saturday, November 6, 2010
You Can’t Fix It If You Don’t Measure It
If your sales staff told you that they had a 50% closing ratio, would you take their word for it? I suspect not – you would probably track all of their opportunities to determine the true percentage. Most dealerships measure a vast number of items on a daily basis. After all, you can’t manage what you don’t measure, right?
How about the level of compliance and ethical behavior in your dealership? Is that something you measure or do you just take everyone’s word for it? Have you really thought about how your staff is conducting itself in these areas? Is it possible that some of these thoughts are floating around?
“We’ve always done it this way – haven’t been caught yet”
“Hey, if we get sued, that’s what insurance is for.”
“Compliance is not in my pay plan. I’ll do whatever it takes to make a decent paycheck.”
Sure, you can bury your head in the sand and hope for the best, but is it really worth finding out the hard way that you were mistaken, or that your customers are not being treated the way you expect?
Instead, why not follow a few simple steps?
1. Audit your operation to determine where you really stand.
2. Have your staff properly trained in all aspects of legal compliance.
3. Once trained, have them sign a code of ethics which will not only help protect the dealership, but let everyone know that the organization is serious about compliance and ethical behavior.
These steps are easy and far more affordable than the costs associated with lawsuits, regulatory actions and, most importantly, hits to your valuable reputation. Don’t find out the hard way that your operation isn’t as clean as you thought it was.
How about the level of compliance and ethical behavior in your dealership? Is that something you measure or do you just take everyone’s word for it? Have you really thought about how your staff is conducting itself in these areas? Is it possible that some of these thoughts are floating around?
“We’ve always done it this way – haven’t been caught yet”
“Hey, if we get sued, that’s what insurance is for.”
“Compliance is not in my pay plan. I’ll do whatever it takes to make a decent paycheck.”
Sure, you can bury your head in the sand and hope for the best, but is it really worth finding out the hard way that you were mistaken, or that your customers are not being treated the way you expect?
Instead, why not follow a few simple steps?
1. Audit your operation to determine where you really stand.
2. Have your staff properly trained in all aspects of legal compliance.
3. Once trained, have them sign a code of ethics which will not only help protect the dealership, but let everyone know that the organization is serious about compliance and ethical behavior.
These steps are easy and far more affordable than the costs associated with lawsuits, regulatory actions and, most importantly, hits to your valuable reputation. Don’t find out the hard way that your operation isn’t as clean as you thought it was.
Saturday, October 9, 2010
Excuses Are Like…
Many of the big money, big publicity compliance meltdowns in the auto industry have been the result of vehicle financing issues. Remember the Gunderson Chevrolet news clips showing the management team being convicted and sent to jail? Being a fearless bunch, some F&I folks still walk a fine line when it comes to compliance. Maybe it’s because no one ever showed them a better way?
Becky Chernek of Chernek Consulting, Inc., who is one of the finest F&I trainers in the industry, was kind enough to share some feedback that she received from F&I managers when discussing ethical sales practices in her seminars.
"Never happened before, not going to now."
"Just a bunch of hype for car dealers to buy into."
"We love Becky, but don't pay too much attention to the regulations; she will get to the meat & potatoes."
"Yeah, the minute we implement that policy you might as well shut our doors."
"I know you learned it this way...but this is the right way to do it if you want to make some money."
"Payment packing is legal if you tell the customer afterwards what products they bought."
"I just tell the customer that the payment to include the service contract is only $5.00 difference."
"Consistent pricing? What about the nonprime customers?"
"What do you mean you can't backdate a contract, we do it all the time."
"So what if we give the customer a raise? That's just how we do it here."
"We always use in-house rebates - how else do you a get loan bought."
"Hey, we sell cars here... its up to finance to get them bought... YoYo deals? 50% of our business is that way."
"No way am I telling the bank this customer is $5000 upside down. Itemize what?"
"Base payment is loaded, that’s just how we do it here."
"I love the idea of getting the customer in the "yes" mode but let's not do that with confirming the true buying numbers that will only confuse them more."
"The interview that is just a waste of time and it doesn't serve any purpose... slows me down."
"When we cancel a policy I don't have to give the customer back the profit just the cost?"
Becky went on to say, “Transparent selling is easy... reduces charge backs, keeps the money on the books and a customer coming back for life…what's so darn hard to understand?”
