So what happened to Bill Heard?  I wonder if we will ever find out.  All I know is that the store near me seemed to “rock” and sold a lot of cars for a long time.  The market has been brutal for Chevy dealers, but you would think that Bill Heard would be able to hang on for awhile in a tough market.

If nothing else, this situation illustrates the downside of debt.  When stores are making money, everyone wants to give you money.  Buy other stores – lots of blue sky?   No problem!  Spend a few million to comply with your manufacturer’s architect de jour?  Here’s the money – no problem!  If the economy gets bad, guess who’s no longer your friend.  When you need the money to keep the doors open, they’ll yank it.  It seems like a lot of fundamentally sound businesses are closing because they relied on financing to operate.  Sometimes its absolutely necessary.  But if you paid off your floorplan instead of buying that 5th store, I bet you’re smiling now.

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

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

Last week I attended the American Bar Association’s annual meeting in New York.  Here’s a summary of what I learned:

1. Wage and hour cases will continue to be an issue for dealerships.  Plaintiffs’ attorneys love these cases because violations are easy to prove and they can get attorneys’ fees.  One attorney bragged that a $600 case netted over $20,000 in attorneys’ fees.  Another said that she made sure to probe all of her clients for wage and hour issues, even if they come to her for discrimination claims.  They also said that they target smaller companies without human resources managers.
2.  Immigration laws are basically like playing Russian Roulette.  To the government, immigration cases are a matter of national security, so they will spend whatever it takes to win.  If you are unlucky enough to show up on the government’s immigration radar, then they will spend whatever it takes to bring you down.  But it seems like the enforcement is really spotty.  It seems to me that the government goes after companies that will make good headlines.
3. Electronic discovery continues to be at the top of everyone’s mind.  Dealers need to have a plan to preserve their electronic files in case they are sued.  The electronic discovery rules have been out long enough that the judges don’t have a sense of humor when parties accidentally delete their electronic files – such as e-mail.  This is an area where having a plan in place could make a big difference.
4. The rules regarding electronic marketing are evolving rapidly as the government attempts to balance privacy interests with commercial interests.  

I will cover all of these topics in more detail in later posts.  Also, if you have not visited New York City lately, you really need to put it on your agenda.  What a great place!  The neighborhoods, the restaurants, the theater, etc. – there is just so much to do!  At least plan a long weekend there.  You won’t be sorry.