Report: Car dealer scams rampant

Industry downplays warning issued by Public Citizen

By Jeff Plungis / Detroit News Washington Bureau

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WASHINGTON -- Millions of consumers are subjected to a wide range of unnecessary fees and charges when buying a new car or truck, according to a report released by a consumers group Monday.

The study by the Washington group Public Citizen found a half-dozen methods they say dealers regularly employ to add hundreds of dollars to the purchase price of cars and trucks.

"The scams are not restricted to a few areas or dealerships," said Public Citizen president Joan Claybrook. "Customers are being cheated on both coasts and everywhere in between."

Among the common alleged frauds:

Boosting the sticker price with extra features that may already come with the vehicle.

Manipulating customers to agree to add-ons during negotiations without specifying the additional cost.

Working with banks to fix a higher interest rate without the buyer's knowledge.

Adding products to the sales contract after the customer leaves.

Requiring credit reports to determine income, previous lease or loan payments to benefit the dealership in negotiations over price.

Public Citizen worked with a former dealer employee, Duane Overholt, to undertake the study. Overholt worked as an auto salesman for 20 years in Florida. At a Washington news conference Monday, Overholt estimated he had personally overcharged customers $33 million over the course of his career.

"When you start as a sales rep, you don't usually know what's going on," Overholt said. "You suspect and gradually catch on, but you don't say anything out of fear of losing your job. As you move up into management, you learn about the scams. If you don't rip off customers, you'll lose your job."

Public Citizen is asking state attorneys general to investigate the practices and step up enforcement of consumer protection laws.

Auto dealers groups said the practices described in the report were not reflective of the industry as a whole.

Marianne McInerney, president of the American International Automobile Dealers Association, said the report contradicted four independent evaluations over the last two years by Gallup, Wirthlin, Ernst & Young and Consumer Reports.

The groups reported that between 90 percent and 95 percent of consumers were satisfied with their new-car buying experience, McInerney said.

"They seem to be indicting the entire industry based on the practices of a very few, with little or no evidence," McInerney said. "The vast majority of dealers are reputable and honest."

You can reach Jeff Plungis at (202) 662-7378 or at jplungis@detnews.com.

Yes, this is my truck. No, I will NOT help you move.

Report: Car dealer scams rampant

Industry downplays warning issued by Public Citizen

By Jeff Plungis / Detroit News Washington Bureau

Comment on this story
Send this story to a friend
Get Home Delivery


WASHINGTON -- Millions of consumers are subjected to a wide range of unnecessary fees and charges when buying a new car or truck, according to a report released by a consumers group Monday.

The study by the Washington group Public Citizen found a half-dozen methods they say dealers regularly employ to add hundreds of dollars to the purchase price of cars and trucks.

"The scams are not restricted to a few areas or dealerships," said Public Citizen president Joan Claybrook. "Customers are being cheated on both coasts and everywhere in between."

Among the common alleged frauds:

Boosting the sticker price with extra features that may already come with the vehicle.

Manipulating customers to agree to add-ons during negotiations without specifying the additional cost.

Working with banks to fix a higher interest rate without the buyer's knowledge.

Adding products to the sales contract after the customer leaves.

Requiring credit reports to determine income, previous lease or loan payments to benefit the dealership in negotiations over price.

Public Citizen worked with a former dealer employee, Duane Overholt, to undertake the study. Overholt worked as an auto salesman for 20 years in Florida. At a Washington news conference Monday, Overholt estimated he had personally overcharged customers $33 million over the course of his career.

"When you start as a sales rep, you don't usually know what's going on," Overholt said. "You suspect and gradually catch on, but you don't say anything out of fear of losing your job. As you move up into management, you learn about the scams. If you don't rip off customers, you'll lose your job."

Public Citizen is asking state attorneys general to investigate the practices and step up enforcement of consumer protection laws.

Auto dealers groups said the practices described in the report were not reflective of the industry as a whole.

Marianne McInerney, president of the American International Automobile Dealers Association, said the report contradicted four independent evaluations over the last two years by Gallup, Wirthlin, Ernst & Young and Consumer Reports.

The groups reported that between 90 percent and 95 percent of consumers were satisfied with their new-car buying experience, McInerney said.

"They seem to be indicting the entire industry based on the practices of a very few, with little or no evidence," McInerney said. "The vast majority of dealers are reputable and honest."

You can reach Jeff Plungis at (202) 662-7378 or at jplungis@detnews.com.

Yes, this is my truck. No, I will NOT help you move.

I saw something like this on Dateline recently. Luckily, being in the "loan" business, I have learned a lot about this and other similar businesses. Being a mortgage broker is similar, but it's both jobs rolled into one. I act as the salesman and the finance guy when it comes to getting paid.

The sales guy makes money off you when he gets you on a higher value, lower trade in amount, accessories, etc., and the finance guy gets you on the loan.

Since I figured all this out, I have quit doing loans with back-end money. I want my clients to see everything up front, so they know they're getting the best deal they can. It has resulted in a lot more referral business that I thought it would. Chalk one up for honesty.

Adam P. Smith
Mortgage Pros, Inc.
303-407-2405 p
303-407-2414 f
aps101374@yahoo.com

Check out this site for some really good info!

http://www.carbuyingtips.com

- Dan

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SUT on order 12/02. 12 months down, 6 to go!
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