Category Archives: Car Buyers: Beware

Attack against Tesla : HUTZPAH

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Automotive News publisher attacks Tesla over safety —
Ignores dealers who oppose having to perform safety recall repairs

“Musk Can Run, but he can’t hide,” writes Automotive News publisher Keith Crain, whose publication caters to auto dealers. Crain echoes the sentiments of auto dealers, who have mounted an aggressive campaign in an attempt to force Tesla to sell vehicles through dealership networks, where they can get a cut of the profits and subject Tesla customers to a wide variety of shady practices that further line the dealers’ pockets.

In his editorial, Crain questions whether Tesla has the ability to perform safety recalls on its cars — which so far have not even been subject to a safety recall.

He writes: “If and when, and it’s bound to be when in my opinion, his car is recalled — if not for the three Model S fires since October 1, it will be something else — he’s going to find it increasingly difficult to take care of all his customers in a timely manner. …I doubt that the National Highway Traffic Safety Administration will allow just anyone to repair a recalled Tesla or let the company ship parts to customers and tell them to install the replacements at their leisure.” (Automotive News: Musk car run, but he can’t hide,” by Keith Crain, Nov. 25, 2013.) Crain implies that Tesla, like other auto manufacturers, should depend on auto dealers to do the safety recall repairs.

What he conveniently fails to write is that auto dealers are aggressively opposing legislation in Washington DC and Sacramento that would require them to get unsafe, recalled rental cars or used cars fixed, before renting or selling them to consumers. A glaring fact that Automotive News has apparently forgotten.

As numerous national and local news organizations have reported, dealers have been caught time and time again selling unsafe, recalled vehicles to unsuspecting used car buyers without bothering to fix them first — even when the repairs are free.

Sample news report: Today Show finds recalled used cars for sale on dealer lots

Unless and until auto dealers show that they actually do place a priority on their customers’ safety, including sales or rentals of recalled cars, they don’t deserve to sell Teslas. They have shown over and over again that they simply can’t be trusted not to sell their customers unsafe cars, knowing full well that the safety recall repairs have not been performed.

Bottom line:  Elon Musk and Tesla are wise to avoid trusting dealers to ensure that recalled cars are safe.

Read more:

Auto dealers oppose rental car safety legislation in Washington, DC

Auto dealers oppose used car safety legislation in Sacramento, CA

Automotive News Editorial: “Musk can run, but he can’t hide”

 

 

 

 

 

Odometer fraud — the “Fountain of Youth” for high-mileage cars

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A lot of people think that odometer fraud is a thing of the past, thanks to digital odometers. Unfortunately, that’s just wishful thinking. In reality — crooks have found ways to hack into vehicle computer systems and re-set odometers. All it takes is a simple gadget that you can buy online — and a lack of scruples.

Making matters worse:  thanks to incredibly stupid rules the National Highway Traffic Safety Administration issued years ago under the Federal Odometer Act, vehicles more than 10 years old are exempt from key provisions of the law. That never did make sense, since all it does is encourage fraud that hits low-income used car buyers the hardest. It makes even less sense now, when RL Polk says that the average age of all light vehicles on the road in the US has hit a record 11.4 years.

One of the worst things about odometer fraud:  an altered odometer can make the warranty void, or make any service contract you buy with the car worthless and void.

According to AOL Autos, a New York man was alerted by friends that his used car miraculously showed less mileage after he sold it on Craigslist:

http://autos.aol.com/article/buying-used-car-tips-odometer-fraud/

How can you avoid getting scammed by an odometer fraudster?

1. Insist on seeing the work orders showing past repairs — and look carefully at the mileage.

2. Call repair shops that worked on the car and are listed on the work orders to confirm the numbers.

3. Have the vehicle inspected by your own independent auto expert BEFORE you agree to buy it. They can hook it up to diagnostic equipment that will access the onboard computer systems — which may reveal telltale records of higher mileage.

Here’s a good place to find a good mechanic:

Car Talk Mechanics Files

 

 

 

 

 

Honda announces new safety recall of popular Odyssey and Acura models

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Honda announced it’s recalling 318,000 Odyssey minivans in the U.S. and 63,400 Acura MDX sport-utility vehicles in several nations because the air bags could deploy unnecessarily, due to electrical interference with a computer chip.

Honda acknowledged it had received complaints from owners of 2003 and 2004 model year Odyssey minivans and 2003 Acura MDX sport-utility vehicles, after the air bags popped open while they were just driving along.

