May 20, 2009

Auto Dealership Pay Plan Litigation: Dealer Employees

It is not uncommon for the very employees upon whom the dealership relies to have complaints with upper management or ownership. My experience over the years has demonstrated that the dealership employees were subject to the same type of “trickery” to which the consumers are subject. In my experience, it is still common for the upper level management and/or ownership to implement schemes or plans, intentionally or unintentionally so, that reduce the commissionable gross proceeds for the salesman. The salesman and a large portion of the dealership employees rely upon the basic profit on the sale and financing of automobiles. I have seen cases where the dealerships have violated the pay plans by claiming various alleged “fictitious” costs. It is these costs when added to the initial cost of the automobile which reduces the gross commissionable proceeds for the dealership employees.

As an example, if a dealership acquired a vehicle at auction for $5,000 and it is placed on the books at $9,000, in my opinion, the salesman has been denied the appropriate profit on the increased cost of the vehicle.

Further, hypothetically, if a dealership principal owned companies which supplied the gap or other after market products, what would the appropriate costs be attributable to this product? The “captive” company could price a product wherein there is no profit for the dealership, thus funneling of the profits into the subsidiary which is owned and controlled by the dealership principals and/or management team. In my opinion, the sales staff or the employees have a claim against the ownership for this type of conduct.

The New Jersey Supreme Court has demonstrated in the case of Wilson vs. Hess that it is the obligation for all parties to a contract to perform it fairly and in good faith. It is this failure to perform a contract in good faith which results in the imposition of the possibility of damages. In the Wilson case, the franchisor, Hess, was alleged to have set the prices up in such a manner to drive the franchisees out of business. I guess in a perfect world, a franchisor is free to set whatever price they want to charge to the franchisee. However, New Jersey Courts imply an obligation to act in good faith.

Many complaints from salesmen over the years include the dealership failing to reveal the method and manner in which the pay is calculated, failing to disclose the amount of charge backs, failing to disclose the appropriate cost of the vehicles and various products sold and failing to comply with the written pay plans. The causes of action under New Jersey Law range from breach of contract and fraud to lack of good faith and fair dealings. If you feel you have been treated improperly by a dealership, feel free to contact the law firm of Carton and Rudnick.

April 9, 2009

CAR DEALERSHIP SELLS CAR TO TWO BLIND PEOPLE.

CAR DEALERSHIP SELLS CAR TO TWO BLIND PEOPLE.

This is not a joke. It is true.

The names will withheld until suit is filed BUT today I saw, possibly, the worst case in the many years that I have been doing this type of work.

Both of my clients are legally blind. The primary obligor and the cosigner. They do not even have a driver’s license nor are the permitted to drive. The dealership even got the car registered and insured. The customer was at the dealership with his cane and his glasses. When they told me the story it was hard to believe. They are both legally blind.

To make matters even worse the car is a mess. It looks like it was in a prior accident with a different hood and various parts are melted on the interior of the car. They were told the car had only one prior owner when it had two.

The following are the causes of action (theories of liability) against the dealer and/or the lender.

• Consumer Fraud-deceptive conduct. Cox v. Sears.
• Fraud
• Breach of contract
• Breach of good faith and fair dealings. Wilson v. Hess
• Revocation. Cuesta v. Classic
• Negligence
• Discrimination against disabled persons, the blind. Law against discrimination.
• Declaratory relief that the contract is void ab initio (from the beginning)

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November 9, 2008

New Jersey Division of Consumer Affairs

New Jersey Division of Consumer Affairs

The State has a great site dedicated to Lemon Law in the State of New Jersey.

There is a list of publications at the Division of Consumer Affairs site.

File a complaint

Licensing Board information.

Division of civil rights

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November 3, 2008

Dealership Investigations

Gresham’s AutoLink faces investigation for consumer fraud
According to an internet source an Oregon dealership is being investigated for improper conduct. They have served search warrants after many many consumer complaints. Auto Link

This is what happens when there are too many consumer complaints against one dealer in a short period of time.

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October 5, 2008

Car Repair Scams

Car repair scams. Car repair scams are everywhere.

How do you protect yourself from car repair scams. There is no easy answer because unless you a mechanic you are at the mercy of the mechanic. I would say the following are the most common types or areas where car repair scams proliferate.

Padding The Bill. Do we know what was actually completed?

Transmission Shops. What really is the condition of the car

Other charges. What are the minor charges that you do not recognize.

