FOR IMMEDIATE RELEASE CONTACT: Lauren Weiner, 202-470-5870
DATE: October 20, 2009
Auto Dealer Horror Stories Stress the Need to Include Car Dealers in the Consumer Financial Protection Agency
Speakers from VA and CA detail their personal stories and urge Congress to ensure the Consumer Financial Protection Agency includes auto dealer financing practices
Washington, DC – As the House Financial Services Committee continues marking up the Consumer Financial Protection Agency, Americans for Financial Reform is urging Congress not to exempt any special interests, including financing from car dealers, as Rep. John Campbell (R-CA) would like. Americans for Financial Reform and the Consumer Federation of America joined with consumers to detail the deceptive practices auto dealers use to scam buyers by jacking up the cost of their loans and the need for these dealers to be included in the Consumer Financial Protection Agency.
Susan Weinstock, Director, Financial Reform Campaign, Consumer Federation of America: “We are very supportive of the Consumer Financial Protection Agency because its sole mission will be the oversight of financial products and services – things like credit cards, overdrafts, the terrible stories we’ve heard today about car financings. And it’s going to cover unchecked lending abuses that have been a problem for consumers for many years. This is an agency that would write rules that would make sure the market place is fair.”
Rosemary Shahan, President, Consumers for Auto Reliability and Safety: “A majority of car dealers’ profits are derived not from the sales of their cars, but from the finance and insurance departments which are much less transparent…Dealers have engaged in numerous practices to maximize their profits including charging excessive dealer markups. These are akin to the fees that brokers get for raising interest on home loans. It’s not as regulated. It’s not as transparent even as that transaction.
“Two of the consumers who are on the call today are victims of very common, pervasive, deceptive practices that many, many dealers engage in – yo-yo financing and unpaid car liens. With yo-yo financing they offer you an interest rate that seems competitive … and then they switch you to a higher rate. And if you balk at that higher rate, they do things like report your car as stolen…. With the unpaid liens… the dealer promises to pay off the lien and then doesn’t…. We’re really hoping Congress will reject the Campbell amendment.”
Stephanie Feliciano, consumer from Roseville, CA: “When I turned in my ’98 Toyota Camry…I bought from them a ’99 Seven Series Beamer. I still owed $5,000 on ’98 Toyota Camry and they said, no problem, we’ll just add it on to the loan and we promise to pay off your trade in…. And a few months later, I applied for an apartment and the landlord there said I had a repossession on my credit report which was a shock to me because that was the first time I learned that the dealership had not paid off my ’98 Toyota Camry.”
KeyAnn Gladden, consumer from Norfolk, VA: “I had purchased a vehicle from a local reputable dealership…was trading in a ’99 Buick Rendezvous… They gave me the keys. They gave me the 30-day tags. They also had given me a contract for the vehicle. They approved my loan and I left. A month went by and I made my first payment. And I get a call saying I need to come into the dealership and sign another contract because they had made a mistake on my original contract… They said we did not put all the terms on your account that needed to be on the contract so we redid it and it came out higher with a higher interest rate, but it’s not that bad – only $100 difference. I disputed that with them… I said can I look at the old contract to make sure everything’s the same on the new contract except for the interest rate? They said we don’t have your old contract, we already sent that over to headquarters. They kept coming up with all these excuses as to why they couldn’t accommodate me…. I ended up leaving in my new vehicle that I had the first time I left. I had already made a payment for that vehicle. I already had a contract on that vehicle.
“At that point I started getting rude phone calls from them…the manager was calling threatening me if I don’t bring the vehicle back. I refused to bring the vehicle back. I went and got a lawyer…. Two weeks went by, and I was at work. They came up to my job with a tow truck and the police department and wanted to arrest me for grand theft auto…. They showed me the warrant for my arrest.
“My vehicle, I haven’t been able to drive it. I’ve been paying every month. The payment is almost $600 …I have a problem getting jobs because of what was on my background check due to the grand theft auto charge…. It’s ruined my life. “
Americans for Financial Reform is a coalition of nearly 200 national, state and local organizations ranging from financial experts to community groups working to restore fairness and stability to the financial system and rebuild our economy. Consumer Federation of America is a part of Americans for Financial Reform.