Single Ply or Double Ply?
Tom Kline ???
Tuck The Octopus | Risk Mitigation Expert & Compliance Consultant | Published Author: Tuck The Octopus | Dealership Owner For 30 Years | Expert Witness | Speaker & Trainer |
Do you prefer single ply or double ply toilet paper?
Unless you live in your RV or boat, is there any debate on this in your head?
I didn’t think so.
Why risk it, right?? Single ply falls apart.? Double ply provides you with protection and don’t you want to be protected? (This is mitigating your risk!)
Of course you do!
Why would you treat your professional career any differently?
Here are three (3) very recent news stories to consider.
Automotive News, on August 1, 2023, reported that Grieco Automotive in New England was fined $557,815 by the Rhode Island Office of the Attorney General as terms of an agreement settling deceptive practices claims. The agreement was filed July 26 in Rhode Island Superior Court. The amount includes $457,815 in direct restitution to customers and $100,000 to the attorney general's office for costs of the investigation and two lawsuits [1]
The dealership automatically charged customers for add-ons not included in advertisements. Between Jan. 1, 2021, and March 18, 2022, more than 6,000 customers said they were charged $249 for a paint and fabric spray and warranty product known as Zurich Shield; the charge wasn't mentioned until they were in the purchase process. Grieco said the product was "preinstalled" and "clearly disclosed on the itemized dealer invoice." A Rhode Island Attorney General Office spokesman said customers were not successful in opting out of the $249 fee during the purchase process.[2]
The July agreement also alleged the three Grieco stores violated the Deceptive Trade Practices Act, charging customers more for vehicles than the price advertised on their website, later adding addendum fees and describing vehicles available at "auction" or "wholesale" prices in February and March 2022.[3]
This agreement is part of (Peter) Neronha's (the Rhode Island Attorney General) work to protect retail automotive consumers from unfair and deceptive trade practices such as junk fees and unwanted add-on products, his office said. It said Neronha is working to stop dealerships from refusing to honor car prices listed on dealership websites and window stickers.[4]
Based on the Automotive News story, I can deduce several things:
1.?????? It is apparent that the customers did not sign a separate product enrollment agreement.
2.?????? The Zurich Shield was not disclosed separately in the Truth in Lending Agreement.
3.?????? The Zurich Shield was not on a menu of any kind, if a menu was used, which is not plainly clear based on the article.
We do know: The law prohibits the dealerships from charging customers for products or services without express informed consent.
That was a state Attorney General.? Here’s news from the CFPB.
On July 26, 2023, the Consumer Financial Protection Bureau (CFPB) released a new Supervisory Highlights report which found unfair, deceptive, and abusive acts or practices across many consumer financial products. For example, auto lenders have originated loan balances above the real value of the car being purchased.[5]
CFPB examiners found that consumers were misled in marketing materials by auto lenders about the quality of car they were eligible for under the terms of an auto loan offer. The pictured cars were often significantly larger, more expensive, and newer than the advertised loan offers were good for.[6]
Examiners also found multiple instances of unfair or abusive acts or practices by servicers, including:
Charging fraudulent interest on inflated loan balances: Servicers charged interest on loans based on fraudulent representations by dealers that the vehicle had options and enhancements that it did not actually have. When servicers identified discrepancies, they did not reduce the amount that consumers owed on the loan agreements and continued to charge interest tied to financing of the nonexistent options.[7]
This deceptive practice is called “power booking” or adding in equipment or higher trim levels which are not actually part of the vehicle.? The CFPB continues to examine these practices and dealers who are participating in these abuses may be discovered and prosecuted for these anti-consumer actions.?
While the CFPB does not regulate franchise dealers, unless they have a buy here pay here operation, the CFPB and the Federal Trade Commission (FTC) coordinate their efforts as indicated by their “Memorandum of Understanding.”[8] The agreement reflects the ongoing coordination between the two agencies under the terms of the Consumer Financial Protection Act, and is designed to coordinate efforts to protect consumers and avoid duplication of federal law enforcement and regulatory efforts.[9]
If you don’t have a compliance program or procedure to prevent these issues, you may be hearing from a federal governmental agency or a state agency. In addition to the Attorneys General, the state has other agencies which may become involved, including Motor Vehicle Dealer Boards, Offices of Consumer Affairs, the state police etc.? (It’s a long list.)
Third, here’s a customer complaint story from the Boston Globe.? Corey Morris’ check engine light came on in his new Chevy in December. It’s still on (in August). Morris faces the real possibility that he won’t be able to drive it at all because his car can’t pass inspection with the check engine light on.[10]
After the light came on in December, Morris took his SUV back to MacMulkin Chevy in Nashua, N.H. But MacMulkin told him it could do nothing until it heard from GM on how to fix the problem. He waited for months, calling the dealership constantly for updates… When he brought his car in for inspection in June it was rejected, because the check engine light was on. They slapped a rejection sticker on his windshield and he was given 60 days to resolve the problem. Now, the 60 days are about up and the light is still on.[11]
When Morris picked up his SUV in December, a MacMulkin service manager handed him a copy of a bulletin issued by GM to all dealerships saying there was currently no fix for the known problem with the check engine light. The bulletin, which was issued five months earlier, said the problem was apparently related to the engine oil pressure sensor. As to cause, it said: “not known at this time.” It was “currently under investigation.”[12]
When the reporter called, he got the same story: We’re waiting for GM. “It’s out of our hands,” one of the managers told me.[13]
At the time of writing this article, the Boston Globe story had 333 comments posted underneath the story online.
