Monday, September 24, 2018

Open Letter to Florida Car Dealers:



I wrote this letter to Florida car dealers almost over decade ago and, so far, I’ve received no replies…at least from car dealers. But I’ve received thousands of replies from car buyers thanking me for taking a stand against the Unfair and Deceptive Trade Practice of dealer fees. I thought that I’d give it another try.




SUBJECT: ELIMINATE THE DEALER FEE

Dear Fellow Florida Car Dealer, 

I started in the retail auto business in 1968, about 50 years ago, and I have seen a lot of changes in the way we dealers sell cars and the expectations of our customers. My remarks in this column are made sincerely and with a positive intent toward you and your customers. I’m not trying to tell you how to run your business; I’m suggesting a change that will reward both you and your customers.

Every car dealer in Florida (except me) adds charges to the price of the cars he sells, variously referred to as a “dealer fee”, “documentary fee”, “dealer prep fee”, electronic filing fee, notary fee, closing fee, tag agency fee, e-filing fee, etc. This extra charge is printed on your buyer’s orders and is programmed into your computers. It is regulated in many states including California. You charge this fee to every customer and it ranges from a few hundred dollars to several thousand. Florida law requires that you disclose in writing on the buyer’s order that this charge represents profit to the dealer. Florida law also requires that you include this fee in all advertised prices. You don’t usually do this, and you get around the law by limiting the number of advertised vehicles (as few as one). You also disclose only in the fine print that there is a dealer fee, but don’t include in the price. You don’t even disclose the amount of the fee. You usually have multiple dealer fees by different names.

The argument that I hear from most car dealers when I raise this issue is that the dealer fee is fully disclosed to the buyer on his buyer’s order. But, most car buyers are totally unaware that they are paying this. Who reads all the voluminous paperwork associated with buying a car? The few who notice it assume it is an “official” fee like state sales tax or license and registration fee. Those few astute buyers who do question the fee are told that your dealership must charge this fee on very car which is not true. These astute buyers are also told that all other car dealers charge similar fees. This is almost true, but, as you know, my dealership does not.

The reason you charge this fee is simply to increase the price of the car and your profit in such a manner that it is not noticed by your customer. This is just plain wrong. Dealers will admit this to me in private conversations and some will admit that they have considered eliminating the fee as I have but are afraid of the drastic effect to their bottom line. By being able to count on an extra $999 in profit that the customer is not aware of or believes is an “official fee”, you can quote a price below cost and end up making a profit. Or, if the price you quote the customer does pay you a nice profit, you can increase that by several hundred dollars.

This “extra, unseen” profit is even better for you because you don’t pay your salesmen a commission on it. That’s being unfair to your employees as well as your customers. When the rare, astute buyer objects to the dealer fee, the right thing to do would be to decrease the quoted price of the car by the amount of the dealer fee. This would have the same net effect of removing it. The salesman won’t permit this because he will lose his commission (typically 25%) on the decrease in his commissionable gross profit.

If you don’t know me, I should tell you that I don’t profess to be some “holier than thou” car dealer who was always perfect. Although, I never did anything illegal, when I look at some of my advertising and sales tactics 20+ years ago and more, I am not always proud. But, I have evolved as my customers have evolved. My customers’ expectations, level of education, and sophistication are much higher today. Your customers are no different. As I began treating my customers, and employees, better I discovered that they began treating me better. Yes, I used to charge a dealer fee ($495), and when I stopped charging it many years ago, it was scary. But I did it because I could no longer, in good conscience, mislead my customers. Just because everybody else was doing the same thing did not make it right.

Now here is the good news. My profit per car did drop by about the amount of the dealer fee when I stopped charging it. But, when my customers realized that I was now giving them a fair shake and quoting the complete out-the-door price with no “surprises” the word spread. My volume began to rise rapidly. Sure, I was making a few hundred dollars less per car, but I was selling a lot more cars! I was, and am, selling a lot of your former customers. My bottom line is far better than it was when I was charging a dealer fee. You can do the same! Currently I’m the largest volume single point car dealer between Orlando and Coconut Creek (near Ft. Lauderdale). That’s not bad for a little dealership in Lake Park, FL (population 9,000).

Why am I writing this letter? I’m not going to tell you that I think of myself as the new Marshall that has come to “clean up Dodge”. In fact, I’m aware that this letter is to some extent self-serving. Lots of people will read this letter to you and learn why they should buy a car from me and not you. And, I’m also aware that most dealers who read this will either get angry and ignore it or not have the courage to follow my lead. But maybe you will be the exception. If you have any interest in following my lead, call me anytime. I don’t have a secretary and I don’t screen any of my phone calls. I would love to chat with you about this. My cell phone number is 561 358-1474.

Sincerely,

Earl Stewart

Monday, September 17, 2018

My Lunch with Bob Woodward


“Most Important Threat to the United States and the World”

I spent several hours with the renowned Washington Post reporter, Bob Woodward, a few years ago. My wife, Nancy, and I and six other Toyota dealers met at the “Newseum” in Washington D.C. and had lunch together at the Capital Grille next door. This once in a lifetime experience was my reward for being one of the top Toyota dealers in the USA, measured by sales and customer satisfaction.

You might be too young to remember the Watergate national scandal. 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. Even if you were too young to remember that, you’ve recently heard of him with his latest book, Fear, Trump in the White House. I’ve downloaded and just begun to read it.

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’ve been on a crusade for many years to make the dealer fee illegal in Florida. In addition to the dealer fee issue, I write a weekly newspaper column, a blog [www.EarlStewartOnCars.com], and host a weekly radio show [JVC radio WSVU; 95.9, 106.9 FM & 960 AM 8-10 AM EST Saturday] 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. In fact, 2 years ago, I was previously on another radio station, Seaview 900 AM. The local car dealers threatened the station owner that they would stop advertising on 900 AM if they didn’t “fire Earl Stewart”. I was fired and off the air for over year until JVC Broadcasting bought Seaview and the new owners, Vic Canales and Matt Goldapper, hired me back. I salute and thank these gentlemen for their courage and journalistic ethics.

Why won’t many TV and radio stations and newspapers (fading from importance in the digital age) report rampant, unfair and deceptive selling and advertising practices by many car dealers in Florida? It’s all about the money. Car dealers are responsible for about 20% of total retail sales. As a group, they’re 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 (Palm Beach Post in my market) 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 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 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, Florida Weekly and radio stations like WSVU 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 at the time, and he privately 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 Palm Beach 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? Ironically, the Palm Beach Post and most newspapers have lost car dealers and most other advertisers to digital and TV. “Selling out” their journalistic ethics didn’t work in the long run.

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, September 10, 2018

Buy a New Car Without Getting Ripped Off Ten Tips from a Recovering Car Dealer


1. Use a trusted third buyer buying service. The top three are , True Car (www.TrueCar.com ), Consumer Reports (https://www.consumerreports.org/cro/car-prices-build-buy-service/index.htm), and Costco (https://CostcoAuto.com ) The one caveat is to be sure to deal directly with the TrueCar, Costco, and Consumer Reports designated individuals in the their “certified dealerships” and NEVER vary from the specific car you selected or price quoted by TrueCar, Costco, or Consumer Reports. NEVER pay any additional fees unless they are GOVERNMENT fees for sales tax and the license plate.

2. Ignore all car dealer and car manufacturer advertisements. Almost without exception, it’s impossible to buy or lease a new car for the advertised price. Either it’s simply untrue or there’s something hidden (usually in the fine print) that makes the car much more expensive than advertised. Do your own research online. TrueCar.com, Edmunds.com, and Kbb.com (Kelly Blue Book) are accurate sources of information for fair selling prices.

3. Always get three “bids” for your trade-in. Car dealers love to buy cars directly from owners for their used car lots. Their vernacular is “over-the-curb”. Shop the value of your trade-in with three car dealers of the same make as your trade-in. Make an appointment with the used car manager and tell him you don’t want to buy another car. Explain that you’re “down-sizing and just want to sell your car. Be sure that he knows that you’re getting two more bids from two other dealers. If you’re near a CarMax, that’s a good place to get a bid.

4. Check with your bank and/or credit union. You’ll get a better interest rate and terms than the dealer will likely give you. The exception is with manufacturer offered interest rates, but you often must forego a cash rebate for this. Your best bet may be to take the manufacturer’s cash rebate with a slightly higher interest rate from your bank or credit union.