Honda said that owners of the recalled vehicles should take them to Honda dealers, where technicians will install an “electrical noise filter.”

Caution:  If you are shopping for a used car, you cannot rely on the dealer to ensure that the safety recall repairs have been performed.  Auto dealers are actively opposing legislation that would require them to fix unsafe, recalled vehicles prior to renting, selling, or loaning them to unsuspecting consumers.

Read more: Dealers play unsafe, recalled used car roulette

 

 

Car dealerships — fertile ground for ID thieves

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How common is identity theft at auto dealerships?  According to a report in Automotive News, “Dealerships are targets for identity thieves — those working from both the inside and outside.” *  The report quotes Dave Robertson, executive director of the Association of Finance and Insurance Professionals:

“It’s still a major problem, but it’s not growing as fast.”

The report also quotes Maryann McKessy, Chief of the Fraud and Identity Theft Bureau of the Maricopa County Attorney’s Office, regarding auto dealerships:

“I hate to say it, but it’s a pretty common ground where information is breached.”

The FTC has issued “Red Flag” rules to try to curb identity theft at auto dealerships and among other creditors who handle people’s personal financial information. Dealers are being urged to train their employees to be on the lookout for identity thieves, including checking to see if the person in front of them looks like the photo on their driver’s license.

* Automotive News, Dec. 5, 2011

 

 

Car title loans — who pays, who makes a killing?

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High-cost car title loans are illegal in most states. That’s because they’re so risky for borrowers, often ruining lives. Particularly when people lose their cars — usually their only way to get to work — and then their jobs.

In 2004, in response to a two-part series of front-page reports by David Lazarus in the San Francisco Chronicle, exposing the seedy but growing car title lending business, California legislators vowed to put a stop to title loans.  Fast-forward almost a decade, and what’s changed?  Nothing — except the shady, predatory businesses continue to expand and cost more consumers triple-digit interest, and often their vehicles.

How high is the default rate for car title loans? At a hearing before the California Assembly Banking Committee, Oscar Rodriguez, CEO of LoanMart, testified on behalf of the leading trade association for car title lenders operating in California.  When asked, point-blank, he admitted that while some lenders have default rates of 14-15%, others have rates up to 40-50%. This is astronomical, and powerful evidence that the loans are predatory — not designed to aid the borrowers, but to strip them of their only valuable material possession — their car.

California caps the interest rate on some loans below $2500. So title lenders skirt the law by talking consumers who seek smaller loans into getting loans over the $2500 threshold. Consumers naturally assume that must mean that they qualify to borrow more, based on their income or creditworthiness. In reality, their credit has nothing to do with the loan amount. As long as the lender can seize their car, and it’s worth much more than the loan, there’s no risk for the lender.  Of course, the bigger loan increases the risk for the borrower.

As the Attorney General of Florida warns: “Remember that a title loan is not risky for the lender but it may be very risky for you.”  How to protect yourself: title loans

So who benefits from car title lending? Award-winning journalist Gary Rivlin’s portrait of who’s living high off the hog thanks to high-cost loans, including car-title loans:

Portrait of a Subprime Lender

What can you do to avoid the car title lending trap?  If at all possible, save up instead of getting a loan. If that’s not possible, find other, less-risky ways to borrow money.  Some lower-risk options: Join a credit union. Seek loans from family members. Sell your car and buy a less-expensive one. Usually, you’re much better off selling it yourself than having it repossessed by a car title lender.

Read more:

Auto-title loans drawing scrutiny — Sacramento Bee, by Personal Finance Columnist Claudia Buck

‘Car-title loans’ a road to deep debt  — San Francisco Chronicle, by Business Reporter Carolyn Said

How to protect yourself: title loans — What else can you do in a pinch, that’s less risky? Advice from Florida’s Attorney General

 

 

 

Ford recalls 370,000 sedans over possible steering loss

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Ford Motor Co. announced it is recalling about 370,000 Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Cars produced between 2005 through 2011 because corrosion could cause a loss of steering. The safety recall includes about 355,000 vehicles in the U.S. and another 15,000 in Canada.

The recall is focused on vehicles in 22 states and Washington, DC, and includes about 195,000 Crown Victoria police cars.

The National Highway Traffic Safety Administration had been investigating multiple complaints about steering loss in 2005-2008 Crown Victoria cars outfitted for use by police.

