A four-agency team of investigators raided an Orange County auto dealership last week and on Friday accused Wilson Ford of Huntington Beach of stealing “hundreds of thousands of dollars” from car buyers by false advertising, lies and manipulation.
Industry response was immediate and unusual.
“I’m encouraged,” said Jack Livingston, a Woodland Hills car dealer and president of the Greater Los Angeles Motor Car Dealers Assn.
“Very helpful . . . perfect timing,” said Mickey Garrett, a 40-year stalwart of the retail car business and the association’s vice president. “We didn’t have anything to do with complaints against Wilson Ford, but this (the investigation) is indicative of the problem and typical of what we’re trying to do.”
What his group is trying to do, Garrett explained, is to remove a small but damaging minority (“somewhere between 2% and 5%") from “a decent, honest majority” of car dealers.
Today, Garrett, Livingston and their association will take their next step by joining Department of Motor Vehicle investigators at a Los Angeles press conference launching a new program against problem dealers.
Dubbed “Blow the Whistle,” the campaign asks dealers and the public to send reports of dubious dealer advertising or suspicious selling practices to the DMV (c/o Michael Vega, chief investigator, DMV, Sacramento, Calif. 95818) or to the Los Angeles Motor Car Dealers Assn. (3349 Cahuenga Blvd., Hollywood, Calif. 90068).
Informants may act anonymously. Dealers are invited to snitch on their competitors.
“In fact,” Garrett said, “the emphasis of this whole campaign will be peer pressure. We are saying: ‘OK, Mr. Dealer, if you are going to do this (ignore the law), somebody is going to turn you in. And not just the customer, but another dealer will be blowing the whistle on you.”
DMV, investigator Vega said, will probe all claims. If proven, a dealer faces license suspension or revocation; fines and jail time; civil injunctions, and penalties.
“We receive about 15,000 complaints a year and false advertising is a significant portion of our case load,” said Vega, chief of DMV’s investigations and occupational licensing division. In January, he added, amendments were enacted to state laws “and now we can really get a handle on wild claims being foisted on the public through media advertising.”
The examples, he added, are many.
“ ‘Push, drag or drive your car on to our lot and we’ll give you $2,500.’ That’s patently misleading,” Vega said. ‘Buy this car for $1 over invoice.’ I knew of a case where a customer paid $2,000 over that $1 over invoice. ‘Get a brand new Corvette for $10,000.’ When you get there, they say they forgot to print a VIN (Vehicle Identification Number) with the ad and that particular car has gone.”
In recent months, DMV’s highly publicized actions against Southern California dealers for false advertising or violation of consumer protection laws have been numerous:
* A civil lawsuit was filed by the Orange County District Attorney’s Office in January against the four-showroom Fairway auto chain in Fullerton and Placentia. Fairway, which operates Toyota, Ford, Lincoln-Mercury and Volkswagen franchises, was accused in 29 instances of selling “low-mileage, executive used cars” that actually were former self-drive rental cars. Orange County Superior Court Judge William F. Rylaarsdam has signed a preliminary injunction ordering the dealership to post the history of the cars for future sales.
* In February, the DMV listed 40 consumer fraud complaints against West Covina Mitsubishi. A hearing to revoke or suspend the license of owner Ziad Alhassen was continued until June. He is accused of false advertising, charging for services that salesmen claimed were legal requirements and altering credit applications.
* In August, Grand Chevrolet and Grand Motors, both of Glendora, filed for Chapter 11 protection from creditors amid allegations of multimillion-dollar fraud and mismanagement. Owner Eminiano Reodica, a Filipino immigrant, is being sought by DMV for alleged fraud involving having customers sign for extra charges on documents they didn’t understand, and by multiple financing of car sales through more than one lender. Reodica subsequently was fired from his state appointment--membership on a board that has the power to overrule DMV decisions.
* DMV investigators have said they are looking at four other agencies believed to have committed similar offenses. The dealerships have not been identified.
* In support of warrants used to search Wilson Ford, DMV contended Friday in Orange County Superior Court that the dealership used television pitchman Ralph Williams to lure customers with offers of cars below factory invoice prices. Showroom salespeople would continue the fraud, alleged state Justice Department investigator Carlos Martinez, by pressuring buyers into signing contracts with hidden costs and inflated prices for such things as buyer protection plans.
“It appears,” Martinez said, that “Wilson Ford is stealing hundreds of thousands of dollars from car buyers . . . relying on the vulnerability of the car-buying public.”
To Garrett, all closures, investigations and accusations add up to an industry image that has “reached its lowest level in history” following a “nose dive in morality, integrity and ethics.”
“We’re not talking about the majority of the 1,000 dealers in Southern California. But one guy gets caught and in one fell swoop you are dragging all dealers into the muck.
“There are some really great guys out there, businessmen, family men, community leaders who give very heavily of their time, money and products to charity. That’s the dealer I want to put in the public mind, not the pitchman.”
Garrett wrote of his concern (“I was tired of going to social functions and being hesitant about telling people what business I was in”) as an editorial in the January issue of Auto Age, a national dealer magazine. “I heard from dealers and association executives from all over the country,” he said. “They commended me for exposing the situation, but were frustrated in not knowing what to do about it.”
So Garrett drew up plans for “Blow the Whistle.”
In February, it was approved by the board of his 200-member organization that represents more than 65% of the car dealers in the Greater Los Angeles area.
Buyer Will Pay
“It is not a dealer witch hunt, but a cooperative operation between the dealers association, DMV and the public, to reduce false and misleading advertising,” Livingston explained. “Our hope is that eventually a customer can walk into a dealer’s showroom and get exactly what that dealer offered through his advertising.
“We also want to educate the dealer who, in view of the new laws that came on board Jan. 1, genuinely might not know that he is doing wrong.”
The new legislation, Garrett said, should silence come-ons that have existed since customers kicked their first tires and dealers offered Model Ts that had only been driven by little old ladies on Sundays.
“If a dealer offers a car with no down payment, he must be prepared to offer that deal without a trade-in,” Garrett explained. “Because a trade-in is a down payment.
“Beware of dealers who say they can finance cars even if a buyer has been refused financing elsewhere. Fact of life: The buyer is going to pay one heck of a larger finance rate through some secondary lending institution.”
In Garrett’s ideal world, even television’s Joe Isuzu, speaker of white lies and black exaggerations, would be dumped in favor of a less comic, more honest spokesperson: “In the back of the public’s mind, all dealers are like that, lying to you, doing a number on the customer.
“To me, that’s no big joke. It’s a mockery.”