5. Always compare out-the-door prices. You’ll NEVER get an out-the-door price from a car dealer unless you demand it and then you still might not get it. An out-the-door price is the amount you can hand the dealer a check for and drive the car “out-the-door” to your home with. Every other price you see advertised or quoted is plus a lot more money. Usually you never see the true out-the-door price until you’re in the “business office” aka F&I and “the box” signing stacks of papers spit out by the computer. Typical hidden additions to the price you think you can buy the car for are dealer fees by many different names like tag agency fee, electronic filing fee, dealer services fee, doc fee, notary and closing fee, administrative fee…and “the beat goes on”. Names for aliases for dealer fees are limited only by the dealer’s imagination. I recently mystery shopped a car dealer who claimed he had no dealer fee, but he had an “electronic filing fee and tag agency” fees…both phony fees that are pure profit to the dealer. But wait, there’s more…DEALER INSTALLED ACCESSORIES. Most car dealers add these to the price you pay. Some examples are nitrogen in the tires, plastic pin stripes, “protection packages” including paint sealant, roadside assistance, etc, window tint, and anything else the dealer can buy cheap and overcharge you for.

6. Consult Consumer’s Report before you choose the new car you will buy. Consumer Reports in the most reliable source of information you can access in choosing your next car. Their annual auto issue is priceless…always have in in your library. You don’t have to buy the safest, most fuel efficient, lowest maintenance and repair car with the highest resale value, but at least you will know which cars they are. Then you can choose the one you want.

7. Deal strictly online with car dealers, anonymously. There’s no good reason to visit a dealership and talk to a car salesman other than to test-drive the car you’ve selected and to pick it up after you’ve bought it. Dealing online you won’t be hounded by phone calls from a hoard of car salesmen (don’t give them your number or give them a phony one). Create a new, free address from Google or Microsoft. All dealers have “Internet departments” now. Those sales people are authorized to quote lower prices than the regular “floor salesmen”. Dealer will always give you a lower written price online than they will quote you face-to-face because they know, if it’s too high, they may never hear from you again.

8. Never drive the new car home until you know your credit has been approved. You will be cajoled to drive the car home as soon as you sign the papers. The salesman has two reasons. (1) You will “fall in love with the car”, brag to all you neighbor about the good deal you got, and your family will fall in love with it too. Even in you find some “surprises” in the reams of paperwork you brought home, you’re unlikely to “return the puppy to the pet store”. That’s why they call this practice “puppy-dogging”. (2) Often dealers send credit applications to multiple banks for approval (called shot-gunning). If you have marginal credit, you’re likely to get an approval with “exceptions”. These usually entail higher interest, more down payment, and shorter terms. Customers are far more inclined to agree to this after they’ve taken their puppy home and shown it to all their friends and neighbors.

9. Have a friend accompany you in the Finance Office. Dealer have a large menu of “products” they will try to sell you after you’ve bought the car. The best rule of thumb is to buy none of these until you you’ve had time to study and understand their value. Some examples are extended warranties, maintenance plans, GAP insurance, road hazard insurance, lost key insurance, paintless dent repair, emergency road service, etc. Sometimes one or more of these products is added to your payment without your knowledge or you may be told that “the lender requires that you buy an extended warranty”. This is never true. Having a witness with you is some protection against this.

10. You do not have to bring your car back to the dealer you bought from for service. Buy the car from the dealer that gives you the best price and bring your car for service to the dealer that gives you the best service. You can even bring your car to an independent service company for maintenance or repairs if they aren’t warranty items. Be sure to keep a good record of all repairs and maintenance and use the manufacturer’s owner’s manual a your guide for what maintenance must be done.

*Copies of Confessions of a Recovering Car Dealer are available online at https://www.amazon.com/Confessions-Recovering-Dealer-Earl-Stewart/dp/0985729511. 100% of the proceeds are donated to Big Dog Ranch Rescue, www.BDRR.org.

Friday, August 31, 2018

Holdback or Holdup?

If A Car Dealer Show You His “Invoice” …He’s Lying


Back in 1968 when I first went into the retail car business with my father, I can remember asking him, “What is holdback?” I was learning the business and had been studying the invoices on new Pontiacs that General Motors sent us when they shipped a new car that we had ordered. We had to pay the invoice immediately when it was issued, sometimes even before the car arrived at our dealership. In most cases, it was our bank or GMAC who paid GM and we borrowed the money from them to pay for the car. 

My father’s answer to my question about holdback was that it was an increase in the amount of the invoice that we paid General Motors which was not really part of the price of the car. It was just an extra amount added to the real price of the car and included in the invoice. At that time, it was 2% of the MSRP (manufacturer’s suggested retail), so if a new Pontiac Bonneville had an MSRP of $10,000 and a true cost of $9,000, the factory invoice would be $9,200. I asked my father, “When do we get the $200 back?” He said, “At the end of the year”. I asked him if they paid us interest on our money and I can remember him laughing loudly and saying no.

Of course my next question was why they do that. He told me that the reason they gave him was to “help dealers sell their cars for more money” so that they didn’t go broke. He said that because they didn’t get their holdback money for such a long period of time, they began to think of their invoice as being the actual cost of the car. General Motors felt that many dealers were such poor businessmen that they might sell their cars so cheaply that they would go out of business. Now, because GM was kind enough to hold back hundreds of thousands of dollars of the dealers’ money (and pay them no interest on it) but return the money to them once a year, they could help the dealers make a bigger profit and maintain adequate working capital.

At that time, I thought this was the biggest bunch of boloney I had ever heard and I was sure that this was a scheme by the manufacturers to keep a free float of millions of dollars of their dealers’ money under the guise of helping the dealers. I asked my father why the dealers didn’t strongly object to this and he said that most dealers actually “liked” the idea of holdback. When I heard that, I thought that maybe GM and the manufacturers were right about the dealers not being smart enough to sell their cars for a reasonable profit.

It took me a few more years in the business before I understood what was really going on with holdback. It was a “no brainer” as to why the manufacturers liked it, but at last I understood its attraction to us dealers. Because we had to pay an extra amount over the true price of the car and not see that money for up to a year, we began to think of the invoice as the true price, even though it was inflated by hundreds of dollars. Because all manufacturers added holdback to all dealers’ invoices, the net effect was to raise the price of all cars to all buyers by the amount of this holdback. I know this is a dirty word, but it’s price fixing on the grandest scale. This might have been something that Henry Ford, Alfred Sloan, and Walter Chrysler concocted while playing golf at Bloomfield Hills Country Club outside of Detroit.

Another neat thing about holdback for us dealers is being able to tell our customers that we are only charging them “X dollars” over invoice; or we can tell them that we will sell them this car at invoice with no profit to us at all! (There’s a sucker born every minute) Dealers often have “invoice sales” with copies of the invoice pasted on the car windows. Who doesn’t believe that an invoice is the cost of the car? The truth is in the semantic skullduggery …” Mr. Customer, I solemnly swear to you that this is the exact price that I paid the factory for this car. In fact, here’s a copy of the invoice.” That’s what the dealer “paid” the factory all right, but it’s not what he paid the factory after he got his holdback check in the mail…or, let’s call a spade a spade, his KICK-BACK.

You might be thinking, so we’re talking about $200 more or less on a $10,000 car. Who cares? Don’t forget, that was almost 50 years ago. Holdbacks have expanded considerably and now instead of several hundred dollars we’re talking several thousand. Also, dealers no longer must wait a year to get their hold back money back. Now they get it back monthly. Manufacturers even changed the names of these monies they hold back. These are innocuous names so that, if you see them on the invoice, you will have no suspicion…names like floorplan assistance, advertising, PDI, Administrative or DAP. Of course, there are also cash rebates to dealers that don’t even show on the invoice. I estimate the average car invoice today includes $3,000 to $4,000 in hidden holdbacks to the dealer. Holdbacks are also applied to factory or distributor accessories like “protection packages” [wax, undercoat, window etch, roadside assistance], floor mats, window tint, etc.

The bottom line is that you should never rely on the dealer’s factory invoice to determine the price you are willing to pay for a car. And be especially suspicions when the dealer quotes you a price of “X dollars over invoice” or shows you the invoice. You’ve heard the old joke, “How can you tell when a politician is lying?” Answer: When his lips are moving. “How can you tell when a car dealer is lying?” Answer: When he shows you the invoice.

