Let The Government Be Your Customer Service Department!

by Tom Kline

Three super-large dealership groups are trying it!  

Here’s how it’s going for them so far…

Carvana lost the ability to transact in Illinois according to Automotive News (May 16, 2022) because, “The Secretary of State's police department opened an investigation into consumer complaints about Carvana in February, (Henry) Haupt told Automotive News. The investigation spans about 90 signed complaints, Haupt said. He said he couldn't provide an exact date as to when Carvana might see the suspension lifted.”

According to a press release from the Texas Attorney General’s Office:

“Texas Attorney General Ken Paxton filed a deceptive trade practices lawsuit against the online used vehicle dealer Vroom Automotive LLC and Vroom Inc., which also sells cars to Texas consumers under the name Texas Direct Auto. The lawsuit alleges that Vroom has misrepresented and failed to disclose significant delays in transferring clear title and obtaining vehicle registrations, burdening thousands of consumers. The State also alleges that Vroom has misrepresented and failed to disclose vehicle history and condition and terms of financing and approval—all violations of the Texas Deceptive Trade Practices Consumer Protection Act. According to the lawsuit, Vroom has not managed its growth effectively, leading to inadequate systems and procedures that have harmed Texas consumers. 

Over the last three years, consumers have filed over 5,000 complaints with both the Better Business Bureau and the Office of the Attorney General against Vroom and Texas Direct Auto.” 

According to the Federal Trade Commission’s (FTC) Press Release dated April 1, 2022:

“The Federal Trade Commission and the State of Illinois are taking action against Napleton, a large, multistate auto dealer group based in Illinois, for sneaking illegal junk fees for unwanted “add-ons” onto customers’ bills and for discriminating against Black consumers by charging them more for financing. Napleton will pay $10 million to settle the lawsuit brought by the FTC and the State of Illinois, a record-setting monetary judgment for an FTC auto lending case…

A survey cited in the complaint showed that 83 percent of buyers from the dealerships were charged junk fees for add-ons without authorization or as a result of deception.

One consumer cited in the complaint reported that the dealership located in Arlington Heights, Ill., charged him for nearly $4,000 in add-on fees after he’d paid a similar amount in down payment.”

So, from the outside looking in, it appears these three (3) organizations do not have procedures in place to handle their customer queries, issues, and problems. So, by default, by attrition, or by apathy, they are ceding control and allowing the regulators to fine them and suspend them, thereby driving the dealerships to manage their own business affairs. (Good pun, right?)                                                                                                                

In the Napleton matter, a staggering 83 percent of buyers said Napleton took advantage of them.

Let’s examine that statistic even further.

In order to gather the information about the 83 percent, Napleton had to allow the FTC to have access to its customer files.  The FTC must have had quite a lot of leverage for Napleton to agree to give them that access.  Further, 83 percent cannot be simply “miscommunications” or “misunderstandings.”  It’s an astonishing number which cannot be explained away.

Let’s keep this simple:

Handle your customers or the government will.  

Tom Kline

Tom Kline, a former franchise dealership owner with 30+ years of experience, specializes in risk mitigation by preventing and solving dealership problems through risk transference remedies, compliance, and dealership dispute resolution. Tom is the Lead Consultant and Founder of Better Vantage Point and has worked with both publicly-held and private dealerships. Kline speaks at national conferences and workshops, writes for six (6) publications, and has endorsements from multiple trade groups. Thanks for seeing things from a Better Vantage Point, where “We Get You Out of Trouble…and Keep You Out of Trouble."

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