That’s a great point Becky makes. Whatever happened to good old-fashioned principles like salesmanship and value-building? Do you really think dishonesty is the only way to make a sale?
I was fortunate enough to attend a great seminar given by Jim Ziegler a few years back where he taught ethical F&I selling. To be quite honest, at first I was taken aback. Most of the previous F&I training I was exposed to was the “old school” variety. (Of course, I use the word “training” loosely – most of it was “tribal knowledge” from the old-timers). Jim Z, in his inimitable fashion, taught us how to produce big numbers while doing things the right way. No excuses, just salesmanship. And guess what? It works.
Okay, here’s the part where I piss some people off…
If you feel that you need some help becoming a better, more honest F&I practitioner, I recommend that you contact Becky, Jim or one of the other fine F&I trainers out there. But if, on the other hand, you feel that you need to operate unethically and buy into the lame excuses listed above, maybe you’re in the wrong business. Think about it…
Becky Chernek of Chernek Consulting, Inc., who is one of the finest F&I trainers in the industry, was kind enough to share some feedback that she received from F&I managers when discussing ethical sales practices in her seminars.
"Never happened before, not going to now."
"Just a bunch of hype for car dealers to buy into."
"We love Becky, but don't pay too much attention to the regulations; she will get to the meat & potatoes."
"Yeah, the minute we implement that policy you might as well shut our doors."
"I know you learned it this way...but this is the right way to do it if you want to make some money."
"Payment packing is legal if you tell the customer afterwards what products they bought."
"I just tell the customer that the payment to include the service contract is only $5.00 difference."
"Consistent pricing? What about the nonprime customers?"
"What do you mean you can't backdate a contract, we do it all the time."
"So what if we give the customer a raise? That's just how we do it here."
"We always use in-house rebates - how else do you a get loan bought."
"Hey, we sell cars here... its up to finance to get them bought... YoYo deals? 50% of our business is that way."
"No way am I telling the bank this customer is $5000 upside down. Itemize what?"
"Base payment is loaded, that’s just how we do it here."
"I love the idea of getting the customer in the "yes" mode but let's not do that with confirming the true buying numbers that will only confuse them more."
"The interview that is just a waste of time and it doesn't serve any purpose... slows me down."
"When we cancel a policy I don't have to give the customer back the profit just the cost?"
Becky went on to say, “Transparent selling is easy... reduces charge backs, keeps the money on the books and a customer coming back for life…what's so darn hard to understand?”
That’s a great point Becky makes. Whatever happened to good old-fashioned principles like salesmanship and value-building? Do you really think dishonesty is the only way to make a sale?
I was fortunate enough to attend a great seminar given by Jim Ziegler a few years back where he taught ethical F&I selling. To be quite honest, at first I was taken aback. Most of the previous F&I training I was exposed to was the “old school” variety. (Of course, I use the word “training” loosely – most of it was “tribal knowledge” from the old-timers). Jim Z, in his inimitable fashion, taught us how to produce big numbers while doing things the right way. No excuses, just salesmanship. And guess what? It works.
Okay, here’s the part where I piss some people off…
If you feel that you need some help becoming a better, more honest F&I practitioner, I recommend that you contact Becky, Jim or one of the other fine F&I trainers out there. But if, on the other hand, you feel that you need to operate unethically and buy into the lame excuses listed above, maybe you’re in the wrong business. Think about it…
Tuesday, September 21, 2010
Digital Due Diligence
Before the internet, when there were only phone pops, we learned valuable lessons on how to handle calls, such as selling the appointment, creating urgency, not giving shopping numbers and keeping information close to the vest until the customer showed up. It was good advice then and it may be good advice now. But keep in mind that many customer inquiries tend to come online rather then by phone. While the ultimate goal remains the same – to get the customer into the dealership – the rules for execution have become trickier because online communication creates a permanent written record of all interactions with customers.
In addition, many dealers are now utilizing social media as an easy and affordable way to promote their products and services. It’s important to understand that even though it may not require writing a big check, certain social media postings may be considered advertising and proper care should be taken to avoid legal exposure. As we are painfully aware, there are plenty of federal and state regulations that govern automotive advertising. For instance, social media postings that list vehicle prices, payments, downpayments or drive-off amounts may trigger advertising disclosure requirements.
