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Monday, April 27, 2009

A Conversation with Bob Woodward about Integrity in the Media

Seven other Toyota dealers and I spent several hours with the renowned Washington Post reporter, Bob Woodward, on Sunday, April 18th. We met at the Newseum in Washington D.C. and then had lunch together at the Capital Grille next door. This once in a lifetime experience was my reward for being one the top Toyota dealers in the USA, measured by both sales and customer satisfaction. In addition to this experience, we spent 4 ½ days in Washington D.C. seeing the sights, luxuriating at the Four Season’s Hotel, and eating at other great restaurants.

Just in case you’re too young to remember Watergate, Bob Woodward and another young reporter at the Washington Post, Carl Bernstein, were the reporters that broke the most important political story of the 20th century which led to the resignation of President Richard Nixon. Bob Woodward has written several books, won the Pulitzer prize, and is generally regarded as the #1 investigative reporter and political author in the world.

Now what on Earth can my conversations with Bob Woodward have to do with car dealerships? I’m glad you asked! As you know, I have been on a crusade for many years to make the dealer fee illegal in Florida. In addition to the dealer fee issue, I write this column, a blog [www.EarlStewartOnCars.com], and host a weekly radio show [Seaview AM 960] campaigning for truth, ethics, and legality in advertising and selling cars. The main reason my message is so slow to reach the public is the refusal or reluctance of the great majority of the media to report the story.

Why won’t many newspapers and radio and TV stations report rampant unfair and deceptive trade practices by many car dealers in Florida? It’s the economy, stupid! Car dealers are responsible for about 20% of total retail sales. As a group, they are often the largest single buyer of advertising in the media. When the media runs a negative news or editorial piece about car dealers, they risk losing that advertising revenue. Newspapers are going out of business daily. Many of our largest newspapers, the NY Times for example, are teetering on bankruptcy and local newspapers are even more severely affected.

During my lunch with Bob Woodward, he asked each of us what we considered the single most important threat to the United States and the world. My answer was “radicals inciting terrorism and the threat of a new world order”. Another Toyota dealer was afraid of “hyperinflation brought on by this Administration’s out of control spending”. After hearing all of our greatest fears, Bob Woodward told us his greatest fear affecting the USA and the world. He fears that the media is failing to fulfill its vital role to report all of the news fearlessly, completely, honestly, and ethically. We Americans take a lot of things for granted and I’m afraid that a free, open, and honest media keeping our government and corporations honest is one of them. Most of the world doesn’t have a free press and it’s no coincidence that those parts of the world without it also don’t have freedom.

Newspapers like the Hometown News and radio stations like Seaview AM 960 should be admired and respected for having the journalistic ethics and courage to allow me to express my opinions about unfair and deceptive trade practices in the retail car business. My local newspaper, the Palm Beach Post, is not so inclined. For fear of losing the advertising business of local car dealers, they refuse to run any news or op ed article with my name in it. This is not just my “opinion”. PB Post reporters have said “off the record” that they cannot get permission from their editors to do stories about my company or me. I know one former PB Post reporter who quit his job for this very reason. When I finally realized that the PB Post had put a “black out” on any news about me or my company, I met personally with the former publisher, Doug Franklin, and he confirmed that he could not risk losing car dealer advertisers by reporting my views or even running positive news articles about me. I do have to give him credit for being candid about this. He equates the financial survival of the PB Post with maintaining sufficient advertising revenue. Survival is our strongest instinct. It’s a very rare person or company that will put ethics ahead of survival. Would you?
So there you have it. What do you think is the greatest threat to the USA and the rest of the world? I’m inclined to agree with Bob Woodward. Who is going to keep our politicians, Wall Street, corporations [including car dealers] honest and ethical if they know that nobody will ever learn about their shenanigans in the media?

Monday, April 13, 2009

*Ed Morse Sues Earl Stewart for Defamation!

