Misleading advertising and car dealership activity – ubiquitous as ever

You hear them every day on the radio and TV. Some have excessive advertising and sales gimmicks. “Push, pull or drag your trade-in for at least $4000”, “Best price in the world!” “Best bumper to bumper warranty ever – we cover it all.” “Car Sales Posted Back Today.” Bet you didn’t know that these ads can be very misleading and usually illegal.

According to Leslie Anderson, AAA, deceptive advertising and deceptive marketing from car dealerships have been on the rise in recent years. Car dealerships are resorting to gray market sales tactics and advertising due to a struggling economy. Many of these ads are borderline or even illegal in nature. With all the publicity over the past few years of scams and illegal business activities by companies from every state, you’d think most states would have tightened their laws and cracked down on bad car dealerships. Only one state, New York, has really done anything.

There are already laws on the books making many of these ads and things illegal, but few states will even look at these activities. If you run a push, pull, or drag sale in New York, chances are you’ll be fined. The thinking behind New York’s laws is that if you promise someone a flat fee for their vehicle, it shouldn’t be included in the discount or markup of the newer, replacement vehicle. This is misleading advertising. Yet I hear the same ads all the time, with even higher pledges on the radio and TV in North Carolina and South Carolina. Then there is the issue of express and implied warranties.

Express and implied warranties are governed by federal law. Every car dealer must have a federally approved warranty statement posted in the window. This is to show whether there is a warranty and what is actually covered. This was done because in the past there was too much discrepancy with car salespeople blurring the line of what is really covered and what isn’t. On a recent drive from North Carolina to South Carolina, I saw 11 used car dealerships that didn’t have these in the windows – one time we found them in the glove compartment. When we asked the seller why it wasn’t in the window, he said it wasn’t necessary. In New York, every car dealership you drive by or visit will display it prominently.

Then you have the usual lies – car dealers advertising a sale, cream puffs, etc… They will lie about the origins of cars, just like in a recent Carfax ad. Oh, that was just a minor scratch on the fender (completely repainted after a 50 mph accident) or new upholstery (due to a flood and full submersion). These repossessions, like Repo Joe, are doing a media blitz claiming to have all the repossessed vehicles for a great buy. When in fact they probably don’t even have one repossessed car for sale. Most car dealers get their cars from trade or local auctions.

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Whatever they claim, they probably don’t know the history of the vehicles. You can’t even rely on Carfax 100% as many vehicles are repaired without full salvage disclosure or even any repair history. A Carfax report is only as good as the information that is actually entered into the system. Before you rely on that Carfax or what the dealer says the car’s history is, listen to this — Tennessee attorneys Frank Watson and David McLaughlin argue that Carfax’s ads promise more than they can deliver. “Carfax doesn’t disclose the limitations of their database,” says Watson. “People think they have a little insurance policy on their Carfax report, and it’s just not right,” says McLaughlin. Carfax is an online company that searches databases for a vehicle’s history and claims to be “your best protection against buying a used car with costly, hidden problems.” But, critics say, when it comes to many accidents, online reporting companies fall short. A class action lawsuit against Carfax alleges that the company cannot access police accident records in 23 states.

This article should be a wake-up call for car buyers to be more wary of car dealership scams, lies and untruths. It should also serve as a warning to states from Oregon to Florida that more needs to be done to curb bad car sales tactics. Most car dealerships are not small mom and pop organizations. They are big multimillion or billion dollar companies that will do anything to make a dollar. Even crossing the line or blurring what is legal and what is not. And according to one major dealer in Charlotte, North Carolina, who didn’t want his name or dealership mentioned for obvious reasons – “it’s all about that bottom line and if we get caught, that’s what our lawyers are there for. According to a other car dealer, “it’s a market for buyers, beware: buyers have to be careful and be detectives too.”