Here’s an illustration of how an online interaction could potentially come back to haunt you. A few days before this past Labor Day, I saw a posting from a dealer on their Facebook page about a Labor Day weekend special that offered zero drive-off leases. During this time period, several competing dealers ran newspaper advertising on similar lease programs with “no money down, zero driveoff, leave your checkbook at home” and so forth. On closer inspection, many of these ads indicated in the fine print that certain fees were due at signing, such as tax, license, doc fees and acquisition fees.
I logged on to the Facebook dealer’s website to check out the actual ad (there were no disclosures on the Facebook posting other than zero drive off). The ad indicated that the customer was responsible for tax and license. I then contacted the dealer online to inquire whether I had to pay for the tax & license or if it was indeed “zero out of pocket”. The dealer representative responded that yes it was zero down, but since it was the last day of the month, I needed to come in before close of business to take advantage of the special lease.
Now, let’s look at some possible outcomes if a customer decided to go to the dealership that night.
If the customer went to the dealer to lease the car and there was indeed no money down required and they gave her the advertised payment, she would probably leave happy and nothing else would matter.
But, if she showed up at the dealership and they informed her that she had to pay other fees to get the advertised payment, a few other things might happen:
1. She might reluctantly pay the fees or roll them into a higher payment. The salesperson’s closing ratio would go up and his CSI would go down.
2. She might leave and go lease a car from another dealer.
3. She might decide to take the written evidence of the transaction to her friendly neighborhood attorney. This could happen the next day or sometime in the future if she decides that she no longer wants the car.
Here are some potential claims that an attorney might make. First, I wouldn’t be surprised if an aggressive attorney would try to make a case for Unfair and Deceptive Acts and Practices (UDAP) for the dealer rep’s little miscommunication about zero down (remember, the customer has an email from the rep that said there was no money required).
Next, the dealer’s Facebook posting stated that they were having a “Labor Day Weekend” sale, yet the dealer rep claimed (in writing) that the sale was over the Tuesday BEFORE the Labor Day weekend. Another deceptive act?
The attorney might also throw in a few advertising violation claims for good measure, such as that the Facebook posting may have lacked some required advertising disclosures and the disclaimer in the dealer’s website may not have been clear and conspicuous enough to be in compliance.
There’s a good chance that an aggressive lawyer would throw all of those nitpicky claims against the courthouse wall to see what sticks. Plaintiff’s attorneys love UDAPs, they can often get multiple damages and attorney fees if successful.
So, here’s my two cents: Be careful what you say; even more careful what you write and if you communicate with customers, it’s not a bad idea to get some training in legal compliance.
In addition, many dealers are now utilizing social media as an easy and affordable way to promote their products and services. It’s important to understand that even though it may not require writing a big check, certain social media postings may be considered advertising and proper care should be taken to avoid legal exposure. As we are painfully aware, there are plenty of federal and state regulations that govern automotive advertising. For instance, social media postings that list vehicle prices, payments, downpayments or drive-off amounts may trigger advertising disclosure requirements.
Here’s an illustration of how an online interaction could potentially come back to haunt you. A few days before this past Labor Day, I saw a posting from a dealer on their Facebook page about a Labor Day weekend special that offered zero drive-off leases. During this time period, several competing dealers ran newspaper advertising on similar lease programs with “no money down, zero driveoff, leave your checkbook at home” and so forth. On closer inspection, many of these ads indicated in the fine print that certain fees were due at signing, such as tax, license, doc fees and acquisition fees.
I logged on to the Facebook dealer’s website to check out the actual ad (there were no disclosures on the Facebook posting other than zero drive off). The ad indicated that the customer was responsible for tax and license. I then contacted the dealer online to inquire whether I had to pay for the tax & license or if it was indeed “zero out of pocket”. The dealer representative responded that yes it was zero down, but since it was the last day of the month, I needed to come in before close of business to take advantage of the special lease.
Now, let’s look at some possible outcomes if a customer decided to go to the dealership that night.
If the customer went to the dealer to lease the car and there was indeed no money down required and they gave her the advertised payment, she would probably leave happy and nothing else would matter.