Those of you who read either my blog [www.EarlStewart.com], my column in Hometown News, or listen to my radio show [Stream it Saturdays, 9-10 am at www.SeaviewAM960.com] know that I’m rarely at a loss for words! But when I got the letter from Ed Morse’s lawyers a few days ago, telling me that Ed Morse is suing me personally for defamation, I was temporarily speechless. However, words and phrases soon begin to float through my mind… like” unmitigated gall”, “chutzpah”, “You can’t make this stuff up”, “stranger than fiction” and “Fools Rush in”.

As I write this column I haven’t been served with the lawsuit but the letter from Ed’s lawyer said that the lawsuit will be based on two of my articles that appear in this blog. One is “Ed you went to far this time” and the second is “What my lawsuit against Ed Morse Honda means to you”. If you haven’t already read these, please do. It will give you a better understanding and appreciation of this article.

For those new readers, let me briefly recap the events that brought us to this point. Around mid 2008, Ed Morse Honda ran a radio commercial accusing me of deceiving my customers because I “concealed a dealer fee” in the price of my car. Now, if you don’t already know, I do not charge a dealer fee. In fact, I’m one of the very few dealers in Florida that doesn’t. Ed Morse Honda does charge a dealer fee and the amount is $699. A dealer fee is just profit to the dealer that is not included in the price quoted to their customer. Ed Morse Honda’s radio commercial raised a lot of concern among my customers, prospective customers, not to mention my friends and family. This is not to say that those who know me, feared that I was doing anything wrong, but when you’re publically accused on the radio of deceiving your customers it’s a matter of concern.

There are few things more important in life to me than my reputation. My business and I, personally, are known for our reputation of integrity and we’re both held to a higher standard in our community than other car dealers and dealerships because of this. I had no choice but to defend this attack by Ed Morse’s radio commercial and my defense was a lawsuit against Ed Morse Honda for slander.

Now, let’s get back to this most recent development of Ed Morse suing me for defamation. The reason that I was at a temporary at a loss for words when I received the notice, is because I could not believe it. At first, I thought it might be a joke! After I realized that it wasn’t a joke, I was still speechless because I had no understanding of why Ed Morse would do this. Gradually I began to formulate some theories on motives for this seemingly irrational act.

Theory number one is that Ed Morse doesn’t really believe that I’m serious about my lawsuit against him for slander and that my having to spend some more money to also defend against his lawsuit will “make me go away”.

Ed, read my lips: I’m not going away!

It isn’t about money; it’s about my reputation. I’ve stated publically that 100% of the proceeds that I receive from my lawsuit will be donated to charity. Ed’s flimsy attempt to frighten me off has had the opposite effect. Now, Ed Morse has impugned my reputation again.

Theory number two is that Ed Morse’s law firm is **“running amok”. Most lawyers make their money by billable hours and some lawyers feel that the more animosity they can stir up between their clients, the more money they can make. Ed Morse owns about a dozen car dealerships and, especially in today’s economy, has his hands full. I don’t need to tell you that most car dealerships are in crisis mode these days and owners are very busy doing damage control most of the time. Maybe Ed simply hasn’t looked at our dispute closely enough. Ed, if that’s the case I strongly advise you to learn all of the facts about my lawsuit against you and your new lawsuit against me. You’re obviously a smart businessman. You haven’t grown to be one of the largest dealership groups in the USA by accident. Frankly, I don’t know how you can efficiently manage 12 dealerships all over Florida at the same time. My hat’s off to you! I have my hands full just staying on top of my one dealership in North Palm Beach.

My final theory is that Ed Morse is reacting out of anger, ego, and not logic. Now, Ed, himself, may not be guilty of this, but maybe one of his senior managers is. Too large an ego has gotten lots of powerful men in big trouble. “Pride goeth before the fall”.

Lawyers will tell you that “the truth is an ironclad defense against defamation, libel, or slander.” When these two lawsuits go to trial, a jury of our peers will look at the evidence. It’s likely that most of those jurors will have driven to the courthouse in cars they bought in Florida. It’s also highly likely that all or most of the jurors paid a dealer fee when they bought their car. Some or all of them may not have even realized that the extra amount they had to pay for their car was just additional profit to the dealer. Because of this and the arguments presented by Ed’s and my lawyers, the jury will form an opinion on whether or not the dealer fee is deceptive to car buyers. That belief will dictate whether or not they believe that I am telling the truth or that Ed is telling the truth. “May the “honest” man win.”

