It seems like dealers just can’t catch a break when it comes to lawyers and lawsuits. Back in 2004, California businesses won a hard-fought battle against “shakedown” lawsuits with the passing of Proposition 64. Previously, the law had allowed any party to sue a company regardless of whether the plaintiff was directly affected. For example, lawyers were able to review car dealer ads in the newspaper, spot a violation of the Vehicle Code and file a lawsuit against the dealer, without any client who was misled. Proposition 64 restricts private lawsuits against a company only to those where an individual is actually injured by and suffers a financial loss due to an unfair, unlawful, or fraudulent business practice. It also provides that otherwise only public prosecutors may file lawsuits charging unfair business practices. Of course, this was a tremendous blow to greedy attorneys who specialized in these shakedown lawsuits. Read the rest of this entry →

First, I’d like to go on record as saying that I sincerely believe that the Brownback Amendment is a good thing. The last thing auto dealers need is more regulation. Most dealerships are highly ethical and provide a great service to the public by helping provide affordable auto financing. NADA, as usual, is doing an outstanding job of lobbying for dealers’ interests.

Unfortunately however, the media spotlight this amendment has received has once again brought negative attention to the auto industry. Any way you look at it, the President of the United States, the U.S. Military and numerous consumer groups are fundamentally stating the auto dealers can’t be trusted. That’s never a good thing.

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When the Going Gets Tough, the Tough Get an Attorney

It’s been a tough couple of years for just about everyone in this business. I suspect there is an exception though – attorneys that specialize in suing car dealers.

It seems that the recent economy has caused a higher than usual amount of disgruntled customers. An example is the customer who can no longer afford his or her car payment and would like to find a way out of the deal. Then there are the folks who got used to trading in their vehicles pretty much at will. No down-payment? No problem. Upside-down? No sweat. Well, as we’ve become painfully aware, those days are over. So, unfortunately, there are customers out there who feel that they got “screwed” by a dealer because they owe far more than their vehicle is worth and actually need money down to trade it in.

Enter the consumer attorney. Just Google “auto dealer fraud” and you’ll see what I mean. Besides the numerous law firm websites, you’ll find several consumer advocate sites which “educate” people about “car dealer scams”. After browsing through a few of these sites, a consumer may decide to call for a “free consultation” or ring up his local attorney general’s office. Not a pleasant thought. An innocent dealer can easily become the target of a government investigation or lawsuit simply because a customer is trying to wiggle out of a transaction. Read the rest of this entry →

Another day, another news story about a sexual harassment lawsuit against an auto dealer. This time it’s the general manager and the GSM versus the receptionist. Allegedly, they were snapping her bra, whacking her backside with a back scratcher, hounding her with come-ons, and sending her inappropriate text messages among other things. According to the suit, the abuse became so bad that the receptionist quit her job after only 6 weeks.

If any of this is surprising to you, simply Google “auto dealer harassment” to get an idea of how common these types of lawsuits are in our industry. You will find many cases of not only sexual harassment, but also racial harassment, age discrimination, etc. The amounts of fines and damages that dealers have been assessed are eye-popping.

In a statement about another case against a dealership, U.S. Equal Employment Opportunity Commission (EEOC) regional attorney John Hendrickson said that it was “amazing that at a time when the auto industry is struggling for survival and women exercise so much influence in the marketplace that anyone would in engage in sexual harassment or show contempt for female customers.” Read the rest of this entry →

I remember the good old days when I was blissfully ignorant about everything except making the next car deal…

Back in the days when I was a dealership general manager, I couldn’t wait for the next Big Sale, Promotion, Mailer, etc., whatever it took to make things happen. I gladly signed up for whatever “Next Big Thing” my boss was willing to pay for. After all, we had to keep the staff pumped up and the customers coming in, right?

Well, since then I’ve learned a thing or two about compliance and now realize that many of the programs we participated in were questionable at best or downright misleading (and thus, illegal) at worst. I never gave those advertisements a second thought because I figured we paid the program vendors a lot of money so they must be legal and proper, right? And even if the ads were improper, the vendor would be responsible, not us, right? Ah, wrong and wrong. Read the rest of this entry →

Will You Still Love Me Tomorrow?

There are a number of good reasons for operating an ethical and legally compliant dealership, not the least of which is staying out of a courtroom. Perhaps the most important – and most often overlooked – reason is increased customer satisfaction. There are times when an employee may feel that he or she came out the winner by bending the rules a little, but what about the dealership’s reputation? What about the customers who were mislead? It seems like there might be some losers in the game.

Customers often make decisions during a vehicle sale transaction that they come to regret after the “ether has worn off”. Perhaps they read the contract more carefully after they get home or showed it to a relative, friend, neighbor, etc. The customer may notice some imperfections on the vehicle in the light of day and have it inspected by a mechanic or body shop or run a vehicle history report. If there is a concern, some customers will let the dealer know while others will just chalk it up to (bad) experience. Read the rest of this entry →

Top Ten Ways an Employee Can Ruin Your Day

Question: Where are compliance lapses likely to occur in most dealerships?

1. The F&I office
2. The sales managers’ office
3. The lot
4. The showroom
5. All of the above

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Legal Compliance – Who Taught You the Rules?

Back when I was a green-pea salesman, I listened carefully to everything the closers and sales managers said. These guys were good! It seemed that no matter what the customer said, they had an answer. So I listened and learned. When I got my shot and became a closer, I carefully followed my sales manager’s lead. Same thing as I moved up through the ranks – I listened and learned from the old timers. By the time I became a GM, I knew it all, right? Well, not exactly. Any of this sound familiar?
Sales manager to salesperson: “Your customer has great credit but the bank is going to need more income. I don’t think they’ll ask for proof”. (falsifying credit information)
Sales manager to finance manager: “Listen, these folks are in a hurry. Let’s make them mental owners. Just have them sign a contract real quick and we’ll get the rest of the paperwork done another time. If they leave without signing something, they won’t be back”. (improper disclosure) Read the rest of this entry →