When we do dealer compliance reviews, the first thing we try to do is determine the philosophy of the dealership. If the place is a Snakepit Motors, compliance becomes a substantially greater challenge than it is if ethics and decency rule the roost like they do at Goodguys. That's because there's no such thing as a Truth in Lending claim.
Excuse me Tom, did you just say there's no such thing as a Truth in Lending claim?
Yes, that's what I said. It's a bit of an exaggeration, of course. Every now and again a lawyer, law student or paralegal will buy a car and review the paperwork looking for TILA claims (you really don't need to worry about the lawyer, though, since they all buy BMWs and Mercedes Benzes, and TILA doesn't apply to a car finance transaction when the amount financed exceeds $25,000). Everyone else who buys a car signs all the paperwork and goes home and throws it into a drawer.
Until there's a problem.
If the customer chats up her new car purchase at work and finds out that she paid $1,000 more for her Belchfire V-8 than her co-worker down the hall, or if she reads in Consumer Reports that credit insurance is a rip-off, or if she starts thinking that perhaps her etch protection isn't worth $995, or has a mechanical or electronic problem with the car, she will complain to the dealer. If there is no satisfactory response and she gets mad enough about whatever the issue is to see a lawyer, the first thing the lawyer requests is those papers that went into the drawer.
Then the lawyer starts dissecting the credit contract and other documents looking for every technical violation he can find, and you end up on the receiving end of a Truth in Lending claim.
Except it's not really a Truth in Lending claim. It's an "I paid too much for my car" claim, or an "I got ripped off in some other way" claim, or a "my car's not working" claim, or, maybe just an "I'm fighting mad and I'm not going to take it any more" claim. Whatever it is, the Truth in Lending claim is just the stalking horse for the real problem.
Have I digressed? Not really.
At Goodguys, the customer likely received fair treatment to start with, and problems like these are less likely to surface. In the rare case that arises that involves a customer treated unfairly, the Goodguys management fixes the problem and the customer goes away happy.
At Snakepit, all the people involved in the initial transaction with the customer have moved on to other dealerships, and those currently in charge will not give the customer the time of day. With no satisfaction of her problem, the customer caroms off the dealership into her lawyer's office.
Now, both Goodguys and Snakepit need a legal compliance program, constant legal training and ethics workshops. But that's all Snakepit has. The difference between the two shops is that at the end of the day, even the best measures are not nearly as effective as the best compliance program there is - treating customers right. Goodguys has both a compliance program and a well-deserved reputation for treating its customers right. Guess which dealership spends more time fighting off lawsuits?
Vol 2, Issue 4