Anyone seeking a clear definition of "abusive or deceptive practices" in auto retail should look no further than the Consumer Complaint Survey Report conducted by the Consumer Federation of America.
Automotive issues were No. 1 on the annual report that tracks complaints received by state and local consumer protection agencies.
False advertising, income inflation and misrepresented financial terms are among the top-cited auto scams cited in the 2018 report, released July 30. Many complaints about the worst behavior concerned conduct in the F&I office and involved particularly vulnerable customers such as the elderly and mentally disabled.
Here are some of the most egregious complaints leveled against auto dealers:
- A consumer in Massachusetts with a cognitive disability was sold two vehicles when he wanted just one. The dealership also misrepresented the man's income, inflating his Social Security pay by $4,000 a month.
- A Maryland woman tried to transfer the vehicle title of her recently deceased husband to her name. Rather than informing her the vehicle would have lawfully passed to her through the estate, the dealer bought her out of the remaining balance, then resold it to her with an extended loan term and a slightly lower interest rate. As a result, the woman became liable for almost $10,000 more for her vehicle.
- An elderly man in Arkansas was coerced into signing a financing contract for a new $50,000 vehicle and trading in his old car. He could not afford the new vehicle and did not understand the terms of the agreement upon signing it.
- A woman in Ohio financed a used vehicle and three F&I products from a well-known dealership. For more than two years, the customer was told to pay for repairs that should have been covered by the products. The Summit County Office of Consumer Affairs discovered that the dealer never notified the warranty companies that the consumer had bought the coverage.
Susan Grant, director of consumer protection and privacy at the Consumer Federation of America, has been conducting the survey since 2008. She said auto issues are consistently in the top two.
"These are not typical of all car transactions, but these are the kinds of incidents that cause people to complain or get relatives to help them. There are situations that not only something happened that's just not right, but it's really outrageous," she said.
Dealers need to ensure that customers aren't being taken advantage of in the F&I office or on the showroom floor. F&I managers must ensure their customers understand and consent to their vehicle contract and the finance agreement. Not only is it unethical to have customers leave the dealership without a thorough understanding of the terms and total cost of their car deal, but employees who deceive customers become potential liabilities when it comes to consumer protection action and reputational damage.