Cost What is the real cost of the repairs


In order to assist you I found a web site that addresses all of these issues ans would recommend a thorough reading.


What is the law on car repair and car repair scams.

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September 25, 2008

Car Salesman Code Words

Car Salesman Code Words

Car Salesman have code words for many situations and they are not flattering. Most imply that are maximizing the profit or poor negotiating skills of the salesman. They are real.


(from edmunds.com)
Be-backs - A customer who leaves the car lot promising to return later, saying, "I'll be back," or some variation of that statement. "The guy was a be-back. But I think he meant it. I'll see him again."

Boss - The typical way that salespeople address the managers or the GM. "Hey boss! Got a deal for you!"

Bumping - Raising the customer's offer for a car. "If Mr. Customer says he only wants to pay $250 a month, just say, 'Up to -- ?' He'll probably bump himself up to $300 without you doing anything."

Closer - An experienced salesman who is brought in to "close" the customer by making them agree to a deal. "If I worked with a better closer I'd have more units on the board."

Desk - This is the sales manager, not the place he sits. "Ask the desk if these rebates are still in effect."

Demo - This is the test drive. "This guy comes in, demos the car and I think he's ready to buy, right? Then he tells me the car's for his wife and he can't make a decision without her."

F&I - This stands for the Finance and Insurance office where the documents are signed. The F&I salesperson usually will push products such as extended warranties, fabric protection and alarms. "The wait for F&I is two hours. Better stick with your customer so they don't leave."

Full pop lease - This is when a vehicle is leased at 110 percent of the sticker price - the highest amount allowed by most banks. "I got them into a full pop lease. I'll get a nice voucher for that."

GM - The General Manager. The GM is the head honcho at the dealership. He runs the business from day to day. "The guys were standing out on the curb drinking coffee so the GM called them into the tower and read them the riot act."

Green pea - A new salesperson. "The funny thing is, green peas can outsell the veterans. That's because they don't know how hard this job is."

Grinder - A customer who negotiates for hours over a small amount of money. "We were only $500 apart but the guy wouldn't sign. Man, what a grinder."

Lay down - A customer who takes whatever deal the salesperson offers. "I quoted him monthly payments of $575 and he took it! I wish all the customers were lay downs like that."

Mini - The commission on a deal where the car was sold at close to invoice price. "Sure, the deal was only a mini. But I qualified for a weekend bonus and made a grand."

Mooch - A customer who wants to buy a car at invoice. "People are spending too much time on the Internet. It's turning them into a bunch of mooches."

Packing payments - Adding extra profit to the cost of a car. "This place I used to work got busted for packing payments. Next job I get is going to be in a no-haggle store."

The Point - The place on the car lot where the "up" man stands looking for customers. "The GM saw me standing on the point with my hands in my pockets. He went ballistic and sent me home for the day."

Pounder - A deal with $1,000 profit in it. "Doctor comes in and buys the top of the line model, fully loaded - and he pays sticker! That'll be a two pounder for me."

Rip their heads off - This describes taking a customer to the cleaners. "I stole their trade in, I sold them the car at a grand over sticker - I mean, I just ripped their heads off."

Roach - A customer with bad credit. Not to be confused with the "roach coach" (see entry below). "The guy looked good. But we ran his credit and he turned out to be a roach. We're talkin' a 400 credit score here."

Roach coach - The food truck that comes around to the dealership every day. "I should've known better than to eat that chili from the roach coach. My stomach's killin' me."

Spiff - A tip, kickback or payment of any kind, usually cash which is handed between salespeople. "I spiffed the F&I guy $20 bucks and he took my customers first."

Strong - This has a special meaning on the car lot. It means holding firm on your price and being a tough negotiator. "When they ask for your price you have to be strong. Hit 'em with high payments, then scrape them off the ceiling and start negotiating." (See also "weak.")

Tower - The office where the sales managers work. This is usually a raised platform allowing the managers to see over the roofs of the cars so they can watch customers and their salespeople. "Attention: All new car salesmen report to the new car tower!"

Turn over - Also known as "turning," this is the practice of passing a customer from one salesman to another. It is thought that this will prevent customers from leaving the car lot. The theory is that the customer might just have bad chemistry with the first salesman and he might like the next salesman. "I turned this guy to my partner and he wound up buying. I'll get half of the commission on the deal."

Up - A customer that walks on the car lot. The term probably comes from the order in which customers are taken, as in: "I'm up next." Many dealerships also have an up system. "We've got ups all over the lot, and you're in the back drinking coffee?!"