Monday, August 27, 2018

Common Deceptions by Car Dealers... Check out the Gallup Annual Poll; Honesty & Ethics in Professions






I get a lot of heat from the Florida Auto Dealers Associations (FADA), auto manufacturers, and most car dealers because I say “bad things” about the way they do business. In my own defense, I’m just one voice among most Americans that feel that the majority of car dealers are unethical and dishonest. The Gallup poll on “Honesty and Ethics in Professions” has been conducted every year since 1977 (40+ years) and car dealers have never ranked above 4th from the bottom. Last year they were next to last, just below Congressman and above Lobbyists. All other retailers except car dealers have “gotten smart’ to match the intelligence and high demands of the 21st Century American consumer, but car dealers are still selling cars the way they did in 1950.

The “Big Sale Event”. If you look online or on TV, you’ll find that most car dealers in your area are having a sale of some kind. It may be because of a current holiday, “too large an inventory” of cars, to “reduce their taxes”, “the manager is out of town”, or some other nefarious lure. Advertising 101 says that you should give the prospective buyer a “motive to act”. Unfortunately, it doesn’t matter whether the motive is real or not. The fact is that most car dealers do not sell their cars for less during “sales events” than they do at any other time. I point this out so that you don’t rush your buying decision. If you don’t buy a car during the tight time constraints of a phony sales event, you can negotiate just as good a price the next day. The exceptions to this are legitimate rebates offered by the manufacturer. These often expire at the end of the month which is one reason why the “last day of the month” really can be the best time to buy a car”.

“The Price I’m giving you is good only today”. If a salesman or sales manager tells you that, it is probably only a tactic to push you into buying the car. The only exception would be the expiration of a factory incentive. Once again, this is simply a tactic to push you into buying before you have a chance to do your comparative price shopping.

“I can’t give you my best price, but if you bring me another dealer’s price, I guarantee I’ll beat it”. Car dealers are afraid to give you their best price because they fear other dealers will beat if by a few dollars and they’ll lose the business. Guess what! That’s called “the free market place” and that’s the way all other businesses are conducted. The only retailer that won’t give you a final, out-the-door price is the car dealer. They’re still selling cars like they were sold in the middle of the 20th century. Can you imagine walking into Target or Macy’s and asking for the price of dress or a TV set and the sales person tells you can’t have it unless you buy it right now?

“Take the car home tonight and see how you like it”. Driving the car, you’re considering buying, home can be a good thing. It will give you a lot better idea about how the car performs, etc. However, there are two reasons the car salesman offers this. One is that you must leave the vehicle you might be trading in with the car dealer. This means that you cannot shop prices with other dealers. The second reason is the psychological impact of parking that new car in your driveway where your family and neighbors can see it. The slang expression for this is “the puppy dog”. If you were to take home a little puppy from the pet store, you and your children would fall in love with her and could not return her the next day. This same tactic is used when a customer has questionable credit. This is referred to as the “spot delivery” and the dealer will have you sign a form known as a “Rescission Agreement”. You might not even realize that you’ve signed it. It says that you must return the car immediately if the bank rejects your credit application. If you don’t comply, there are huge financial penalties.

I’ll hold the car for you, but you must give me a cash deposit. Deposits in Florida are nonrefundable only if that is stated in writing on the receipt for the deposit. Always get a written receipt and not just handwritten on the salesman’s business card. Read the receipt and be sure that it does not say in the fine print that refunds are nonrefundable. It’s a good idea to give them your credit card for the receipt instead of cash or even a check. You can always protest the charge with your credit card company if the car dealers tries to unfairly keep your deposit.


“Make me an offer and I will take it to my manager for approval”. This is a very common tactic which you have probably already encountered. It’s not unethical. It’s simply part of negotiating. I point this out so that you are fully aware that this is part of the negotiating game. Be aware, that no matter what price you offer, the manager will ask you for more money. Even if you offered a high price that would be a very large profit for the dealer, the manager would ask you for more money. The psychology behind this is that if you suddenly accepted the offer, you may frighten the customer by thinking he had offered too much (which he would have). When you negotiate, you must be well versed on what is a good price for that car. Start out below the best price you think you can buy it for You can obtain fair prices for all cars online with Kelly Blue Book (KBB.com), Consumer Reports, TrueCar.com, and Edmunds.com.

The “really big” discount”. Recently, a friend showed me direct mail advertising piece from a new car dealer with a coupon good for $3,000 discount on any car in his inventory. This is very common for online, direct mail, and TV ads too. Federal law requires new cars to have a price sticker on the window named the Monroney label. A discount from this suggested retail price gives you a fair basis for comparison. Unfortunately, most car dealers today, increase the suggested retail price substantially with the use of an addendum to the Monroney sticker often referred to as a “Market Adjustment Addendum”. This “adjustment” can be several thousands of dollars. Be sure you know what the asking price is for the car when you have been offered a “big discount”.

I’ll sell you the car for $100 over my cost. The salesman will show you the invoice of the car and add $100. The invoice price of a car is NOT THE TRUE COST. The dealer invoice contains thousands of dollars in hidden rebates, holdbacks, advertising kick-backs. The manufacturers are colluding with the dealers in this deception to raise the advertised and actual selling price of cars. Any car dealer would be delighted if he could sell every car at the factory invoice amount…he’d make a fortune.

The best protection from all the above is to find a car dealer that you can trust. Ask your friends about their experiences with dealers and call the Better Business Bureau and the County Office of Consumer Affairs. Unfortunately, this is a very difficult thing to do. I recommend two third-party buying services, www.TrueCar.com and www.CostcoAuto.com. You must pay a fee to become a Costco member, but there’s no charge for TrueCar. You can also buy through Consumer Reports; they use TrueCar as dealer and pricing source. If you buy directly from a dealer, you better off to negotiate the price completely online. Remain anonymous so that you won’t be harangued by car salesmen. Use a different email address and don’t give them your real phone number.

Monday, August 20, 2018

Dealing with the Dealer Fee: Earl Stewart’s User’s Guide



Hopefully by now, all but my newest readers know about the infamous “Dealer Fee”. If you don’t know, it’s a hidden price increase on the car you purchase disguised to look like a federal, state, or local tax or fee. It’s 100% profit to the dealer. “Dealer Fee” is the generic name for this disguised profit, but it goes by many names such as doc fee, dealer prep fee, services fee, administrative fee, electronic filing fee, e-filing fee, tag agency fee, pre-delivery fee, etc. The names are only limited by car dealers’ imaginations. Almost all car dealers in Florida charge a Dealer Fee. The dealer fees range from around $600 to as high as $2,000+!



This is the Florida law that is supposed to regulate the Dealer Fee: “The advertised price must include all fees or charges that the customer must pay excluding state and local taxes.” The law also requires that the Dealer Fee must be disclosed to the buyer as follows: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.”



This law is very weak and virtually never enforced. When enforced, it isn’t enforced by the letter of the law; it is done to “accommodate” the car dealers. The law is “weak” because it requires only that the dealer fee be included in the “advertised” price. The word “advertised” is narrowly interpreted to mean one specific car shown in an online, Facebook, TV, radio, or print ad. But what about getting a price on the phone, online, or from the salesman? You don’t find out about the Dealer Fee until you’re in the business office signing a bunch of papers. The dealers get around advertisements very easily by including a “number” in the fine print. This number is their stock number that designates one specific car. When you respond to the ad, this car is no longer available (sales people are usually not paid a commission for selling the “ad car). The advertisement might say “many more identical cars are available.” It’s true that identical cars are available for sale, but they are not available for sale at the sale price because they are not the advertised stock number car. If you buy one of those “exact same cars” you will pay from $700 to $2,000 more.



The reason I’m told that the law is rarely enforced is that the Florida Attorney General’s office is understaffed and too busy enforcing other Florida laws. I’m also told that Florida car buyers don’t file very many complaints against car dealers for violating the Dealer Fee law. I don’t believe that there can be too many other infractions of the law that take more money annually from consumers than dealer fees take from car buyers. Just one car dealer selling 1,000 cars a year and charging a $1,000 dealer fee is taking a $1 million annually from car buyers. Most car dealers in South Florida sell lot more than 1,000 cars annually and many charge more than $1,000 dealer fee. I believe that the reason more complaints aren’t filed on the dealer fee is because most car buyers don’t know that they are being duped. They either don’t notice the fee or assume it’s an official federal or state fee. Dealer often tell their customers that all dealers charge it and that it’s required by law.