*As lawyers would say, “in an abundance of caution” I ran this column by my lawyers and there are some clarifications that they felt were necessary. I refer to Ed Morse, Ed, and “he” in this column, but Ed, personally, isn’t suing me [Although, I am personally being sued]. My lawyer was very nervous about my using the term “running amok”. The word was in use in India during the British Empire, originally to describe an elephant gone mad, separated from its herd, running wild and causing devastation. I want to make it abundantly clear for the record that I in no way intend to compare Ed’s lawyers with “mad elephants”. I believe that journalists are allowed literary leeway for humor, exaggeration and satire. I also do not know that Ed’s lawyers are stirring things up between Ed and me for monetary gain, but not knowing his lawyers, I can’t rule out the possibility.

Monday, April 06, 2009

JOB LOSS, CAR PAYMENT PROTECTION SCAM

Desperate economic times make for desperate sales and advertising tactics and that’s what we are seeing today with the promise that you “don’t have to worry about losing your job” if you buy a new car.

First you heard about this from Hyundai. About three months ago they began advertising that if you buy a new Hyundai and then you lose your job and can’t make the payments…NO PROBLEM! Guess what? It worked! Hyundai sales rose 20% while all other car manufacturers’ sales are plummeting. Seeing this, AutoNation, the largest publicly owned car dealer group in the USA, jumped on the bandwagon [In Florida, AutoNation chose to name most of their dealerships “Maroone”. I guess there’s a certain stigma associated with public companies vs. locally owned]. Not to be outdone, GM and Ford joined the party recently. If Hyundai can fool that many people, maybe we can too!

I contacted the Texas company that was underwriting the payment protection plan for Hyundai. I found out that this was nothing new, the company had been peddling this “get ‘em in the door” scam to car dealers for years. What they have been selling and what they sold Hyundai is like an insurance policy. But, it’s not an insurance policy. It’s kind of like those “credit default swaps” you’ve been reading about so much lately. They should be regulated but they are not. Hyundai, AutoNation, GM, and Chrysler are paying a “premium” for the highly unlikely event that one of their car buyers loses her job. This cost is included in the price of every car they sell, even for those buyers who have no concern about losing their job. Maybe they’re retired! Maybe they paid cash for the car! That’s just one more thing that stinks about this ruse. Every by buyer, whether they need or want payment protection, is subsidizing, by the higher price they pay for the car, those who think they need job loss protection.

There’s a lot more wrong with this deceptive promise of guarding you against job loss. Even though it does not qualify as an insurance product, it is underwritten just like it was. As you hear repeated so often these days…”The devil is in the details”. I went to the General Motors Web site which was advertising their payment protection plan and finally got to the “devil and his details”…SEVEN pages of fine print! It was worse than reading a health or life insurance policy. This column doesn’t have space for me to list and explain all of the exclusions, qualifications, and other loopholes. I can best explain it this way. You have heard the insurance term “pre-existing condition”. That means that if you have a particular illness, your health insurance or life insurance policy does not cover you. Well, if you are in danger of losing your job, your chances of having Hyundai, GM, or Ford take care of your car payments if you do lose it are slim and none.

This advertisement is very similar to the ads you have seen and heard that tell you that you can buy a car even though you have bad or no credit. These ads exploit car buyers’ fears. Often times prospective car buyers have exaggerated negative feelings about their credit status. Even in today’s economy, a few people with low Beacon scores can qualify a large down payment and are willing to pay a very high interest rate. Or, the dealers will sell the person a cheap used car for cash down payment she saved. The problem is that for every person with bad credit that can buy a car, the ads bring in at least 25 more that are disappointed and embarrassed when they can’t qualify. A lot of car dealers won’t even show you a car until they run a credit check on you. They don’t want to “waste their time”. This kind of advertising is like casting a net to catch fish. You catch lots of fish with every cast, but only a small percentage of “keepers”. In my opinion, this kind of advertising is unconscionable.