Illinois Attorney General, Lisa Madigan, sued two Orland Park dealers under Illinois’ Consumer Fraud and Deceptive Business Practices Act, the Loan Advertising to Bankrupts Act, the Uniform Deceptive Trade Practices Act and the Illinois Administrative Rules on Motor Vehicle Advertising.  The complaint is based on mailers sent out by Orland Park Nissan and Infinity of Orland Park.  The mailer apparently targeted credit challenged consumers and touted a “credit amnesty event.”  The envelope also claimed that the mailer contained “important vehicle recall information.”  The AG’s office claimed that it received 26 complaints as a result of the mailer.

So why is this significant?  First, it’s another sign that AG’s are tired of the old “important recall information” hook.  (See Bill Heard)  More importantly, AG’s want to appear that they are on top of the credit crisis and are doing something about it.  Ms. Madigan stated in her press release that “[t]his lawsuit should send the message to auto dealers that my office won’t tolerate using  deceptive marketing practices to lure unsuspecting consumers into risky loans.”  I predict that you will see more suits like this spring up around the country, so pay very close attention to your mailers – especially secondary finance mailers.

Illinois Attorney General Press Release

CBS2Chicago.com

The Georgia Governor’s Office of Consumer Affairs raised new allegations against Bill Heard Enterprises.  The Governor’s Office claims that Bill Heard engaged in deceptive and misleading sales practices in violation of Georgia’s Fair Business Practices Act of 1975.  Specifically, it asserts that Bill Heard failed to pay off trades and engaged in “power booking” (overstating the equipment on vehicles to induce a lender to finance a larger amount).  Bill Heard disputes the allegations.

Bill Heard is based in Columbus, Georgia and operates five stores in Georgia and nine stores in other states.  It is one of the largest General Motors retailers in the country.

The current allegations arise from a long-standing dispute between Bill Heard and the Governor’s Office.  According to the Governor’s Office, between July 1, 2005 and April 5, 2007, it received 113 complaints about Bill Heard’s stores.  Instead of settling those claims, Bill Heard sued the Governor’s office in May, 2007 under Georgia’s Open Records law seeking the names of the consumers and dealerships who filed complaints against it.  The Governor’s Office then sued Bill Heard for $50 million claiming that a sales mailer sent to thousands of consumers was misleading.  The mailer allegedly looked like a factory recall notice. 

The new allegations are simply the latest round of this bitter dispute.  But they come at a particularly difficult time for Bill Heard.  According to news reports, GMAC Financial Services recently discontinued Bill Heard’s new vehicle inventory financing. 

“State Says Bill Heard Used Deceptive Practices,”  Atlanta Journal-Constitution

“State Levels Accusations Against Bill Heard” Ledger-Enquirer.com

Kansas’ Attorney General filed suit against Chad Franklin Suzuki alleging that its ads violated the Kansas Consumer Protection Act.  Chad Franklin Suzuki ran a $1.9 million dollar ad campaign that, according to the AG, promised consumers they could  “drive a new Suzuki for life with no payments or drive a new Suzuki for a fixed time period at a fixed price.”  Apparently, the ad worked because 650 customers hooked up.  Customers were apparently happy with their free Suzukis.  The problem arose when the the customers had to start paying price for the cars.

Apparently, this was a case where the mouse type in the ad explained the limitations on the deal, but the overall message of the ad gave consumers the impression that the buyers could have a free lunch.  According to the news report, the ad generated over 100 complaints to the AG’s office and the BBB.  If you watch the news report below, it will make you cringe.  Imagine receiving that kind of bad publicity.  

The message here is pretty clear – there is a line that we walk.  You have to get customers in the door, but if you cross the line, you will face bad publicity and lawsuits.  The more we examine what sets off the AG’s, the better we can see the line. 

Kansas AG’s Website News  Kansas City Business Journal

Does any of this sound familiar?  I’ve done a mailer or two in my past that sounded a lot like this, so I am not going to get on my soapbox and tell you to stay away from mailers, etc. etc.  But how can you conduct a sale that will generate 50 complaints to the AG’s office?  That has to be some kind of record.  These people must have really thought that they won something.  So what’s the moral to the story?  I guess if you do a mailer that really, really makes it sound like people have won something, you better either give them something or have someone waiting who is pretty smooth.  50 complaints!  I just can’t get over it . . . .

You can read the original article here.

This story shows how important it is to do good background checks when you hire, especially with managers.  It also shows how important it is to have someone watching F&I very closely.  I don’t care how good these guys were – there had to be some smoke somewhere, and nobody caught it.  Watch the interview of the dealership’s operations manager, who claims that the dealership was a victim too.  Don’t be a victim.  With F&I, “trust but verify.”  Nah, on second thought, don’t trust.

You can read the full story about it here.