The Attorney General also “accommodates” the dealers by not interpreting the law the way it was intended. For example, the law says that the dealer fee must be included in the advertised price. The Florida Senate has ruled that the law requires that the fee be “included” rather than “specifically delineated.” But the Attorney General allows car dealers to advertise car prices without including their dealer fee in the price if they mention their dealer fee in the fine print. They also allow car dealers to simply state in the fine print that they have a Dealer Fee but not even mention the amount. To me they are simply allowing the car dealers to break the law. The Florida Auto Dealers Association (FADA) is the powerful lobbying arm for Florida car dealers. It’s almost impossible for a Florida Attorney General to be elected without the support of car dealers and the FADA.



Lastly, the required disclosure of the Dealer Fee on the vehicle buyer’s order or invoice is confusing, misleading, and incorrect: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.” It should not say “costs” because any cost that you pass along to the customer in the price of a product is pure profit. A dealer can pass along his utility bills, sales commissions and advertising if he wants to and call it a “dealer fee”. It should not say “inspecting, cleaning, and adjusting vehicles” because all car dealers are reimbursed by the manufacturer for “inspecting, cleaning, and adjusting vehicles”.



So, what should you do when you are confronted by a car dealer with the “Dealer Fee”? Besides “LEAVE”, here are some suggestions that may help you:



(1) Make it clear from the very beginning that all prices you discuss must be “out-the-door” prices. This way you don’t care if the dealer fee added up front because you will shop and compare their bottom line price with at least 3 competing car dealers. Ideally you should require that they include tax and tag in that price. If you don’t they might try to slip in something they call the “electronic filing fee” or “e filing fee” and trick you into believing it’s part of the license tag and registration.



(2) The dealer will often tell you that all car dealers charge Dealer Fees and that they are required by law to add the dealer fee on every car they sell. Simply tell them that you know this is not true and you can cite me and other car dealers like CarMax who do not charge a dealer fee. Print out a copy of this article, show it to them, and tell them that you know that there is no law that says he must charge you a dealer fee.



(3) As long as you and the dealer understand that the out-the-door price is the price you will shop and compare with his competition, you don’t need to be concerned whether there is a dealer fee showing on the vehicle buyer’s order. To be competitive, the dealer can simply reduce the price by the amount of his Dealer Fee and the bottom line is what you are comparing.



(4) Be aware that dealers usually do not pay their sales people a commission on the amount of their dealer fee. In fact, dealers often misinform their sales people just like they do their customers. The salesman who tells you that the all dealers charge Dealer Fees and that the law requires everyone pay a dealer fee may believe it. Sale people who understand that the Dealer Fee is simply profit to the dealer will be resentful of not being paid their 25% commission on it. A $1,000 dealer fee costs the salesman $250 in commission.



(5) When you respond to an advertisement at a specific price for a specific model car, object when the dealer adds the dealer fee. Unfortunately, the law allows him the loophole of claiming that the ad car is a different stock number, but you might be able to shame him into taking off the dealer fee. If you raise a “big enough stink”, the dealer would be smart to take off the dealer fee than claim that technicality, especially if you were to advise the local TV station or newspaper.

(6) www.TrueCar.com is the one third party buying source which requires its certified dealers to give you a final price excluding only GOVERNMENT fees only…sales tax and license plate/registration. This prohibits the dealer from adding dealer fees and dealer installed accessories. Consumer Reports, American Express, USAA, GEICO, and other blue-chip companies use TrueCar.

I hope that these suggestions help you and I hope that you will file a complaint with the Florida Attorney General, Pam Bondi. If enough consumers (who are also voters) let our elected officials know how they feel about the Dealer Fee, it will bring positive results. You can download a complaint form for the Florida Attorney General’s Office at www.FloridaCarDealerComplaints.com.

Monday, August 13, 2018

Hold the Owners or CEOs of Car Dealerships Accountable











Congress passed a law a few years ago that really “shook up” publicly owned companies. It’s called Sarbanes-Oxley, named after the Congressmen who sponsored the bill. Basically, this law says that the CEO and other high echelon management of a public owned company cannot get off the hook from wrong doings because he or she claims they didn't know what their employees were doing. I believe the same rules should apply to all businesses, even if their stock is not publicly held. The boss should always be held accountable for the actions of his employees and this should apply especially for car dealerships.




Most of the employees that customers meet in a car dealership are paid on commission. Those employees get a percentage of the profit that the company makes on the transaction. Car sales people, service sales people (also called service advisors or assistant service managers), parts sales people, and the mechanical technicians who work on your car are mostly all paid on commission. This method of pay tilts the relationship between the customer and employee in somewhat of an adversarial manner. The employee wants the profit to be as high as possible but the customer wants it to be low. In a car dealership that has talented, fully engaged, and ethical management, this potentially adversarial relationship is kept in a fair balance. Without the oversight of upper and middle management and careful hiring practices, some employees will exploit a customer to increase his commission.




What brought the subject of this column to mind was a call I received yesterday from a 78 year old widow from Ft. Pierce. She called to thank me for writing my column and to tell me that she wished she had read some of my columns before she bought her 2005 used Mazda. This was the first car she had bought on her own. Her husband had always taken on this responsibility. She paid the dealership a huge profit on her purchase. She was sold a maintenance package that she believed cost only $25 but it really was $2,500. She was rushed to sign the papers at night because the dealership was closing. In the morning, when she realized the mistake, she drove back to the dealership and asked to back out the sale but was told it was too late. She was told she had signed all the papers and that they had already sold her trade-in even though she had not given them the title. When she asked to speak to the General Manager, three different employees identified themselves as the General Manager. I get a lot of sad calls like this.




The owner of that dealership should know what’s going on. I’m giving him the benefit of the doubt by saying that he doesn’t know because if he does know it’s even worse. The owner should look at the big picture and the long term view of his business. You can take advantage of customers and benefit in the short run, but you eventually “pay the piper” when your bad reputation spreads far enough. Most of the bad things I hear about car dealers from their customers are not illegal things. They are simply unethical and not the way one human being should treat another. Refusing to refund the money of an elderly, widow after she realized that she had been taken advantage of is not illegal, but it sure “stinks”. Jim Press is the top executive for Toyota over all of North America and he is also the only non-Japanese to occupy a place on Toyota’s board of directors. He was quoted in the book, The Toyota Way by Jeffrey Liker, as saying “It’s what you do for a customer when you don’t owe him anything that is the true measure of character. It’s like sticking up for somebody who can’t defend himself”. I really like this quote and I have it engraved on a plaque which I give out each month to the employee who wins the “Above and Beyond Award”. This award goes to our employee who does something for her customer above and beyond what the customer would have expected.



If you have a bad dealing with your car dealership, do your best to contact the owner. This is impossible with publicly held dealerships like AutoNation and United Auto Group, but you should be able to talk to their General Managers. If it’s privately owned dealership, don’t give up until you see the owner.

Monday, August 06, 2018

Follow-up Letter to Florida Law Enforcement



Dear Florida law enforcement officers,

After hearing feedback from the readers of this blog, newspaper columns, and my radio show, I’m amending my original letter to you (shown below).

I agree with my critics that tell me I should not make Florida motorists suffer because of the apathy and abdication of duty by Florida legislators. I asked you, our law enforcement officers that patrol Florida roads, in my original letter below, to ticket those driving cars with dangerous safety recalls. My reasoning behind this request was to get the attention of the legislators that have been ignoring this danger to Florida motorists. I reasoned that the outrage by motorists, most of whom also VOTE, would frighten our legislators into the action they should have taken two years ago…MAKE IT ILLEGAL TO SELL A VEHICLE WITH A DANGEROUS SAFETY RECALL.

However, I see no reason why every Florida motorist shouldn’t be advised by the Florida Department of Highway Safety & Motor Vehicles (FLDHSMV) if their car has an unfixed dangerous safety recall. This can be done simply by computer. The FLDHSMV has the name, address and VIN number of every Florida driver. By running this information through the database of the National Highway Traffic Safety Association (NHTSA), every Florida motorist driving a dangerous car can be notified by certified return receipt mail within a few days. All Florida drivers should then be required to show proof of that the safety recall has been fixed before the state will renew their license and registration.

Earl Stewart 


Since Modified as Shown Above ↑
Open Letter to all Florida Law Enforcement Officers Ticket all vehicles with open safety recalls:


Dear Florida law enforcement officer,

If you’re with the Florida Highway Patrol, County Sheriff’s Department, or local city police, you’re empowered by Florida law to issue citations and warnings to unsafe vehicles on Florida’s roads. You typically exercise this duty by citing drivers of vehicles with faulty tail, brake, and head lights, unsafe tires, or even a noncompliant license plate frame.

