Monday, February 03, 2014

Shame on Consumer Reports!

Consumer Reports (CR) is considered to be the journalistic icon of consumers’ rights in America. I have written columns for this blog and Hometown News. I’ve advocated on my radio show for Consumer Reports. I considered them the single most reliable source for consumers selecting the best products and sellers of those products, and I still do. Since 1936 Consumer Reports has set the example for unbiased, scientific evaluations and opinions on virtually every product Americans buy. They report, not only on products and services, but those who sell those products and services. They accept no advertising or any other consideration from companies. In fact, they will not even allow a company to use their name if they have endorsed a product of that company. When Consumer Reports recommends a product, you can be sure that it is their honest belief that that the product is a good one. Everyone is entitled to one honest mistake and I have to believe that this was the case with Consumer Reports.

Consumer Reports offers an auto-buying service to its members and charges $12 to give their members “Consumer Reports bottom line price” to buy any new car. They sublet this to an outside car buying service, TrueCar, which provides this data. In fact, TrueCar provides this service directly to car buyers for no charge at, whereas CR chargers $12 for each car you want to get the “best” price on.  In full disclosure, I’m a member of TrueCar’s national dealer council. I’ve written about TrueCar in Hometown News and my blog, highly recommending them, just as I have Consumer Reports. TrueCar, as a result of my advising and urging, will be moving soon to require all car dealer members of the TrueCar program to more clearly disclose the “true”, bottom line price.

Consumer Reports is inadvertently leading their members who purchase what they believe to be the “bottom line price” a price which is actually much higher than the bottom line. In the example above, the “estimated dealer price” of $22,253 with “estimated savings: $4,782” on a new 2014 Toyota Prius, is actually $23, 252, almost one-thousand dollar higher! The estimated savings are only $3,783, not $4782.

The extra $999 that the dealer adds to the bottom line price is disclosed in the pricing that CR gives their members, but it’s disclosed in the fine print and below the focal point of their documentation which states, “This is your Estimated Dealer Price” and the price is featured in bold print and color. Some might say that as long as the extra dealer profit not included in the “bottom line” price is disclosed in the fine print, CR’s done nothing wrong. First of all, this is not the way Consumer Reports does business. CR is vehement against fine print ads that trick buyers. This issue was actually brought to my attention by a very well educated, intelligent consumer who was tricked by this very CR “bottom line” price. She brought it to the attention of her mother (who happened to be my wife) because she thought my price (I’m a Toyota dealer) was higher than the other two dealers’ prices. If an intelligent woman that is a college graduate, and investment banker can be duped by Consumer Reports’ “bottom line price, what chance has the average consumer?

Florida law requires that that dealer fees aka “Dealer Processing Fees” and many other names be included in the advertised price of the vehicle. I’m not a lawyer, but I think a good argument could be made that this information emailed to a prospective car buyer could be construed to be an advertisement. This particular dealer adds $999 to the Consumer Reports’ “bottom line price”, but he could add as much as he likes. In fact, Florida law has no cap on the amount of fees (by names limited only by the imagination of car dealers) that dealers can add to their quoted prices. The phrase, dealer fee, is used only for convenience; other fee names commonly used are dealer prep, pre delivery inspection, tag agency, electronic filing, administrative, doc., documentary, notary and closing, etc. If a dealer thought he could get away with hit, he could charge a million dollar dealer fee and Florida would deem that legal! Florida requires that the dealer disclose on the invoice the following: “This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles, and preparing documents related to the sale”. The truth be known, added cost to the price of a product is defined as “profit” so the disclosure should simply read this charge represents profit to the dealer, period.

I know that Consumer Reports is not aware of any of this and hopefully they will read this blog or Hometown News column and realize that they are inadvertently aiding and abetting dealers in unfair and deceptive advertising and sales practices. If you are a subscriber/member of Consumer Reports or have used their auto-buying service, please consider calling and or emailing them on this subject. Maybe you should send them a copy of this column.

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