Ford said owners in other states, who may not receive notice of the recall in the mail, could take their vehicles to Ford dealers for a check-up, and, if necessary, the cars would be repaired at no cost to the consumers. Federal law requires auto manufacturers to provide auto safety recall repairs at no cost to the owners.

Unfortunately, if the vehicles are owned by new or used car dealers who do not have a Ford franchise, they may not  be repaired before they are rented, sold, or loaned to unsuspecting used car buyers.  Auto dealers are fighting attempts in Washington, DC and Sacramento to help ensure that dealers have the safety recall repairs performed — for FREE — before they foist them off on their customers.

Did a dealer sell you an unsafe, recalled used car? If they did, CARS wants to hear from you — here’s where to contact CARS.

Read more:

NY Times report: Ford announces safety recall

Car dealers oppose having to fix unsafe, recalled used cars

 

 

 

 

 

Don’t become a victim of identify theft when you shop for a car

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Imagine handing over your personal financial information, including your home address, Social Security number, birth date, and amount you earn each month, to a dealership finance manager who just happens to have a history of engaging in identity theft. Creepy, no?

Unfortunately, some dealers fail to do even basic background checks of prospective employees. As a result, you may end up exposed to identity theft. The FTC has issued “Red Flag” rules aimed at curbing ID theft at auto dealerships, which is a step forward, but — they don’t have the staff or resources to police compliance.

Bottom line:  This is yet another reason to ALWAYS get your financing lined up with a reputable lender BEFORE you shop for a car.

Read more:

Yahoo News report: Could you be a victim of identity theft while shopping for a new car?

Orange County, CA District Attorney busts major new car dealership

KC TV 5: Car dealer facing ID theft charges

F & I  News: Tampa dealer convicted of identity theft, other charges

 

 

Sales of service contracts pad auto dealer profits

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High-cost service contracts are major profit centers for auto dealers.  One dealer told Automotive News that in 2005 his gross profit per extended service contract was $436.  By the end of last year, it had skyrocketed to $1,178.  (Automotive News, March 11, 2013)

Consumers anxious to avoid unexpected, costly repairs often buy them without realizing they are usually full of loopholes and exclusions that allow companies to deny coverage. For example, they usually fail to cover prior damage, even if that’s the cause of the problem.

Some auto dealers pressure their finance managers to meet a quota of service contract sales, or be fired. Others have tried to sell service contracts at lower, more competitive prices, but then faced litigation by the companies that offer them.

Some dealers mislead car buyers into thinking that they have to buy a service contract in order to get financing. Legal experts say that such deception is illegal, but can be difficult to prove.

CARS recommends that, instead of getting a service contract, it’s smarter to spend about $000 for a thorough inspection before you buy.  Then if the car has major problems, you can decide if you still want it, or take your business somewhere else.  Also — beware of dealers who try to sell you service contracts that kick in at the same time as the warranty, and expire just when you might need them.

 

Car dealers sue to keep car buyers captive, attack Tesla

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Ever wonder why you can’t just order a new car over the internet, directly from the manufacturer? Then pick it up at the factory, or a local showroom, like people do in Europe? It’s because U.S. auto dealers have used their political muscle to get laws passed in all 50 states that give them a special monopoly. Those state franchise laws insulate them from having to compete with manufacturers for your business.

Car dealers got the laws enacted because they know that, given a choice, most car buyers would never subject themselves to the typical car-buying experience.

Car dealers are now attacking electric car manufacturer Tesla in court and in state legislatures, seeking to bar the company from selling its highly-praised electric vehicles directly to the public. Tesla is wise to be wary of auto dealers. As a group, auto dealers are throwbacks to the era of horse-trading. They have been among the most aggressive opponents of advances in fuel economy standards. They also have a long history of opposing mandates to produce electric vehicles.

Car dealers repeatedly sued the U.S. Environmental Protection Agency, seeking to block higher fuel economy standards. They waged all-out war against improved fuel economy in Congress. The end result, of course, was that when the price of gas rose, the value of their gas-guzzling products tanked, leaving their customers upside down in their overpriced loans. Then we bailed them out, at taxpayer expense, including the $3 billion they got from “Cash for Clunkers.”

Plus auto dealers commonly engage in a laundry list of shady or downright illegal practices that add billions onto the price of financing cars — hard-earned money that could be spent to get a newer, safer, cleaner car.