My suggestion to you is to prioritize citing drivers of vehicles with dangerous safety recalls, especially Takata airbags. There are more deaths and injuries from defective Takata airbags in Florida than all the other 49 states. This is because of Florida’s above average heat and humidity which causes the airbag inflator to EXLODE, sending shrapnel throughout the inside of the vehicle, killing and maiming passengers. Furthermore, SEVENTY-FIVE PERCENT of the cars on the roads with safety recalls have never been repaired. Most of these dangerous cars are older and are being driven by a 2nd, 3rd, 4th or later owners. The manufacturers of these cars are unable to contact most of these endangered drivers because of old, inaccurate addresses. There’s also the apathy of many drivers to take the time to bring their car in for repair. Lastly, thousands of vehicles on the road, especially those with defective Takata airbags, have NO FIX AVAILABLE. The huge Takata airbag recall demand has exceeded the manufacturers’ capacity to build the airbag inflators. Some vehicle owners are waiting over a year for a replacement airbag.

Your squad cars are equipped with sophisticated computers which can cross-reference the license plate number of any vehicle on the roads and display the VIN, vehicle identification number, aka serial number. You have direct access to the National Highway Traffic Association’s (NHTSA) database (www.SaferCar.gov) This source, with the VIN, tells you if the car you’re driving behind has an unfixed Takata air bag or any other dangerous safety recall. The NHTSA data base will also tell you IF there is a fix available for this recall.

I suggest that you first issue a warning to all drivers of vehicles with unfixed safety recalls, giving them 7 days to have the vehicle repaired; if they fail to comply, issue a suspension of their driver’s license. If the NHTSA database tells you that the safety recall has no fix available, you should require the driver to drive immediately to the nearest dealership of his vehicle’s make and rent a car or receive a free loaner.

Thank you for taking the time to read this letter. I’m going directly to you, our Florida law enforcement officers, because our governor, legislators, and regulators have all let us down. Clearly, it should be illegal to sell a car with a dangerous safety recall, but our governor and lawmakers will not act. At the very least, it should be required that the buyer of a car with a dangerous safety recall be advised prior to sale, this has not been done either. Therefore, thousands of used cars with dangerous safety recalls are being sold to unsuspecting Floridians daily.

I believe you have the authority and the responsibility to take dangerous vehicles off the road and you can exercise this authority under our existing laws without waiting any longer for the politicians and regulators to act. Furthermore, I believe your action will put the pressure on the politicians, regulators, auto manufacturers and car dealers to do the right thing. The legislators and regulators have “sat on their hands” because of the huge lobbying efforts by auto manufacturers, car dealers, and their associations. Once the drivers of Florida, most of whom are also VOTERS, begin to be pulled over by law enforcement and warned or have their license suspended, you will see our politicians and regulators suddenly begin to do the right thing.

Thanks very much for considering my suggestion,



Earl Stewart

Monday, July 16, 2018

Abe Was Right! You Can Fool Some of the People All of the Time



Almost everyone has read Abraham Lincoln’s popular saying, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.” I think Abe meant this to be a positive assertion that government may get away with deceiving us for a while, but in the long run, truth justice and the American way will prevail…and I think he was right.

However, it doesn’t work that way with unethical car dealers and car buyers. It always has been “caveat emptor”, or “buyer beware when it comes to buying or servicing a car. Unfortunately for a buyer to “beware” he must be “aware” …that is to say educated, mature, sophisticated and experienced. This excludes a very large segment of our population including the very young, the very old, the uneducated, those with low I.Q.’s and those not proficient in the English language. This is one reason why our regulators and elected politicians don’t seem to care or act with respect to the rampant unfair and deceptive sales practices of a large number of Florida car dealers? Most elected officials and regulators are lawyers and are highly educated and sophisticated. They don’t have a problem buying or servicing a car. In fact, the car dealer that tries to take advantage of a lawyer, regulator, or politician is asking for trouble.

I’ve been writing this column/blog and broadcasting my radio show, Earl Stewart on Cars, for about eleven years. I sometimes feel that I’m “preaching to the choir” when it comes to advising people how to avoid getting ripped off by a car dealer. You, my readers and listeners, largely fall into the category of the educated and sophisticated, “aware” buyer. Most of you aren’t taken advantage of when you buy or service your car because you won’t allow it.

Unfortunately, there are enough uneducated, naive, and otherwise vulnerable consumers to feed those unethical car dealers who prey on the defenseless among us. All you must do is read, listen to or watch some of the car ads. To the educated, sophisticated buyer, these ads are funny; that is until you remember that so many fall prey to them, and are taken advantage of by the car dealers.

For example, it’s hard for you or me to believe that anybody would respond to an advertisement without reading the fine print. Many dealers today are advertising prices that, when you read the fine print, are understated by many thousands of dollars. When you or I see a dealer stating that the car price is plus “freight”, we are educated enough to understand that the law requires that the freight cost be already included in the price. A shrewd buyer knows that “dealer list” is not the same thing as MSRP and that a large discount from “dealer list” means absolutely nothing. We know that the “lowest price guarantee’ is worthless if the dealer reserves the right to buy the car from the other dealer that offers a lower price.

There are those who argue that all buyers have the responsibility to guard against unethical sellers, to take care of themselves. In fact, that’s the literal translation of the Latin legal term “caveat emptor” …let the buyer beware. That’s sounds good, but what about the elderly widow whose husband recently died and who never had to make the decision on a major purchase in her entire life? What about the young person just out of school with no experience in the real world? How about the immigrant who struggles with English? Should we be concerned about our underprivileged classes who often drop out of school because they must go to work to support themselves or their family? You and I know lots of good people who, for one reason or another, simply can’t cope with a slick car or service salesman.

My bottom line is this; since we can’t rely on our regulators and politicians to protect those who “can be fooled all the time”, maybe we owe it to society to protect these folks. If you know someone who is thinking about buying a car or has a service problem with her car and you feel she may not have the ability to fend for herself with the car dealer, offer your support. If you’re one of the people who needs support, ask someone who can go “toe to toe” with a car dealer to come with you when you are car shopping. By the way, nobody, sophisticated or not, should car shop alone. Two heads are always better than one and it’s always a good idea to have a witness to what was said during a negotiation. And, of course, if you don’t have the time to help a person or you’re that person, you can always call me…I’m always here for you.

Monday, July 09, 2018

Open Letter to all Florida Law Enforcement Officers Ticket all vehicles with open safety recalls:


Dear Florida law enforcement officer,


If you’re with the Florida Highway Patrol, County Sheriff’s Department, or local city police, you’re empowered by Florida law to issue citations and warnings to unsafe vehicles on Florida’s roads. You typically exercise this duty by citing drivers of vehicles with faulty tail, brake, and head lights, unsafe tires, or even a noncompliant license plate frame.

My suggestion to you is to prioritize citing drivers of vehicles with dangerous safety recalls, especially Takata airbags. There are more deaths and injuries from defective Takata airbags in Florida than all the other 49 states. This is because of Florida’s above average heat and humidity which causes the airbag inflator to EXLODE, sending shrapnel throughout the inside of the vehicle, killing and maiming passengers. Furthermore, SEVENTY-FIVE PERCENT of the cars on the roads with safety recalls have never been repaired. Most of these dangerous cars are older and are being driven by a 2nd, 3rd, 4th or later owners. The manufacturers of these cars are unable to contact most of these endangered drivers because of old, inaccurate addresses. There’s also the apathy of many drivers to take the time to bring their car in for repair. Lastly, thousands of vehicles on the road, especially those with defective Takata airbags, have NO FIX AVAILABLE. The huge Takata airbag recall demand has exceeded the manufacturers’ capacity to build the airbag inflators. Some vehicle owners are waiting over a year for a replacement airbag.

Your squad cars are equipped with sophisticated computers which can cross-reference the license plate number of any vehicle on the roads and display the VIN, vehicle identification number, aka serial number. You have direct access to the National Highway Traffic Association’s (NHTSA) database (www.SaferCar.gov) This source, with the VIN, tells you if the car you’re driving behind has an unfixed Takata air bag or any other dangerous safety recall. The NHTSA data base will also tell you IF there is a fix available for this recall.