Several items here:
1.????? Why would MacMulkin sell the vehicle, knowing that there was no fix to the problem? (They had known about the bulletin which had been issued before Morris bought the vehicle.)
2.?????? Why didn’t MacMulkin trade him out of the vehicle?
3.?????? Why didn’t MacMulkin lend him a vehicle?
4.?????? Why didn’t MacMulkin offer to make his payments while trying to get the issue resolved?
5.?????? Why didn’t MacMulkin offer to get a GM engineer to fly in to look at the vehicle?
6.?????? Why didn’t MacMulkin try anything to satisfy the customer?
What is the damage to their reputation?? How many people will remember this story and not go to MacMulkin for parts or service or sales?? Consider weighing the lost profit here with the cost of getting this situation right with the customer.
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These three (3) situations all occurred within two (2) weeks of one another.
There are so many lessons to consider.? Here’s a few:
1.?????? Your advertising should be “clear and conspicuous.”? It is what the FTC mandates.? Someone should be reviewing your business practices and ensure those practices are aligning with your advertising.
2.?????? Do you have a compliance program to catch used car booking errors?? Has anyone ever checked this issue at your store(s)?
3.?????? Unresolved customer problems cause the biggest public relations issues. Do you have a methodology and procedure to fix them?
White collar compliance issues are clearly serious and carry fines and penalties and consequences.
Without the proper governance, risk, and compliance (GRC) procedures at the store, make no mistake, you are using single ply toilet paper.? And sometimes, that’s just messy.
If you really want to cover your ass-ets, have a robust GRC program, and that double ply will more than cover “your situation.”
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About Tom Kline
Owning and running a dealership can feel like trying to tuck an octopus in bed and the tentacles keep flopping out.? Tom Kline appreciates and understands this as, for thirty (30) years, he was a dealership franchise owner. Kline specializes in solving dealership problems through risk mitigation remedies, compliance, and dispute resolution (i.e. tucking in the tentacles). He is the Lead Consultant & Founder of Better Vantage Point, Tuck The Octopus (a new, early efforts governance, risk, and compliance (GRC) program), and AlwaysDoBetter.com , and has worked with both publicly-held and private dealerships. Kline’s ideas have been featured in both the Wall Street Journal and Automotive News.
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Kline routinely speaks at national conferences, workshops, 20 groups, presents webinars about risk transferences and risk mitigation topics & techniques, and routinely provides expert witness testimony to defend dealerships. Kline also writes for seven (7) publications, has multiple trade group endorsements, and is an often sought-after podcast guest.
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Thanks for seeing things from a Better Vantage Point, where “We Get You Out of Trouble…and Keep You Out of Trouble.sm “
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[1] Automotive News, August 1, 2023 “Three R.I. Grieco stores to pay $557,000 for deceptive sales
AG alleges customers were automatically charged for add-ons” by Gail K. Howe
[2] Automotive News, August 1, 2023 “Three R.I. Grieco stores to pay $557,000 for deceptive sales
AG alleges customers were automatically charged for add-ons” by Gail K. Howe
[3] Automotive News, August 1, 2023 “Three R.I. Grieco stores to pay $557,000 for deceptive sales
AG alleges customers were automatically charged for add-ons” by Gail K. Howe
[4] Automotive News, August 1, 2023 “Three R.I. Grieco stores to pay $557,000 for deceptive sales
AG alleges customers were automatically charged for add-ons” by Gail K. Howe
[5] Press Release. CFPB Exams Find Unfair, Deceptive, and Abusive Practices Across a Wide Array of Consumer Financial Product Lines. July 26, 2023.
[6] Press Release. CFPB Exams Find Unfair, Deceptive, and Abusive Practices Across a Wide Array of Consumer Financial Product Lines. July 26, 2023.
[7] Press Release. CFPB Exams Find Unfair, Deceptive, and Abusive Practices Across a Wide Array of Consumer Financial Product Lines. July 26, 2023.
[8] Press Release, FTC and CFPB Reauthorize Memorandum of Understanding, February 26, 2019.
[9] Press Release, FTC and CFPB Reauthorize Memorandum of Understanding, February 26, 2019.
[10] Boston Globe. “The check engine light came on in his new Chevy in December. It’s still on.” by Sean P. Murphy Globe Staff, August 7, 2023
[11] Boston Globe. “The check engine light came on in his new Chevy in December. It’s still on.” by Sean P. Murphy Globe Staff, August 7, 2023
[12] Boston Globe. “The check engine light came on in his new Chevy in December. It’s still on.” by Sean P. Murphy Globe Staff, August 7, 2023
[13] Boston Globe. “The check engine light came on in his new Chevy in December. It’s still on.” by Sean P. Murphy Globe Staff, August 7, 2023
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1 年Either way, the roll is on backwards.?
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