Think you might like to have the freedom to buy directly from a manufacturer someday?  Now it’s only a pipe dream for car buyers in most states — unless you’re willing to travel to Europe — but someday it may become reality here in the U.S.

Read more: National Public Radio report

 

Dealer ordered to pay off loans on traded-in vehicles

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In response to dozens of complaints from consumers who were stuck struggling to make payments on vehicles they had traded in, plus the cars they bought, Washington State’s Attorney General ordered dealerships owned by Mark Gilbert to pay off the liens on the traded-in vehicles.

Washington state law requires auto dealers to pay off the remaining balance consumers owe on traded-in vehicles within two days after they make a new purchase. Typically, the amount owed on the trade-in — known as “negative equity” — is added onto the price of the newly purchased car.

According to the Attorney General’s office, “The Walla Walla County Superior Court..entered a preliminary injunction, ordering several Northwest auto dealerships owned by Mark Gilbert to comply with Washington dealer and consumer protection laws, requiring prompt payoff of customers’ trade-in vehicles.”

The Attorney General’s legal case involved car dealerships Gilbert owned that sold new Honda, Jeep, Dodge, Chrysler, Nissan, and  Ford vehicles.

How can you protect yourself from this scam? The safest thing to do is to wait to buy your next car until you have paid off the loan on the car you are currently driving. Otherwise, you risk having both cars repossessed if the dealer fails to pay off the loan on the car you trade in.  Plus you sink deeper into debt. And — always insist on seeing the title to the car BEFORE you buy. If the dealer doesn’t have the title, the lender for the prior owner can repossess your newly purchased car — even if you are making all the payments in full and on time to your lender.

Read more:

Washington State Attorney General Press Release

“check engine” light woes

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You’re a smart consumer. So before you buy that used car, you take it for a test drive.  You notice that there are no warning lights on the dashboard. You think everything is fine, and you buy the car.

But — shortly after you drive it home, the “check engine” light comes on. This spells trouble. BIG trouble. This scenario is playing out all over the country. It’s become a frequent complaint among used car buyers. “I just bought it and now the ‘check engine’ light is on.”  Adding to the woes experienced by consumers who are victims of “check engine-itis” — the repairs to get that pesky light to go off can cost $3,000 — $4,000 or more.

Margie Y of Hawthorne, CA contacted CARS and said she bought a used Toyota for her daughter, as a present for her 21st birthday, from a local dealership. Within a day, the “check engine” light came on. Then the alternator blew up, and the car caught on fire. When she had the partly charred Toyota towed to a mechanic, he said it needed a new alternator, catalytic converter, and solenoid — at an estimated cost of over $2400.  Money she didn’t have, since she had paid $6200 cash for the Flaming Toyota, and also traded in a vehicle that was running fine, plus had paid $300 for the tow.

Unfortunately, this story is all too familiar. So — what’s happening?  According to automotive experts, unscrupulous dealers buy “scan tools” over the internet that allow them to simply wipe out the error codes that trigger the “check engine” light. Then they sell the car.  As soon as it’s driven a short distance, the error codes register and — on goes the dashboard warning light.  Some dealers don’t bother to buy the scan tools. They just disconnect the battery, erasing the error codes and getting the “check engine” light to go off just long enough to foist the car off onto an unsuspecting used car buyer.

Not only are the dealers cheating their customers, they’re also falsifying smog test results and polluting the air. They know that chances are good their customers won’t be able to pay for the expensive repairs, and will end up driving the car despite the fact it doesn’t meet emissions standards.  The day of reckoning may come when the hapless consumer tries to register it, and it won’t pass the smog test. But by then, the dealer figures it will be too late for the consumer to take them to court.

What can you do to avoid becoming a victim of “check engine-itis”?  The most effective single thing you can do is to insist on getting your own trusted mechanic to inspect the car before you buy. They should be able to detect the fact the error codes have been wiped clean, and also do a check of the emissions system that will turn up the problems.  Where can you find a good, reliable mechanic?  Car Talk’s Mechanics Files is a terrific resource, where you can find the best mechanics in your area, based on reviews written by their own customers.

Check Car Talk’s Mechanics Files to find a reliable mechanic — before you buy

Tell the seller that you want them to take the car to YOUR mechanic before you’ll agree to buy.  If they balk at that, or try to talk you out of it, well, that’s why God gave you feet — so you can walk away from there. Pronto.  There are plenty of good used cars for sale.You don’t need to get stuck with one that will cause you hassles and headaches.