But, if she showed up at the dealership and they informed her that she had to pay other fees to get the advertised payment, a few other things might happen:
1. She might reluctantly pay the fees or roll them into a higher payment. The salesperson’s closing ratio would go up and his CSI would go down.
2. She might leave and go lease a car from another dealer.
3. She might decide to take the written evidence of the transaction to her friendly neighborhood attorney. This could happen the next day or sometime in the future if she decides that she no longer wants the car.
Here are some potential claims that an attorney might make. First, I wouldn’t be surprised if an aggressive attorney would try to make a case for Unfair and Deceptive Acts and Practices (UDAP) for the dealer rep’s little miscommunication about zero down (remember, the customer has an email from the rep that said there was no money required).
Next, the dealer’s Facebook posting stated that they were having a “Labor Day Weekend” sale, yet the dealer rep claimed (in writing) that the sale was over the Tuesday BEFORE the Labor Day weekend. Another deceptive act?
The attorney might also throw in a few advertising violation claims for good measure, such as that the Facebook posting may have lacked some required advertising disclosures and the disclaimer in the dealer’s website may not have been clear and conspicuous enough to be in compliance.
There’s a good chance that an aggressive lawyer would throw all of those nitpicky claims against the courthouse wall to see what sticks. Plaintiff’s attorneys love UDAPs, they can often get multiple damages and attorney fees if successful.
So, here’s my two cents: Be careful what you say; even more careful what you write and if you communicate with customers, it’s not a bad idea to get some training in legal compliance.
Thursday, September 2, 2010
Unfair? You Bet it is…
“BUYERS ARE LIARS”.
I don’t think I was in the car business one hour before I heard that catchy little phrase. Sure enough, over the course of my retail career, I suspect I was lied to over and over again by the best of them.
I’m not going to pontificate about what buyers lie about and why – many of us could easily write a book on that subject. Instead I’m going to bring up what I think is an important point – buyers can say pretty much whatever they want without fear of recourse, dealers cannot. Yep, that’s right. Buyers can outright lie through their teeth, but dealers are not allowed to stretch the truth even a little.
Doesn’t seem fair, does it? Well it’s not. All may be fair in love and war, but it sure isn’t fair on a car lot. For the most part, when buyers lie to a dealer, they get to go on their merry old way. But if a dealership is accused of being dishonest with a customer, either by commission or omission, they may end up in a courtroom or worse.
When you look at actual enforcement actions and court cases against dealerships, there is typically one common element – the perception that the dealer was less than completely honest with a consumer. The laws allow for a very broad interpretation of what is considered to be unfair or deceptive. Here are some common examples of accusations by plaintiff’s attorneys and regulators:
• Making false statements or failing to disclose a material facts to a consumer
• Oral promises made to the consumer that the dealer fails to deliver upon
• Misleading statements about APR, such as “You won’t be able to get a better interest rate than this”, when the buy rate is being marked up
• Communicating information in a manner that may be misleading, either by commission or omission
• Adding the cost of an F&I product to a consumer’s purchase agreement or lease without first obtaining the consumer’s express consent to purchase the product
• Informing or suggesting to a consumer that the price of any F&I product is included in the price of the motor vehicle
• Informing or suggesting to a consumer that the sale or lease of a vehicle subject to credit approval is a final or completed transaction
• Altering documents without the knowledge and permission of all parties
• Obtaining a credit bureau without proper authorization
• Failing to sell a vehicle at or below an advertised price, whether or not the consumer knows about the advertisement
• Advertising vehicles with intent not to sell them as advertised
• Misrepresenting discounts in advertising and not disclosing important limitations
• Advertising claims such as "everyone financed," "no credit rejected," or similar claims when the dealer is unwilling to extend credit to any person under any and all circumstances
• Engaging in false or misleading advertising, either orally or by way of media
• Advertising “no money down” or “zero drive off” when there is actually some money needed to achieve the advertised payment amount (such as tax, license, acquisition fee, etc.)
