Today, Public Citizen sent letters to government officials in Florida, California, Texas, Tennessee and Georgia about dealership scams in their states. Since beginning our collection of dealership fraud complaints in December, these five states have had the highest number of complaints.
In the letters, we called on officials in Consumer Affairs offices of these state's Attorney Generals' and Governors' offices to take notice of the dealership frauds described by their state's consumers and to take action to prevent them in the future.
Over 700 consumers have contacted Public Citizen describing their experiences with auto dealers. Follow this link to read a summary of our survey complaints and some of these consumers' stories:
Follow this link to read the state-specific fact sheets and letters sent to CA, GA, FL, TX and TN officials:
For more information, read our full press release below or visit our website, www.autodealerscam.org
May 27, 2004
After Being Deluged With Stories from Consumers, Public Citizen Sends Information to Officials in Florida, California, Texas, Tennessee and Georgia
WASHINGTON, D.C. - Public Citizen is providing government officials in five states with information about reported rip-offs by auto dealers in those states, ranging from loan terms being changed without customers' knowledge to buyers being charged for "free" add-ons. The stories are among more than 700 received by the consumer advocacy organization after publishing a report detailing how auto dealers scam consumers.
The December 2003 report, Rip-Off Nation: Auto Dealers' Swindling of America, outlined a wide range of industry-wide practices, including inflating the cost of warranties, reporting one set of numbers to the customers and another set to the bank, and stuffing contracts with extras that the customer never agreed to pay for. After issuing the report, Public Citizen encouraged consumers to contact the organization if they thought an auto dealer had defrauded them during a vehicle purchase.
The largest number of complaints came from Florida (90 complaints), California (52), Texas (42), Tennessee (22) and Georgia (20). Public Citizen today sent letters to the attorneys general of Florida, California and Texas; the Tennessee Division of Consumer Affairs; and the Georgia Governor's Office of Consumer Affairs, providing details of the experiences reported by consumers in those states. Public Citizen sent the information only of those buyers who gave their permission.
"They told me that my interest rate was 2.15 percent but after I signed I did some calculations and realized it is actually 10 percent!" wrote a Los Angeles consumer. "Also, they charged me for both an aerodynamics package and a spoiler, but a spoiler is included in the aerodynamics package!"
Said an Austin, Texas, buyer, "I was told that I would have a four-year loan and the loan coupons turned out to be [for] a five-year loan." A Jacksonville, Fla., consumer reported three different cash prices for the vehicle on three different contracts. And an Atlanta, Ga., consumer reported being charged a $1,000 fee just to receive a loan.
"Unfortunately, these stories of egregious and blatant consumer rip-offs are all too typical," said Public Citizen President Joan Claybrook. "From the snapshot these buyers have provided, it is evident that dealers are ripping off customers, sometimes for thousands of dollars each. The government officials should take action now to stop this fraud."
In the letters, Public Citizen urged government officials to assess whether the states' consumer laws provide adequate protection for auto purchasers and to collaborate with other state agencies, such as the Department of Motor Vehicles, and with other consumer protection or attorney general's offices around the country, to stem dealership fraud.
Consumers buying automobiles are particularly vulnerable to being ripped off by auto dealers because of the large size of the purchase, the flurry of paperwork and the fact that the financial deals are often complicated. Some dealerships use unscrupulous tactics to squeeze the highest possible profit from each sale.
Public Citizen issued its report in December 2003 detailing the many ways that consumers may fall victim to unscrupulous dealers. They include:
• The dealer boosts the manufacturer's suggested retail price with extras, some of which may already come with the vehicle.
• Sales managers run credit reports on potential buyers without their permission to learn how much credit the customer has and even what the customer's last car payments were, for use in price negotiations.
• Banks may have "sweetheart" relationships with dealers, imposing an uncompetitive interest rate in order to kick back to the dealer the dollar value of a few percentage points of the loan without the buyer's knowledge.
• Customers are manipulated during the sales process to pay more than the agreed-upon price. This is often done with the use of worksheets listing add-ons.
• If the sale is made after hours, customers are asked to sign blank bank forms that the dealer offers to fill in later, ostensibly after talking to a bank during business hours. The numbers reported to the bank may not reflect what the customer agreed to.
To protect themselves, consumers should: 1) obtain financing at verifiably competitive rates or independently of the dealer; 2) refuse to sign any contract containing an arbitration clause; 3) never sign blank financial forms; 4) remember that dealers make money from extras and add-ons and view with skepticism offers of "free" items; and 5) never drive a car off the lot before all financial transactions have been agreed upon by the lending institution. Consumers must also be willing to walk away from the deal at any point that something smells fishy or they are treated disrespectfully, as hard-ball sales tactics can distract consumers from the precise terms of a deal.
