Keith Whann The Car Counselor on ‘Can we use the same FTC window sticker used in all states?’

F & I PRACTICES AND MENU MISHAPS THAT CAN SINK YOUR DEALERSHIP

Motor vehicle dealers are increasingly becoming targets for disputes about improper disclosures and deceptive trade practices and, in particular, dealership F & I practices. The negative reputation continues to get fuel from media programs that foster the consumers’ perception that misrepresentation is rampant in the motor vehicle industry. This is occurring even as many dealers are working diligently to make their sales and F & I practices more disclosure and consumer friendly.

The goal is to ensure that all of the Dealership’s products and services are offered to all of the customers all of the time. Claims frequently raised by consumers are related to allegations that the dealership’s representatives failed to make disclosures or made inconsistent disclosures. Examples of these claims include that the dealership included the cost of optional products or services that the consumer did not know he was purchasing in the price of the vehicle (commonly referred to as “payment packing”) or was told that he had to purchase them in order to complete the transaction.

A popular F & I trend geared toward avoiding consumer claims regarding deceptive F & I practices is “menu selling”. Read the rest of this entry →

Keith Whann The Car Counselor on ‘Is there a set format for the FTC window sticker?’

Jim: In follow up to the OIADA member question from earlier today regarding what language goes into a Notice to Co-Signer Form, here’s the answer:
NOTICE TO CO-SIGNER

You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

The creditor can collect this debt from you without first trying to collect from the borrower.

The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

This notice is not the contract that makes you liable for the debt.

Preventing Dealership Fraud

(Courtesy NADA)

The opportunity to commit fraud, plainly stated, is a weakness in a company’s internal controls that has been exploited by the fraudster. Whenever fraud occurs, there are three aspects prevalent—the incentive to commit fraud, the rationalization of one’s actions, and the opportunity to commit fraud. While incentive and rationalization are difficult to control, management can prevent many opportunities for fraud by monitoring and updating its system of internal controls. Preventive controls are put in place before a transaction is entered into the company’s books, and include: Read the rest of this entry →

There are a whole host of products that consumers can purchase to protect their credit if something happens to the vehicle or, worse yet, to them.  Motor vehicle dealers offer everything from extended service contracts to credit insurance.  One product that has received a great deal of attention throughout the years is the Guaranteed Asset Protection (GAP) Product. Read the rest of this entry →

The increased popularity of service contracts among consumers (as evidenced by the rising sales penetration rates in dealerships across the Country), combined with the recent problems related to the payment of claims by a service contract provider, has produced numerous inquires on the types of issues a motor vehicle dealer should consider when analyzing a service contract program.  As with any other product or service, a dealer should do some due diligence beforehand with respect to both the service contract provider and the product it is offering.   Remember, you must be realistic when looking at a particular service contract program.  As with dealership paperwork, the cheapest is not always the best.  Since the dealership is the one selling the product to the consumer it can be exposed to liability regardless of what the actual service contract or service contract provider’s dealer agreement might say. Read the rest of this entry →

While there are numerous sources of information for consumers on what to look for when purchasing a service contract and various laws to protect them, motor vehicle dealers looking for a service contract program are not as fortunate.   As I travel the country and meet with dealers at The Car Counselor’s TARP Conferences, service contracts and the types of issues a motor vehicle dealer should consider when analyzing a service contract program and its provider are a major topic of discussion.  Their concern is certainly understandable. Read the rest of this entry →

You know contracts are important.  In fact, as a motor vehicle dealer, you should know they are VERY important.  Your dealership enters into them every day with customers.  You also sign contracts with all of the people you do business with, from your bank and insurance carrier to lenders and third party providers of your service contract, gap and other programs.  Because a contract is a necessary part of any business transaction, it is important to understand basic contract terms and their implications.  Dealers (or counsel familiar with the industry) should read all of their contracts carefully and completely enabling the dealer to understand what they are agreeing to before signing on the dotted line.  Unfortunately, many dealers don’t understand what they are signing and, even worse, some are signing without reading them at all. Read the rest of this entry →

Keith Whann The Car Counselor on ‘What is the difference between an implied or express limited warranty, and a service contract?’