I suggest that you first issue a warning to all drivers of vehicles with unfixed safety recalls, giving them 7 days to have the vehicle repaired; if they fail to comply, issue a suspension of their driver’s license. If the NHTSA database tells you that the safety recall has no fix available, you should require the driver to drive immediately to the nearest dealership of his vehicle’s make and rent a car or receive a free loaner.

Thank you for taking the time to read this letter. I’m going directly to you, our Florida law enforcement officers, because our governor, legislators, and regulators have all let us down. Clearly, it should be illegal to sell a car with a dangerous safety recall, but our governor and lawmakers will not act. At the very least, it should be required that the buyer of a car with a dangerous safety recall be advised prior to sale, this has not been done either. Therefore, thousands of used cars with dangerous safety recalls are being sold to unsuspecting Floridians daily.

I believe you have the authority and the responsibility to take dangerous vehicles off the road and you can exercise this authority under our existing laws without waiting any longer for the politicians and regulators to act. Furthermore, I believe your action will put the pressure on the politicians, regulators, auto manufacturers and car dealers to do the right thing. The legislators and regulators have “sat on their hands” because of the huge lobbying efforts by auto manufacturers, car dealers, and their associations.Once the drivers of Florida, most of whom are also VOTERS, begin to be pulled over by law enforcement and warned or have their license suspended, you will see our politicians and regulators suddenly begin to do the right thing.



Thanks very much for considering my suggestion,



Earl Stewart

Cell Phone 561 358-1474

Monday, July 02, 2018

Don't Get "Flipped" to a Lease!

One of the most popular weapons in car dealers’ arsenals is the infamous “lease flip”. This is car dealer jargon for switching a customer who originally intended to buy a car to leasing the car.

Of course, the motivation to do this is more profit for the dealer and a bigger commission to the salesman. That’s not to say that leasing a car is always costlier than buying one, but it can be if you’re not careful. And not being careful is exactly what happens when a purchase intender becomes a lessee.

Here’s how it happens. You come into the dealership to buy a car. You may have seen the dealer’s advertisement in the newspaper or TV for a model you love. More than likely, you’re prepared to make a down payment and/or trade in your old vehicle. You have a monthly payment in mind because almost everybody has a budget and we usually translate most purchases into if we can fit them into our monthly budgets. You negotiate the best price you can to buy the car, or maybe the sale price is good enough.

Now the salesman, or more often the F&I manager/business manager, tells you what your monthly payment will be. Let’s say that you have a trade-in worth $15,000 and aren’t going to put any cash down. The F&I [Finance and Insurance] aka business manager, tells you your monthly payment will be $427 per month. But that’s way more than you can afford and you tell him you can’t buy the car because you can’t afford that big a payment. He asks you how much you can afford and you tell him it must be under $350 per month. Now he has you set up perfectly for the “lease flip”.

“Mrs. Smith, I think I have just the right thing for you. What would you say if I told you that you can drive that new car home today for just $349 per month?” You say, with glee, “We have a deal!” Guess what? You’ve just been flipped. If you had bought the car at the advertised price or negotiated a very good price, the dealer probably would have made about $1,000 profit. and the salesman would have made about a $200 commission. Not that you’ve let yourself be flipped to lease, the dealer could be making $15,000 and the salesman could be making a $3,000 commission!

I’m not exaggerating. I get calls weekly from victims of lease flips. Many of the callers are elderly and many of them are widows who never bought a car before, but had relied on their husbands. There’s no law that limits the profit that a dealer can make when he sells or leases a car. $10,000, $15,000, and even $20,000 profits are made and usually on leases. The dealers can do this by using the trade-in as a capital cost reduction on the lease but allowing less for the trade than it is worth. In the example above, your trade-in may be worth $15,000 but you were allowed only $5,000 to reduce the capitalized costs of the lease. Also, the dealer could have raised the price of the car you negotiated or the sale price to MSRP or even 110% of MSRP which is allowable by the leasing companies.

By manipulating the number of months of the lease and the down payment [capitalized cost reduction], a dealer can give you as low a payment as you ask for and still make an exorbitant profit. Most buyers are so focused on monthly payments that they don’t carefully analyze what they are agreeing to and signing. The shorter the number of months of a lease, the greater impact the down payment has on the monthly payment. A $5,000 down payment reduces the monthly payment on a 36-month lease by $139 per month, $208 on a 24 month lease, and $417 on 12 month lease.

Incredibly many victims of the lease flip, never thought about the fact that after the 24, or 36, or 48-month term of the lease, they own nothing after the end of the lease. A car with a good resale value should be worth about half of what you paid for it. Many people who have never leased before think they can bring their lease car back early if they want. Leasing is not renting, and you can bring your car back early only if you make all of the remaining lease payments. If you had bought the car for $30,000 and financed it for 36 months, you would have about $15,000 in equity at the end of 36 months and no monthly payments. You were building equity with every monthly payment in the purchase but you were building zero equity with your 36 lease payments.

As I said before, don’t let this frighten you from ever leasing a car. Leasing can be a good choice and sometimes the best choice. You can find six blog articles I’ve written: “Lease a New Car before You Buy It”, “Car Leasing Booby Traps”, “Be Very Careful When Leasing a Car”, “The Lease Acquisition Fee…the Bank’s Gotcha”, “Buy or Lease Your Car at the Right Time of Year”, and “Should I Buy or Lease My Next Car?”

Monday, June 25, 2018

What to do if You’re Treated Badly by a Car Dealer

Hopefully the sales or service experience with your car dealer went well but, all too often, they don’t. 
(See https://news.gallup.com/poll/1654/honesty-ethics-professions.aspx) Now what? The advice I give you applies to all business transactions, not just car dealerships. 

Your first step should be to communicate your complaint ASAP to the General Manager or, preferably, the owner. Be sure that you are talking to the REAL owner or the general manger. A General Manager is over all employees in the entire company. A general “sales” manager is not a General Manager. If you can’t reach the owner (Many car dealerships are either publicly owned or owned by absentee owners), ask to see the General Manager. Often the owner or General Manager is not aware of everything that goes on with all of their customers and employees. They might have new employee that should not have been hired or received inadequate training. Or, they may simply have a “rotten apple” that should not be working there. The ease and speed with which you can meet and speak to a General Manager or an owner is a pretty good measure of the integrity of the company as whole. If the owner or General Manager cares enough about her customers to allow total access, it is probably a very good place to do business. In fact, it is a good idea to find this out before you do business.

If you cannot reach the owner or General Manager, contact the manufacturer who franchises the dealership. Car dealers have a contract with the manufacturer called a franchise agreement and this contractual agreement requires that they treat their customers with courtesy, efficiency and integrity. Most manufacturers have a customer hotline, 800 number, that allows you to call and register a complaint directly. The owner or General Manager of the dealership will be made aware of your complaint. As you might guess, the manufacturer has quite of bit of clout with their dealer. If a dealer does not live up to his side of the contract, his franchise could be canceled or not renewed.

The third step I recommend, if numbers one and two don’t work, is to contact a consumer agency like The Better Business Bureau or the County Office of Consumer Affairs. These agencies will send your complaint to the dealership and request a written reply. No car dealership or business wants an unanswered complaint in the file of a governmental or private consumer agency.

The 4th step is to call the Florida Department of Motor Vehicles, DMV, and/or the Florida Attorney General’s office. These are extreme steps to be used for serious, even illegal, activities. The DMV has the power to suspend or cancel a dealer’s motor vehicle retail license, putting him out of business. The Attorney General’s Office can file criminal charges and assess large fines, even jail terms. The DMV phone number is (850) 617-2000 and the Attorney General’s phone number is 866-966-7226. You can access complaint forms at this website, www.FloridaCarDealerComplaints.com.

Your last resort is to contact an attorney. I list this last because hiring an attorney just about eliminates the possibility that you can quickly, amicably and inexpensively resolve your differences with the car dealer. Be very careful which attorney you choose. Try to choose one that is primarily interested in helping you and not in generating large fees for himself. Under the Florida Unfair and Deceptive Trade Practices Act, an attorney is entitled to his fees and costs from the defendant in a lawsuit if he wins. These fees can be much larger than the amount of your claim, motivating an unethical attorney to spend more time than is needed and dragging out a case to generate more fees than are necessary. This can be very dangerous for you because the car dealer’s attorney’s fees run roughly parallel to your lawyer’s and you can be held liable for those if you lose the case.