• Representing to a consumer that a vehicle is available for sale when it is not
• Informing or suggesting to a consumer that an F&I product is a required purchase
• Informing or suggesting to a consumer that purchase of an F&I product will increase the likelihood that the consumer will be approved for financing or that financing will be approved on more favorable terms to the consumer
• Increasing the selling price of a vehicle to cover a bank acquisition fee
• Intentionally overstating a vehicle’s value by supplying an incorrect book-sheet or due bill to a financial institution
• Over-allowing on a trade-in, thereby increasing the sale price of the purchased vehicle or failing to properly disclose negative equity
• Misrepresenting the amount of rebates available to a customer
• Engaging in payment packing, i.e. inflating payments, inflating down payments, extending the contract term or in any way disguising the actual charges for goods or services.
• Knowingly delivering a vehicle where the lender or lessor will not approve the consumer for financing according to the terms set forth in the installment sales or lease contract, with the intention of re-writing the contract at a later date
• Failing to properly disclose deferred down payments
• Knowingly misrepresenting a vehicle’s prior history or condition, either by commission or omission
• Forging documents
• Knowingly misrepresenting a vehicle, products or the terms being offered
• Falsifying, or allowing to be falsified, any information on a credit application
• Knowingly allowing a consumer to participate in a “straw purchase”
• Misrepresenting the scope or extent of coverage under a service contract or warranty
It’s more important than ever to be very careful when dealing with customers. Plaintiff’s attorneys are constantly on the prowl for cases and regulators recognize the political capital in going after dealers. There’s just no upside to being accused of lying.
The good news is that you can feel free to lie to car salespeople in your spare time.
I don’t think I was in the car business one hour before I heard that catchy little phrase. Sure enough, over the course of my retail career, I suspect I was lied to over and over again by the best of them.
I’m not going to pontificate about what buyers lie about and why – many of us could easily write a book on that subject. Instead I’m going to bring up what I think is an important point – buyers can say pretty much whatever they want without fear of recourse, dealers cannot. Yep, that’s right. Buyers can outright lie through their teeth, but dealers are not allowed to stretch the truth even a little.
Doesn’t seem fair, does it? Well it’s not. All may be fair in love and war, but it sure isn’t fair on a car lot. For the most part, when buyers lie to a dealer, they get to go on their merry old way. But if a dealership is accused of being dishonest with a customer, either by commission or omission, they may end up in a courtroom or worse.
When you look at actual enforcement actions and court cases against dealerships, there is typically one common element – the perception that the dealer was less than completely honest with a consumer. The laws allow for a very broad interpretation of what is considered to be unfair or deceptive. Here are some common examples of accusations by plaintiff’s attorneys and regulators:
• Making false statements or failing to disclose a material facts to a consumer
• Oral promises made to the consumer that the dealer fails to deliver upon
• Misleading statements about APR, such as “You won’t be able to get a better interest rate than this”, when the buy rate is being marked up
• Communicating information in a manner that may be misleading, either by commission or omission
• Adding the cost of an F&I product to a consumer’s purchase agreement or lease without first obtaining the consumer’s express consent to purchase the product
• Informing or suggesting to a consumer that the price of any F&I product is included in the price of the motor vehicle
• Informing or suggesting to a consumer that the sale or lease of a vehicle subject to credit approval is a final or completed transaction
• Altering documents without the knowledge and permission of all parties
• Obtaining a credit bureau without proper authorization
• Failing to sell a vehicle at or below an advertised price, whether or not the consumer knows about the advertisement
• Advertising vehicles with intent not to sell them as advertised
• Misrepresenting discounts in advertising and not disclosing important limitations
• Advertising claims such as "everyone financed," "no credit rejected," or similar claims when the dealer is unwilling to extend credit to any person under any and all circumstances
• Engaging in false or misleading advertising, either orally or by way of media
• Advertising “no money down” or “zero drive off” when there is actually some money needed to achieve the advertised payment amount (such as tax, license, acquisition fee, etc.)
• Representing to a consumer that a vehicle is available for sale when it is not
• Informing or suggesting to a consumer that an F&I product is a required purchase
• Informing or suggesting to a consumer that purchase of an F&I product will increase the likelihood that the consumer will be approved for financing or that financing will be approved on more favorable terms to the consumer
• Increasing the selling price of a vehicle to cover a bank acquisition fee
• Intentionally overstating a vehicle’s value by supplying an incorrect book-sheet or due bill to a financial institution
• Over-allowing on a trade-in, thereby increasing the sale price of the purchased vehicle or failing to properly disclose negative equity
• Misrepresenting the amount of rebates available to a customer
• Engaging in payment packing, i.e. inflating payments, inflating down payments, extending the contract term or in any way disguising the actual charges for goods or services.