To view the letters sent to the attorneys general as well as new national and state fact sheets, go to: www.citizen.org/autosafety/dealerscam/articles.cfm?ID=11651 Consumers interested in filling out surveys and reading more information should visit: www.autodealerscam.org To read Public Citizen's report, go to http://www.citizen.org/autosafety/dealerscam/articles.cfm?ID=10775
IN THIS UPDATE:
1. Anti-Scam bill in CA needs your help
Legislation to End Rip-Offs in CA Needs Your Support Today
Last month we told you about legislation California that would establish a three day "cooling off period" for vehicle purchasers, make financing scams more difficult to pull off, and craft new standards for "certified" used cars. This landmark legislation would be an terrific first step towards a consumer-safe marketplace in CA and the rest of the country.
Take Action Now!
The bill, AB 1839, passed out of committee yesterday (May 29) following a very tough fight. It will likely be voted on on the Assembly floor early next week (Tuesday the 25th or Wednesday the 26th). Strong opposition to this bill by the auto dealer lobby must be countered by your voice of support. Follow this link to send a letter of support to the bill's sponsor, Assemblymember Cindi Montanez, or if you are a CA resident to your Assemblymember.
**If you are a California resident, please forward this call to action to other interested people in your state. Now is the time to make a difference!
IN THE NEWS - TX, NY, IL, NJ
On April 6 Public Citizen and Consumers for Auto Reliability and Safety called on the Texas Legislature to repeal a law - passed under former Gov. George Bush - that blocks consumers from recovering billions in overcharges on car loans and allows dealers to keep financing kickbacks secret. To learn more, follow this link: www.citizen.org/pressroom/release.cfm?ID=1682
The New York Attorney General, Elliot Spitzer, proposed legislation that would take steps to eliminate racial disparities in automobile financing by making the financing process more transparent and equitable for all consumers. The legislation would establish a flat rate that all consumers would be charged for arranging financing.
The Illinois Attorney General is pushing a bill that would overturn an old law which allws dealers to hide markups and that would require dealerships to disclose how much they've added to a lender's rate. The legislation, brought before the IL Legislature in February, has yet to be brought to a vote in part because of the powerful dealers' lobby in the state.
The New Jersey Attorney General has filed two complaints against dealerships and their financing arms. The first, against DCH Auto Group, claims a violation of consumer protection laws. The second lawsuit seeks restitution for consumers affected by fraudulent practices of TradeLease Corp and Antares Leasing Corp.
In the past few weeks, consumer friendly laws that would drastically curb dealership scams were proposed in CA, NY and IL. Also during this time, consumers in FL dodged the bullet on unfriendly legislation that would have curtailied their rights to seek greivances against unscrupulous dealers.
IN THIS UPDATE:
1. NY, IL Attorney Generals support consumer friendly dealer legislation
1. PRO-CONSUMER LEGISLATION IN NY, IL
NY Attorney General Eliot Spitzer is expected to seek legislation that would require dealerships to disclose the profit they make on vehicle financing, following a two-year investigation by his office into an Albany, NY, dealership. IL Attorney General Lisa Madigan supports legislation that would require dealers to disclolse their markup on finance rates.
Follow this link to read Spitzer's press release http://www.oag.state.ny.us/press/2004/mar/mar31a_04.html
TAKE ACTION NOW!
Are you a NY or IL resident? If so, contact Attorneys General Spitzer or Madigan to support his/her proposal and tell him/her your story. If you live elsewhere, contact your state AG and urge them to join NY and IL AGs in their efforts and to support similar legislation in your state. To find contact information for your AG, follow this link: www.naag.org/ag/full_ag_table.php
2. ANTI-SCAM BILL IN CALIFORNIA
On Tuesday, March 9, 2004, California Assemblywoman Montanez launched AB 1839, the Car Buyer's Bill of Rights. The consumer advocacy groups Consumers for Auto Reliability and Safety (CARS) and Public Citizen are rallying California consumers in support of the bill to speak out, share their stories and curb dealership scams in the state.
TAKE ACTION NOW!
Check out CARS' website (www.carconsumers.com/AB1839.html ) to learn more about the bill and about sending a letter to your Assembly person in support of ending dealership scams.
INTERESTED IN SHARING YOUR STORY?
CARS is looking for California consumers who have been scammed by dealerships in one of the 4 key areas covered by the bill who would be available to speak to consumer reporters. The key areas are:
1. excessive interest charges
If you are interested in speaking with CARS and consumer reporters, please email email@example.com and let us know.