Hopefully you never have to resort to the final step of hiring a lawyer. In trying steps one, two, three and four try to present your complaint as concisely and politely as possible. You have every right to be angry when you are taken advantage of, but try to let your anger subside before you speak to or write to someone about your problem. We all react negatively to someone who is profane, raises his voice, or is sarcastic. Your goal of communicating and resolving your complaint is best reached by communicating clearly, politely and concisely.

Monday, June 18, 2018

Car Dealers Have Blocked Your Right to Sue

Did you know that when you bought your last car that you agreed to waive your constitutional right to sue the car dealer who sold you the car and have your complaint heard in a court of law by a jury of your peers?

You probably did not, because an “arbitration clause” was hidden in the fine print of your contract that you signed. Even worse, you also are prohibited from even taking that car dealer to arbitration unless you write a “demand letter” first!

What is “arbitration” anyway?

The average person does not understand what arbitration is, much less know that they agreed to substitute this process for their right to sue when they bought their last car. Arbitration allows individuals that are employed by an arbitration company to decide who is right in a dispute, you or the car dealer. Professional arbiters can be retired judges or anyone that the arbitration company decides is qualified. Because car dealers use the arbitration company often and because car dealers determine the compensation to these companies, there is a good chance that the arbitrators are inclined to side with “the hand that feeds it”.

You can’t even file for arbitration unless you write a “demand letter” to the dealer which must contain specific information as prescribed by Florida statute 501.98. This is a summary of that law:

“Florida Statutes require that, at least 30 days before bringing any claim against a motor vehicle dealer for an unfair or deceptive trade practice, a consumer must provide the dealer with a written demand letter detailing the name, address, and telephone number of the consumer, the name and address of the dealer; a description of the facts that serve as the basis for the claim; the amount of damages; and copies of any documents in the possession of the consumer which relate to the claim. Such notice must be delivered by the United States Postal Service or by a nationally recognized carrier, return receipt requested, to the address where the subject vehicle was purchased or leased or where the subject transaction occurred, or an address at which the dealer regularly conducts business.” If you would like to read the detail of this law, you can access it online at https://www.flsenate.gov/Laws/Statutes/2013/501.98.

If you hire a lawyer because you believe a car dealer has taken advantage of you, you’re not eligible for reimbursement of any legal fees unless you have sent the demand letter exactly as described above. Therefore most lawyers are reluctant to assist you because they know that the fees they would normally be entitled to are at risk…both because of the arbitration requirement and the demand letter.


What I’ve described is just one more reason why you should be extremely careful when you buy or lease a car. In the back of our minds most of us believe that when we are doing business with a car dealer, or anybody else, if we are taken advantage of we have the right to sue to force the company to make things right. This is not true with 99.9% of car dealers. You should realize this and be even more careful when you purchase a car. Access my blog for articles on every facet of doing business with a car dealer. There are hundreds of articles accessible in the archives of www.EarlStewartOnCars.com. You will learn never to go car shopping alone, get all promises by the salesman in writing, spend at least two weeks researching the purchase of car, and always get at least 3 competitive bids on the car you’re buying, your trade-in, and your financing.

Monday, June 11, 2018

CAR DEALERS’ DIRTY LITTLE SECRET (not so “little” anymore)

Hopefully by now, all but my newest readers know about the infamous “Dealer Fee”. If you don’t know, it’s a hidden price increase on the car you purchase disguised to look like a federal, state, or local tax or fee. It’s 100% profit to the dealer. “Dealer Fee” is the most common name for this disguised profit, but it goes by many names such as doc fee, dealer prep fee, service fee, administrative fee, electronic filing fee, e-filing fee, tag agency fee, pre-delivery fee, etc. The names are only limited by car dealers’ imaginations. Almost all car dealers in Florida charge a Dealer Fee. The dealer fees range from around $700 to as high as $2,000!

This is the Florida law that is supposed to regulate the Dealer Fee: 

“The advertised price must include all fees or charges that the customer must pay excluding state and local taxes.” The law also requires that the Dealer Fee must be disclosed to the buyer as follows: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.”

This law is very weak and almost never enforced. When enforced, it isn’t enforced by the letter of the law; it is done to “accommodate” the car dealers. The law is “weak” because it requires only that the dealer fee be included in the “advertised” price. The word “advertised” is narrowly interpreted to mean a specific car shown in a newspaper, TV, radio, or online ad, but, what about when you get a price on the phone, online, or from the salesman? You don’t find out about the Dealer Fee until you’re in the business office signing a tall stack of papers spit out by the computer. The dealers get around including their dealer fees in advertisements very easily by including a “number” in the fine print. This number is their “stock number” that designates ONE specific car. When you respond to the ad, this car is no longer available (sales people are usually not paid a commission for selling the “ad car). The advertisement might say “many more identical cars are available.” It’s true that identical cars are available for sale, but they are not available for sale at the sale price because they’re not the advertised stock number car. If you buy one of those “exact same cars” you will pay from $700 to $2,000 more.

The reason I’m told that the law is rarely enforced is that the Florida Attorney General’s office is understaffed and too busy enforcing other Florida laws. I’m also told that Florida car buyers don’t file very many complaints against car dealers for violating the Dealer Fee law. I don’t believe that there can be too many other infractions of the law that take more money annually from consumers than dealer fees take from car buyers. Just one car dealer selling 1,000 cars a year and charging a $1,000 dealer fee is taking a $1 million annually from car buyers. Most car dealers in South Florida well more than 1,000 cars annually and many charge more than $1,000 dealer fee. I believe that the reason more complaints aren’t filed on the dealer fee is because most car buyers don’t know that they are being duped. They either don’t notice the fee or assume it’s an official federal or state fee. Dealer often tell their customers that all dealers charge it and that it’s required by law.

The Attorney General also “accommodates” the dealers by not interpreting the law the way it was intended. For example, the law says that the dealer fee must be included in the advertised price. The Florida Senate has ruled that the law requires that the fee be “included” rather than “specifically delineated.” But the Attorney General allows car dealers to advertise car prices without including their dealer fee in the price if they just mention that there is a dealer fee in the fine print; but they don’t state the amount. To me they are simply allowing the car dealers to break the law.

Lastly, the required disclosure of the Dealer Fee on the vehicle buyer’s order or invoice is confusing, misleading, and incorrect: “This charge represents costs and profits to the dealer for items such as inspecting, cleaning, and adjusting vehicles and preparing documents related to the sale.” It should not say “costs” because any cost that you pass along to the customer in the price of a product is pure profit. A dealer can pass along his utility bills, sales commissions and advertising if he wants to and call it a “dealer fee”. It should not say “inspecting, cleaning, and adjusting vehicles” because all car dealers are reimbursed by the manufacturer for “inspecting, cleaning, and adjusting vehicles”.

So, what should you do when you are confronted by a car dealer with the “Dealer Fee”? Besides “LEAVE”, here are some suggestions that may help you:

  • Make it clear from the very beginning that all prices you discuss must be “out-the-door” prices. This way you don’t care if the dealer fee added up front because you will shop and compare their bottom line price with at least 3 competing car dealers. Ideally you should require that they include tax and tag in that price. If you don’t they might try to slip in something they call the “electronic filing fee” or “e filing fee” and trick you into believing that it’s part of the license tag and registration.
  • The dealer will often tell you that all car dealers charge Dealer Fees and that they are required by law to add the dealer fee on every car they sell. Simply tell them that you know this is not true and you can cite me and other car dealers like OffLeaseOnly.com and Earl Stewart Toyota (my dealership) that do not charge a dealer fee. Print out a copy of this article, show it to them, and tell them that you know that there is no law that says he must charge you a dealer fee.
  • If you and the dealer understand that the out-the-door price is the price you will shop and compare with his competition, you don’t need to be concerned whether there is a dealer fee showing on the vehicle buyer’s order. To be competitive, the dealer can simply reduce the price by the amount of his Dealer Fee and the bottom line is what you are comparing.
  • Be aware that dealers usually do not pay their sales people a commission on the amount of their dealer fee. In fact, dealers often misinform their sales people just like they do their customers. The salesman who tells you that the all dealers charge Dealer Fees and that the law requires everyone pay a dealer fee may believe it. Sale people who understand that the Dealer Fee is simply profit to the dealer will be resentful of not being paid their 25% commission on it. A $1,000 dealer fee costs the salesman $250 in commission.
  • When you respond to an advertisement at a specific price for a specific model car, object when the dealer adds the dealer fee. Unfortunately, the law allows him the loophole of claiming that the ad car is a different stock number, but you might be able to shame him into taking off the dealer fee. If you raise a “big enough stink”, the dealer would be smart to take off the dealer fee than claim that technicality, especially if you were to advise the local TV station or newspaper.
  • There are many auto-buying services available. These third-party companies claim to get you a better price than the dealer will charge you. Some of these are quite good and I personally recommend the following: Consumer Reports, American Express, GEICO, Allstate, AAA, Sam’s Club, AARP, and USAA. Those that I just mentioned are all partnered with TrueCar and use www.TrueCar.com for their member pricing. You can also go directly through TrueCar. True Car is unique among third-party auto buying services because once they show you your TrueCar member price online, THEY DO NOT ALLOW CAR DEALERS TO ADD DEALER FEES TO THE MEMBER PRICE. They also don’t allowed DEALER INSTALLED OPTIONS to be added either. TrueCar and their partner companies allow ONLY GOVERNMENT FEES to be added to the member price…sales tax and license/registration. BEFORE USING ANY THIRD PARTY AUTO BUYING SERVICE NOT LISTED ABOVE, VERIFY THAT THEIR MEMBER PRICES ARE THE OUT-THE-DOOR PRICE PLUS GOVERNMENT FEES ONLY.
I hope that these suggestions help you and I hope that you will file a complaint with the Florida Attorney General, Pam Bondi. If enough consumers (who are also voters) let our elected officials know how they feel about the Dealer Fee, it will bring positive results.