Voucher - Car salespeople receive a voucher to let them know what their commission was for selling a car. They don't know until the deal is finalized exactly how much they will receive. "Check out this voucher. I thought I had a pounder. Instead it's a mini."

Weak - This describes being a weak negotiator or coming down too quickly on price. "The guy was weak so he only lasted a few months. How are you going to make money in this business if you give away cars?"

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September 4, 2008

Odometer Roll Back

Odometer Roll Back

The Star Ledger reported that a man admitted to odometer fraud in Federal Court on a case that has been pending since 2004.

In 2004 the FBI arrested 17 in a ring that was alleged to have been rolling back odometers.

It was alleged that:

Robert FIORELLO was the financier of the following businesses and as the leader of the Criminal Enterprise, directed all activity in this illegal operation;

JPF AUTO SALES, Bloomfield, NJ
SEMI MOTORS, Garfield, NJ
TRIBUTE AUTO SALES, Bloomfield, NJ
MJS AUTO SALES, Bloomfield, NJ
RP AUTO SALES, Keansburg, NJ
BLOOMINGDALE MOTORS, Bloomfield/Bridgeton, NJ

The enterprise was purchasing cars and rolling the odometers back by hand and by using a computer. The cars would be resold for a higher amount due to the lower mileage.

Odometer roll back

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August 27, 2008

Car Salesman and Their Pay Plans

Do you work at a dealership? Do you wonder how the managers calculate your commission? Do you see the recap sheets or any of the computer screens? Have you asked to see any of these things? If you have questions as to the calculation of your commissions all calls are confidential,

I have posted several items on the website on this issue that are worth a read. If you see the dealer packing customers do you think they are packing your pay?

Carton and Rudnick

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April 22, 2008

Top Consumer Complaints in New Jersey

Used Cars

Computer Sales

Debt Collection

Internet Sales / Goods

Telecommunications

Home Improvement Repair - General

Health Spas / Health Clubs

Home Furniture / Furnishings

Car Repair

March 3, 2008

What Is The Cost of a Used Car?

You would think that this was an easy question. But when the answer is in the context of calculating salesman commissions you might be amazed at how the dealer calculates the answer. The answer should be simple which is the cost at which the dealer acquires the car. The dealership has already been reimbursed for overhead and expenses by charging a "pack" on each deal to each salesman. BUT the dealer ads money to the acquisition price of the used cars, sometimes known as ups or ads. What is either the need or the justification for this? Usually the pay plans are based on profit for the sale of each car, as agreed by the salesman and the dealer. These ups are usually not disclosed to any of the salespeople since it is "none of their business"

If you work in either sales or finance at a car dealership you should start asking some questions about the COST of the used cars that you are selling and how the dealer gets these numbers.

Carton and Rudnick litigates these cases against car dealerships, located at 262 HWY 35 Red Bank NJ 07701, 732-842-2070

February 21, 2008

Car Salesman Getting Ripped Off? Part I

Guess what? In the car business dealer take as many liberties with their employees as they do with the customers. There are two basic profit centers: The front end and the back end. The salesmen get paid on the front end only. This is the "cost" of the car as compared to the selling price. Some people think the cost is the invoice of the car or better known as tissue. The higher level employees get paid on the overall profit of the dealership which includes all the items considered after market, warranties etc.

The problem occurs when calculating the cost for calculation of the gross commisionable proceeds for the employees. The dealers add costs to the acquisition price of the car. Some dealers call them "ups". The dealers increase the cost by the amount of the ups to reduce the commissions.

Usually the pay plans are based on the costs of the products. The dealers take liberties with increasing the cost of the vehicles without disclosing this to the staff, because they exclusively control access to this information.

If you are a car salesman and you think that the dealership is improperly calculating your pay or improperly increasing the cost of the vehicles feel free to call Carton and Rudnick for a free consultation.

October 2, 2007

New Jersy Car Salesman: Pay Plan Fraud

Many car salesman are also victim of dealership fraud. They have a pay plan that is in writing. Despite the simplicity of the pay plan (commissions as a percentage of profit) the dealership inflates the cost of vehicles to reduce their pay. They will add on various, questionable costs to the "cost" of the car. Much of this is hidden from the salesman: Pack, used car kitty, lot fees, bruise fees, dent fees.

Dealerships will also claim that a product such as GAP or ETCH cost a certain amount which is false

Car salesman are left with few options because they risk being blackballed and out of the industry. Turnover is very high at most dealerships and this is part of the reason.

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