Used Car Dealership Rip-offs Are Alive and Well
My brother Ted decided to trade in his current truck for one that had better gas mileage. He read an advertisement for one in the AutoTrader. The Chevrolet was on the lot of a well-known dealership in Belair, Maryland, for the advertised price of $17,632. It was a “certified” 2009 Chevrolet Colorado, 2WD crew cab.
Ted contacted the dealership and spoke with the salesperson, asking for details about the truck and the price. The salesperson quoted the same $17,632 as in AutoTrader. Ted went to the dealership, put a $500 deposit on the vehicle, and submitted a credit statement for financing. Later that day, he returned to the dealership for delivery. The sales person greeted him with a smile and said he had great news. He was able to get his payment to $120 per month for sixty months based on his good credit. Ted thought the payment was reasonable, but didn’t inquire about the interest rate. When he was about to sign papers, he noticed that the price of the vehicle was not $17,632, as stated, but $18,832! He questioned the increase in price and was told there had been a misprint in the advertisement.
The sales person quickly explained that the deal was so good, Ted didn’t even have to pay taxes on the trade-in difference! (Of course, this was only due to the fact that the vehicle he traded in was at a higher price.) Again, not questioning the price difference since the payment was affordable, Ted went into the finance office.
The finance manager explained he was going to take care of Ted and not only keep his payment the same but —you guessed it—include a service contract in the financing package “for no additional cost.” Again, not understanding the game that was being played, Ted thought it was a great deal. The finance manager went on to explain that Ted was getting an “exceptional rate,” because he was buying the service contract and why not take advantage of it!
After leaving the dealership, Ted returned to the dealership where he had purchased his original truck to get a refund on the unused service contract. He showed the AutoTrader advertisement to one of the managers and explained that he bought the new “used” truck for $1200 over the price advertised, because of a misprint. The manager advised him to contact the dealership immediately, because that dealer should honor the posted price and not increase the price simply because of a so-called “misprint.” He questioned the integrity of the sale.
Ted did as advised. Again, the sales person explained the $17,632 had been a misprint. Then, Ted contacted me for my advice.
I reviewed the advertisement and immediately questioned the honesty of the transaction, since the fees had not been properly disclosed. I calculated the payments and realized the quoted amount was at a ten percent variance from the buy rate, a misquote in payment by $20. I also explained to Ted that he was actually paying $1185 for the service contract! It was not free, as the finance manager had promised him. I advised Ted to contact the general manager or the dealer principal to point out these problems, certain the contract would be rewritten at the advertised price.
Ted returned to the dealership to meet with the general manager, who explained to Ted that he had “misread the advertisement” . . . that the disclosed fees were posted on the third page of the AutoTrader ad ($750 for inspection and $450 for destination charges). Unfortunately, Ted didn’t have the complete copy of the AutoTrader with him to check this out, so he took the general manager at his word. He then stated he didn’t like the way payments were quoted and believed his contract had been “packed.” The manager said the only thing he could do was cancel the service contract.
Ted was sent into the office of the finance manager to cancel the service contract. The finance manager explained that he couldn’t recontract the loan, but that Ted would receive the refund “at loan termination.” He explained that by recontracting the loan, he wouldn’t be able to keep the interest rate. Prior to leaving the dealership, Ted realized that the so-called “general manager” of the dealers was really the general sales manager!
Back at home, Ted reviewed the AutoTrader ad and noted that the fees were not disclosed, as the “general sales manager” had insisted. There was no disclosure of the fees on his buyer’s agreement either! The dealer had simply added the $1200 to the sale price in one lump sum! Ironically, the dealer had a line for “freight” on the buyer’s agreement, but it had been left blank. When Ted asked me about this, I wondered if the freight and destination fees were not the same. I told Ted I would contact the general manager myself. .
I put a call into the dealership and asked to speak with the real general manager. After explaining the situation, I was treated like one would a viper. The man was rude, arrogant and verbally abusive. He was unwilling to accept that his staff had conducted themselves in an unseemly manner. He said his managers had done everything possible to assist Ted by “reviewing the advertisement” with him and pointing out that the fees were properly disclosed.
I explained that I had a complete copy of the ad and it had not disclosed the $750 fee for inspection or the $450 destination fee. I asked why a destination fee was charged for a pre-owned vehicle and why an inspection fee was charged on for a vehicle that was “certified.” At best, the fees should had been disclosed on the buyer’s agreement and not included in the cash price of the vehicle, as indicated on Line One.
The manager stated that the dealership’s Web site showed the correct fees, and that it was the third party’s responsibility to rectify the disparity. He stated that if the newspaper or any other “third party” had stated the information incorrectly, it was up to them to honor the discrepancy, not the dealership. I explained to this misinformed manager that he was not correct. The dealership must, indeed, honor the vehicle price stated in its advertisement regardless if a third party had made a misprint. He immediately dismissed me.
I contacted the AutoTrader and was advised that the dealer is in fact obligated to honor all its content and that they do not endorse bait and switch or deceptive trade tactics of any kind. They referred me to specific sections of their agreement. I filed a formal complaint with AutoTrader against the dealer. Ted filed a complaint with the Better Business Bureau and the Attorney General’s office in Maryland.
It is deplorable that some dealership still don’t “get it!” Millions of Americans are suffering through the worst economy since the Great Depression, and they are doing whatever they can to spend wisely. For years now, car dealers have known that bait and switch tactics are illegal under the compliance and best practices acts. Unfair and deceptive acts will only cause them more harm than good. Their reputations will be sullied as word gets around. Satisfied customers are the cheapest and most effective form of advertising. When they are treated honorably, they return and they recommend the dealership to their friends and acquaintances.
It may be interesting to note that the dealership removed the advertisement from AutoTrader, but Ted’s trade-in vehicle is now posted and again without the “extra” fees properly disclosed! I assume the next customer will be charged for destination and inspection fees, even though Ted’s vehicle was a trade-in.
My professional advice? Do your homework online. Check out every detail. Have a list of questions handy before you ever set foot on the dealership lot. Get names. Write down quotes. Ask for a breakdown of every price used to come up with the monthly payment. Question the process. Hold everyone accountable.
