Escape from the box

tags

Finance

Notes

Even a completed CARS rule, Jase Patrick believes, would not fully stop dealers from engaging in prohibited behavior. “We’re not ready for it,” he told me. “There’s going to have to be a widespread effort to tell the police that you arrest people when this happens.”

One of the biggest tools in the F&I toolkit is delay.  Usually, a customer comes out of sales with some sense of the monthly payment. “Once you have the person committed to that payment,” Jase said, “it’s up to the finance person to maximize profit… We have people in the box. They’re boxed in, they can’t go anywhere. Don’t let them out of the box until deal is closed.” The extended wait time sealing the deal creates a sunk cost that customers don’t want to repeat by starting over somewhere else. And it wears down their defenses to every new offer.

ONCE THIS SALE IS MADE, CONTRACTS HAVE TO BE DRAWN UP. And here is where Jase uses a word that industry analysts would recoil from: fraud.

Jase estimates that something like this—inconsistent numbers, additional charges—happens 50 percent of the time.

Arnold made a terrible financial decision, and the public largely agreed; she was subjected to a torrent of mocking comments about her financial illiteracy. “But in my inbox,” Arnold said, “people were messaging me that they don’t want everyone to see, but they’re in the same boat.”

dealers typically control local monopolies

dealerships have a habit of disappearing amid legal liability.

An FTC official told the Prospect that the rule really only addresses conduct that’s already illegal, but it gives the agency additional remedies to police the market and highlight the worst practices. “It’s crazy that we have to create new laws to enforce the old laws that are already there,” Jase said.

the dealer “un-booked” the deal and then re-booked it, with new calculations, using an older e-signature from the customer to memorialize it.

AFTER MARIO FLORES’ CASE, JASE FOLLOWED UP with every state and federal agency he could think of. The California DMV said the dealer “committed no crimes the DMV can prosecute.” The state attorney general doesn’t represent individual citizens, and said maybe the information would be helpful in developing “patterns of business activity.” The California Department of Financial Protection and Innovation determined the case was out of their jurisdiction, and suggested referring to national bank regulators. The Consumer Financial Protection Bureau took the complaint to Capital One, the lender; Capital One said they were not “physically present” at the sale, and to contact the dealership. The FTC took a complaint but does not provide individual consumer updates.

“I think we’re going to sue these dealers,” he told me. “I don’t want money. I want to send people to jail… I’m a cowboy from Texas, I’m going to die on my sword.”