3. ANTI-CONSUMER BILL DEAD IN THE WATER IN FLORIDA
A bill that would have required 30-day written notices from unhappy auto buyers before they can sue dealers and that would have limited lawyers fees paid by dealers was stalled in the FL Senate Judiciary Committe on March 23.
TAKE ACTION! This bill may resurface - if you are a FL resident, write to your Legislators and tell them that you are opposed to the limiting of your rights to sue unscrupulous dealers. If you aren't from FL, write to the bill's sponsor, State Sen. Michael Bennett, R- Bradenton.
FL Senators contact information:
FL House Members contact information: www.myfloridahouse.com/Legislators.aspx
For local media on the bill: http://multimedia.tbo.com/multimedia/popup/MGASPKSQGSD.html
4. 60 MInutes "Buying Cars: A 'Rip-Off'?
Steve Kroft investigates hidden finance charges and the victims of these routine markups that often costs consumers thousands of dollars.
Welcome to the Auto Dealer Fraud Listserv.
Since we launched our campaign to educate the public and call on law enforcement to investigate and end the widespread fraud, over 500 consumers have joined our Listserv or filled out our consumer survey. Almost 7,000 people have downloaded our report and 20,000 have visited our page. Finally, the news about auto dealer rip-offs is getting out. Help the news spread - tell your friends, family and coworkers to visit www.autodealerscam.org so that they too can learn more and fill out our survey and join our Listserv, if they are interested.
AUTO DEALER FRAUD IN THE NEWS
Public Citizen's report and NBC Dateline's show on auto dealer fraud got substantial coverage in both local and national news. Check out some of the stories - links available at the bottom of this message.
YOU CAN MAKE A DIFFERENCE - TAKE ACTION
Hundreds of you have written to tell us that you have experienced the some of the rip-off schemes described in our report. As you may know, Public Citizen has called upon all of the U.S. Attorneys General to investigate dealership fraud and to prosecute where necessary. The AG's need to hear from you, consumers in their states, that these frauds are widespread and that they affecting people where you live.
Take a few minutes to call, email or send a letter to your AG. You can find her or his contact information on this website: http://www.naag.org/ag/full_ag_table.php
Possible talking points and a sample letter are below.
1. Unethical and perhaps illegal activity is occurring in auto dealerships across the country and is present in my community.
g. Other problems not listed…
3. You, as the Attorney General of my state should look into this problem with regard to the dealerships named above. I urge you to investigate dealership scams and to prosecute wrongdoers, to assure that unscrupulous dealerships are not able to rip-off other customers.
Dear Attorney General _____,
I am a consumer, living in your state, who is concerned about the widespread unethical and even illegal activities occurring at auto dealerships. I have recently learned that the scams that I have personally felt are affecting consumers throughout the country and that the consumer advocacy group Public Citizen has called upon you and the other AGs to investigate them. I implore you to take action.
The fraud described by groups like Public Citizen and in recent media reports is not a theoretical matter; it happened to me. Here is my story:
You serve our State as the chief legal officer. It is in this capacity that I ask you to investigate auto dealership fraud and to work for the people of our State to assure that no consumer is fleeced or lied to during the purchase of a vehicle.
AUTO DEALER NEWS COVERAGE LINKS
NBC Dateline: Car Sales: Tricks of the Trade http://msnbc.msn.com/id/3660557/
AP Wire (covered in Ohio, West Virginia, Michigan, South Carolina, Idaho, California, Utah, Virginia, Texas, Georgia, Florida
Story available at http://www.ohio.com/mld/ohio/business/7447757.htm
Consumer Affairs: Report Alleges Massive Fraud in Auto Sales http://www.consumeraffairs.com/news03/auto_fraud.html
Click on Detroit - WDIV Chanel 4: Group Calls For Investigation Into Car Sales Tactics: Whistle-Blower Says He Ripped Off Customers For $33 Million http://www.clickondetroit.com/consumer/2691313/detail.html
MSN Money: Watchdog says car dealer scams are rampant http://moneycentral.msn.com/content/SavingandDebt/P68724.asp?Printer
Auto Dealer Scam Story on Dateline Follow-Up Tonight 8PM EST
As many of you know, last week Dateline NBC ran an hour-long story on auto dealership fraud, including a hidden camera investigation. Tonight at 8 pm EST, Dateline will be running a follow-up to the story, that includes Joan Claybrook, President of Public Citize. For more information on Dateline's first story and to watch a part of the hidden camera video follow this link: www.msnbc.com/news/1001205.asp
Within the last five days, hundreds of consumers have written us detailing the problems they have experienced when purchasing or leasing a vehicle. Check back on our Web site next week for some of their stories. You can also visit our page - www.autodealerscam.org - to tell us your story if you have not already completed the survey.