Auto Dealer Monthly Magazine is the daily operations publication serving the retail automotive industry. This automotive publication serves dealer principals, officers and general managers with the latest best practices.
Issue link: http://autodealermonthly.epubxp.com/i/99735
dealership operations / compliance • Payment packing, or inflating a monthly payment amount in order to allow room for adding additional goods or services while leading the customer to believe the quoted payment is for the vehicle purchase only, or its "base payment." • Yo-yo financing, or delivering a vehicle with terms the consumer will most likely not qualify for, with the intention of having the customer rewrite the contract under less desirable terms. Spot delivery has been on regulators' radar screens lately, so claims on this type of violation are becoming more common. • Informing a buyer that financing for the car will not be approved unless the buyer purchases a service contract, insurance or other products. • Leading a consumer to believe he or she is purchasing a vehicle when it is, in fact, a lease. • Failing to disclose dealer-added accessories on advertised vehicles. • Leading a consumer to believe that the dealer will be assuming all liability under the lease of a trade-in vehicle when the dealer intends only to make the final lease payments and assume no other liability, such as excess wear and tear or over-mileage. • Oral promises made to the customer upon which the dealer fails to deliver. A common misconception by dealership staff is that only written agreements are enforceable and oral agreements are irrelevant once the customer signs a contract. This is simply not the case. Even if the final contract is in perfect form, the transaction can be legally second-guessed based purely on oral, pre-contract communications between the buyer and seller. Be careful what you say! • Bait-and-switch advertising. The FTC defines bait advertising as "an alluring but insincere effort to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser." • Failure to disclose known vehicle history, which may show that the vehicle was previously used as a rental or demonstrator or sold and returned; suffered harm, including flood or hail damage; or is stolen-recovered, a salvage vehicle, rebuilt or reconditioned. • Breach of warranty claims. The FTC Used Car Rule declares that it is deceptive for a dealer to misrepresent the mechanical condition of a pre-owned vehicle, falsify the terms of any warranty tied to the sale of a used vehicle or represent that a used vehicle is sold with a warranty when it is not. • Offering vehicles as new when they are, in fact, used. Representing a vehicle as being of a particular standard, quality or grade when it is not. • Misrepresenting discounts in advertising and not disclosing important limitations. • Posting false testimonials or online reviews. It's more important than ever to be very careful when dealing with consumers. 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 deceptive practices. 33