Monday, May 21, 2018

Eight Steps to Selecting and Buying the Right New Car for You

1.  Consumer Reports 

Subscribe to Consumer Reports, go to the library and read past issues, or check out Consumer Reports online. There are other objective sources of information on cars, but this is the best. They accept no advertising from anybody and their sole goal is rigorously and objectively testing merchandise that consumers buy. You can very quickly find the best make car for the model and style you want to buy. Consumer Reports rates cars by performance, cost of operation, safety, and frequency of repair.


2. Test Drive the Car You Have Chosen 

This step requires that you visit a car dealership. Remember that this doesn’t have to be the dealership you buy from. You obviously must see, touch, feel, and drive the car that you think you want to buy. A new car is a very personal thing and just because Consumer Reports loved it doesn’t mean that you will. Be sure that you test drive the car at all speeds in all road types that you normally drive. Drive it in the city but also on the expressway.


3. Carefully Choose the Accessories You Want 

There are some accessories that enhance the value of your car and some that don’t or may even lower it. You should accessorize a car comparably to its class. If you are buying a lower priced economy car, you should not load it up with leather seats and an expensive sound system. If you do, you won’t recoup much of what you spent on these accessories in its resale value. On the other hand, if you are buying a luxury car, don’t skimp on items people look for in luxury cars like a navigation system or a moon roof.


4. Carefully Choose your Car’s Color 

This is more important in determining a car’s resale value than accessories. If you want to maximize the trade-in value of this car, choose a popular color. White, silver, black, and beige are the 4 most popular colors. Sports cars and convertibles are exceptions and red is often the most popular color. The difference in trade-in value between the right color and the wrong color can be several thousands of dollars.


5. Arrange Your Financing 

Now that you know exactly what kind of a car you are going to buy, you can check with local banks and credit unions to find the best interest rate. Don’t commit until you have chosen the dealer you will buy from. Manufacturers sometimes offer very low special rates and dealers can sometimes offer a lower rate than your bank or credit union.


6. Shop Your Trade-in 

If you are trading in a car, take it to 3 dealerships for the same make and ask them how much they will pay you for your car. A Chevy dealer will pay more for a used Chevy and a Toyota dealer will pay more for a used Toyota. If you live near a CarMax store, get a price from them too. They have a reputation of paying more money for trade-ins than most dealers. Don’t commit to the highest bid, but give the dealer you buy from a chance to beat that price.


7. Shop for the Best Price on the Internet 

Go to the manufacturer’s Web site. The addresses are all very intuitive. Ford is www.Ford.com, Honda iswww.Honda.com, and Toyota is is wwwToyota.com. You can type in your zip code and get the Web sites of all your local dealers. Depending on how far you are willing to drive to pick up your new car, request price quotes from as many dealers as you like, but be sure you get at least 3 quotes. When you have chosen the lowest price, verify that this price is “out-the-door” with only tax and tag, GOVERNMENT FEES ONLY, added. You can also check with third party sources like www.TrueCar.com. TrueCar is preferred because they prohibit their dealers from adding any dealer fees or dealer installed accessories to the TrueCar price.


8. Offer Your Favorite, or Nearest, Dealer the Right to Meet this Price 

If you have been dealing with one dealership for a long time and have had good experiences with their service department, you should give them a chance to meet your lowest Internet price. Of course, you can take your new car to them for service even if you don’t buy it from them.

You will notice that there were no steps listed above which suggested that you look in your local newspaper’s auto classified section, look at car dealers’ TV or online ads, or believe their direct mail “too good to be true” offers. When you fall for this, the dealer is in control. When you follow my eight steps, you are in total control.

Monday, May 07, 2018


OPEN LETTER TO AUTO MANUFACTURERS:

FROM: EARL STEWART

Dear Auto Manufacturer,

I’ve owned and operated a Toyota dealership in Lake Park (near North Palm Beach), Florida since 1975. If you wonder who I am and why I’m writing you, Google “Earl Stewart” and “dealer fee”, click on www.EarlOnCars.com, and buy a copy of Confessions of a Recovering Car Dealeron Amazon.

I have a solution to the image problem the car buying public has with most of your dealers. As you know, the way your dealers retail the vehicles you manufacture has caused them to be distrusted and disliked by most of their customers. The Gallup Company has polled U.S. vehicle buyers every year since 1977 in a survey entitled Honesty and Ethics in Professions. For all 41 of those years, car salespeople have ranked last, or near last, among all the professions. Click onhttp://news.gallup.com/poll/1654/honesty-ethics-professions.aspx.

I understand why you’ve been unable improve the honesty and ethics in the way your dealers retail your vehicles. Over many years car dealers, the National Auto Dealers Association (NADA) and their state organizations have lobbied “franchise protection” laws in all 50 states into effect that protect car dealers from their manufacturers. These state franchise laws make it difficult or impossible to terminate a franchise agreement or add another franchised dealer near an established dealer, despite “bad behavior” by the established dealer. The franchise laws require you to treat each of your dealers as an “independent businessmen” that can make their own decisions with respect to advertising and sales practices.

I’ve been a car dealer since 1968 and I know that many car dealers would rather sell cars in an honest, ethical, and transparent way; however, they hesitate for fear of losing sales to those among their competitors that employ dishonest advertising and deceptive sales practices. They see that bait and switch advertising and deceptive sales practices “work” (especially on the less educated and vulnerable members of our society). I, too, was one of those dealers I've been criticizing now for many years. However, I changed. I changed for many reasons but the best reason for me and for why other dealers might also change is this: The knowledge and sophistication of the American consumers, especially millennials, has soared since the beginning of the 21st century. Car buyers are much smarter, more demanding, and have access via the Internet, Google, and the social media to the knowledge explosion.

My proposition to you is to employ the Earl Stewart brand and way of retailing cars to the vehicles you manufacture. Check out my dealership, www.EarlStewartToyota.com. I outsell all your dealers between Orlando and Cocoanut Creek (near Ft. Lauderdale) on the East coast of Florida while maintaining extremely high customer satisfaction. I do this by posting and advertising my lowest price on every new and used car. I offer a 100% unconditional money back guarantee on every car sold. Every customer has my personal cell phone number (561 358-1474) and the cell phone numbers of all of my managers. Every department in my dealership has a red hotline phone hardwired to my cellphone which reaches me 7 days a week. I employ a rigid code of behavior for all my employees. You can read the Earl Stewart Code by clicking on www.EarlStewartCode.com. When I sell or service a car my customers return to me at a higher percentage than virtually every Toyota dealer in the Southeast and the USA... you know this as "customer retention."

Mr. Auto Manufacturer, verify my claims, call me, visit my dealership and if I speak the truth, let me do what I do for your brand of vehicle. Putting the Earl Stewart brand on your make will result in an immediate and significant increase in sales, customer satisfaction and your dealer’s image, especially in the South Florida market.

Sincerely,

Earl Stewart

561 358-1474