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Now browsing: Hometown News > Business Columns > Earl Stewart

Earl Stewart
This Week | Archive


Dealer fee deception grows, is ignored by Florida regulators
Rating: 2.9 / 5 (21 votes)  
Posted: 2012 Nov 30 - 08:53

Earl Stewart is the owner and general manager of Earl Stewart Toyota in North Palm Beach. The dealership is located at 1215 N. Federal Highway in Lake Park. Contact him at www.earlstewarttoyota.com, call (561) 358-1474, fax (561) 658-0746 or email earl@estoyota.com. Listen to him on Seaview AM 960, FM 95.9 and FM 106.9, which can be streamed at www.SeaviewRadio.com every Saturday morning between 9 a.m. and 10 a.m.

Last week I sent a mystery shopper into a Kia dealership in West Palm Beach. Her assignment was to respond to TV, radio and Internet advertisements to buy a new Kia Soul for $179 per month or "less than $6 per day."

Every Saturday morning my wife, Nancy, and I host a radio talk show, "Earl Stewart on Cars" and we always feature a secret shopper who visits a south Florida car dealership. I report the results of that experience, positive and negative.

We give our mystery shoppers code names to protect their real identities because most car dealerships listen to my weekly radio show. This shopper's code name is Agent K. Agent K told the sales person who greeted her that she was responding to the advertisement for a new Kia Soul for only $179 per month. The salesman led her over and showed her the advertised car and as they walked over to the car he said, "the advertising for this car is not all true." Interestingly, a comment like this from car salespeople is not unusual. The sales people don't write the advertisements and are not responsible for the sales tactics of the dealership they work for. Many are apologetic and do not like to have to explain unfair and deceptive advertisements to their customers. They are the ones who have to face angry customers when they find out that the advertisements aren't true. Jobs are hard to come by these days and I can almost understand why someone might compromise their ethics to put food on their families' table.

The salesman explained the advertised car was a stick shift. He also explained she would have to make a cash down payment of $4,000 and make monthly payments for the next six years and three months. Furthermore, she would have to have a credit Beacon score of at least 750 to qualify for the 2.79 percent interest rate they used to calculate the low payment.

The salesman asked Agent K if she would like to take a demonstration ride in the new Kia Soul but she responded no because she had already test driven one at another dealer. She didn't tell him the real reason she wouldn't test drive it was because she didn't know how to drive a stick shift. Of course, this is the exact reason that car dealers advertise cars that don't have automatic transmissions because 99 percent of car buyers don't want to buy a stick shift and most have never driven one.

Another thing the car salesman did not tell Agent K was that there was only one car available at the advertised price. This was not clearly disclosed in the advertisements but indicated only in the very fine print by a "stock number." The stock number for this bait and switch car was 130940, which is probably the last six digits of the VIN. The only way I was able to view this number was by looking on the Internet ad, printing it out and then using a magnifying glass to read it.

It is literally impossible to read the fine print on the TV advertisements and impossible to hear the disclosure on the radio advertisements. The fine print on TV appears only for a second or two as a blur on the bottom of the screen and the radio audio disclosure is deliberately obfuscated by speeding up the sound track and lowering the volume.

The reason car dealers use a stock number in the fine print is so they can abide by the Florida law that requires the dealer fee be included in all "advertised" prices.

This anemic law resulted from the powerful lobbying of the Florida Automobile Dealers Association. This means a salesman can quote you a price on new car in person, on the phone or via email without disclosing that there is an extra charge (without limit) that he can legally add after you have agreed to buy the car. A car dealer must only tell the truth about the full price of his cars when he advertises that specific car.

The Kia dealer in West Palm Beach has three dealer fees totaling $971.45. He doesn't name any of them dealer fee. Florida law allows dealers to name this extra, hidden profit anything they choose. This just makes it easier for car dealers to hide this hidden profit from their customers.

The Kia dealer decided to name one of his dealer fees delivery fee and it is $699.95. He probably chose this to make the customer believe this was for inspecting, washing and adjusting the new car. What most customers don't know is these costs are actually paid for by the manufacturer. His second dealer fee he chose to name document and handling fee and in the fine print on his buyer's order says it's "preparation, processing and handling of the documents required in registration, filing and licensing of the vehicle" and this extra profit to him is $218.55.

This West Palm Beach Kia dealer does have expenses for processing and handling documents. He also has expenses for his monthly utility bills, sales commissions and lease payments for his building, not to mention his deceptive advertising.

But businesses are supposed to include all of their expenses in the prices of the products they sell. They are not supposed to tell you the price and then make you pay their expenses on top of that price.

The third dealer fee this Kia dealer chose to name electronic filing/private tag agency fee, which amounts to $64.95. He does pay a company to process his tag work but he doesn't pay them $64.95. It's $10 or $15 and then he marks it up and adds this to his profits.

You'll notice that all of the dealer fee names have something in common. They all end in "fee." This is by design because the word fee has an official sounding sound about it. This is to lead you to believe that all of these fees are federal, state or local taxes or fees.

One way to detect real fees from additional profit to the dealer is by whether or not the dealer charges you sales tax on that amount. He is required by law to pay Florida sales tax on the full, true selling price of the vehicle, which must include all of his profit and expenses, except for tax and tag.

I hope Pam Bondi, Florida's attorney general, reads this article. I wonder how she would feel if a relative or friend of hers were victimized by this dealer or one of the other Florida car dealers, most of whom use the dealer fee and the "phony Monroney" to overcharge their customers. Maybe she would join me in mystery shopping some car dealers to learn how Florida car buyers are being victimized and then do something about it.

I'd love to have Ms. Bondi call my radio show sometime to discuss this. She can stream the show live any Saturday morning between 9 and 10 a.m. by clicking www.SeaviewRadio.com.

I'll gladly accept her call and put it ahead of my other callers so that she doesn't have to wait.




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