DMV Suspends Car Dealer Over False Ads
A Kearny Mesa automobile dealership was forced to suspend sales for three days this week and was fined $54,000 for not making good on advertisements that offered customers new vehicles for $1 more than the cost on the invoice, state officials said Tuesday.
In addition, the officials said that Kearny Mesa Ford, which was also placed on formal probation, has been refunding about $53,000 to customers who purchased 75 cars without being given the benefit of the $1-over-invoice sale.
The action against the Ford agency comes a year after the auto dealer agreed to pay $75,000 to settle a civil lawsuit filed by the San Diego County district attorney’s office over its misleading advertising and sales practices.
“The fact that a car dealership gets involved in this type of thing basically hurts so many consumers,” said Gary Reed Naylor of the state Department of Motor Vehicles’ investigative bureau.
“It’s such a big case that now we’ve assigned an area coordinator in San Diego County to do nothing but check dealer advertisements. That’s how significant it is, that we have one coordinator involved to monitor advertisements year-round. It’s something we’re going to continue to look into and prosecute actively.”
J. Clifford Johnson, general manager of Kearny Mesa Ford, could not be reached for comment Tuesday.
But in an interview when the district attorney’s lawsuit was settled last year, Johnson blamed the problem on a mix-up between the agency’s sales and advertising departments that was caused by some agency managers who no longer work there and said “full restitution” was being made to customers who felt they were treated unfairly.
John Acuna, a DMV supervising special investigator, said his staff began reviewing the sales practices at Kearny Mesa Ford when the ads first appeared in local newspapers in the fall of 1987. He said the DMV also began receiving complaints from customers who felt they had been cheated out of the $1-over-invoice come-ons.
In addition, he said, two Kearny Mesa Ford salesmen “came to us and told us that, by direction of management, they couldn’t sell the vehicles for $1 over invoice.”
“That’s what first alerted us,” Acuna said. “That was a tip-off for us.”
From November, 1987, to March, 1988, officials said, they determined that as many as 53 vehicles were sold for prices much higher than the $1-over-invoice sale, with the profit margin for the dealership being as high as $900.
Some customers complained that they either were not informed of the $1-over-invoice sale or were being charged for vehicle accessories that were already on the cars.
“People were walking out after paying more than they should have,” Acuna said. “The dealership was trying to get as much money as they could for the vehicles.”
He said that, when some customers asked about the ads, they were told that the vehicle they wanted to purchase wasn’t covered by the $1 special, or that the dealership had just sold its last one.
As the case grew, the county district attorney’s office sued the agency for fraudulent advertising. Last November, the agency agreed to pay $75,000 to settle a civil lawsuit brought by the district attorney.
The DMV then continued its investigation and, on Tuesday, announced the $54,000 fine and said the dealership was being closed through today. The dealership could be forced to suspend sales for 17 more days if it violates its probation, Naylor said.