• Knowingly delivering a vehicle where the lender or lessor will not approve the consumer for financing according to the terms set forth in the installment sales or lease contract, with the intention of re-writing the contract at a later date
• Failing to properly disclose deferred down payments
• Knowingly misrepresenting a vehicle’s prior history or condition, either by commission or omission
• Forging documents
• Knowingly misrepresenting a vehicle, products or the terms being offered
• Falsifying, or allowing to be falsified, any information on a credit application
• Knowingly allowing a consumer to participate in a “straw purchase”
• Misrepresenting the scope or extent of coverage under a service contract or warranty
It’s more important than ever to be very careful when dealing with customers. Plaintiff’s attorneys are constantly on the prowl for cases and regulators recognize the political capital in going after dealers. There’s just no upside to being accused of lying.
The good news is that you can feel free to lie to car salespeople in your spare time.
Tuesday, August 10, 2010
Unhappy Car Buyer Gets 110,000 Views on YouTube
I was browsing through the website of a prominent dealer-chasing law firm this morning (I know, I have weird hobbies), and came across a posting about a dealer with a link to a YouTube video. This dealership is part of a good-sized group that is very well-regarded in the area. As I am personally acquainted with this dealer group, I can attest to their integrity and dedication to customer satisfaction. So, when I clicked on the YouTube link, I expected to see another unconvincing customer with a bad case of buyer’s remorse. Well, I wasn’t disappointed – the customer bought a cheap older car and expected it to run like a brand-new Mercedes.
Not surprisingly, the video attempted to make the dealership look terrible and completely at fault. But here’s the thing - this video wasn’t an amateurish clip of a customer ranting and raving, it was obviously professionally done. So well done in fact that I suspect most consumers viewing the video would find it believable.
Then I noticed the view count on the video. Just short of 110,000 views so far, most of which are from the last month or so. Needless to say, I was astounded! One car deal, one customer, one dealership, over 100 thousand views? No way, this has to be a mistake.
Sadly, it’s no mistake. Here’s how it happened:
The video was produced by a consumer group who naturally had an agenda of their own. While the customer’s initial complaint was that the car had problems and he wanted his money back, a good portion of the video dealt with how the customer was saddled with an unfair arbitration agreement by the dealer. Now, according to the clip, the poor customer can’t get his day in court, has had to wait years for his arbitration hearing, has little or no chance of winning in arbitration because it’s skewed towards the dealer, and all kinds of other nonsense.
The arbitration issue is what caused this video to go viral. Consumer groups and plaintiff’s attorneys have been lobbying against arbitration agreements for years. This is just another sneaky way to promote their agenda. There are now links to this video on consumer sites, legal blogs, you name it. The worst part is that the video shows up on page one when you Google the dealership or search on YouTube. It’s just a darn shame.
Not surprisingly, the video attempted to make the dealership look terrible and completely at fault. But here’s the thing - this video wasn’t an amateurish clip of a customer ranting and raving, it was obviously professionally done. So well done in fact that I suspect most consumers viewing the video would find it believable.
Then I noticed the view count on the video. Just short of 110,000 views so far, most of which are from the last month or so. Needless to say, I was astounded! One car deal, one customer, one dealership, over 100 thousand views? No way, this has to be a mistake.
Sadly, it’s no mistake. Here’s how it happened:
The video was produced by a consumer group who naturally had an agenda of their own. While the customer’s initial complaint was that the car had problems and he wanted his money back, a good portion of the video dealt with how the customer was saddled with an unfair arbitration agreement by the dealer. Now, according to the clip, the poor customer can’t get his day in court, has had to wait years for his arbitration hearing, has little or no chance of winning in arbitration because it’s skewed towards the dealer, and all kinds of other nonsense.
The arbitration issue is what caused this video to go viral. Consumer groups and plaintiff’s attorneys have been lobbying against arbitration agreements for years. This is just another sneaky way to promote their agenda. There are now links to this video on consumer sites, legal blogs, you name it. The worst part is that the video shows up on page one when you Google the dealership or search on YouTube. It’s just a darn shame.
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