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Six More Dealers Accused of F&I 'Packing'

June 28, 2002

Four Minnesota dealerships and two in Florida have been added to the F&I malpractice list that started with the April sentencing of four former employees of Gunderson Chevrolet, El Monte, Calif.

In Minneapolis, import dealer Paul Walser reached an out-of-court settlement with the state attorney-general over charges of deceptive practices in service-contract sales. Four of Walser's 12 stores were cited for "packing" vehicle sales with unordered service contracts.

The settlement requires Walser's stores to record or photograph all F&I sales for a four-month period, with copies of the tapes sent to the AG's office in St. Paul, Minn. Consumers also may make copies of their own tapes, and the AG reserves the right to request tapes after the four-month mandatory period.

In the Sunshine State, Sonic Automotive's Clearwater Toyota and Clearwater Mitsubishi dealerships were facing six consumer suits over alleged F&I sales bundled into vehicle purchases prices or excessive prices for service and GAP contracts. The Florida attorney's office in nearby Tampa, Fla., was looking into the matter.

Sonic, based in Charlotte, N.C., said it was cooperating "fully" with the state government's investigators. Clearwater, coincidentally, was the site several years ago of an F&I "packing" case against Lokey Oldsmobile, which also led to an F&I manager's being sentenced to prison.

The ex-Gunderson employees named in the California case for defrauding more than 1,000 consumers by adding hidden costs to auto sales contracts received sentences ranging from six months in jail to probation. Gunderson, the Golden State's largest Chevrolet dealership, is owned by AutoNation, Inc., the No. 1 dealer consolidator based in Fort Lauderdale, Fla. AutoNation paid $2.8 million in penalties and fines as part of the settlement.

The June 20 issue of the Wall Street Journal featured a story on the F&I cases under a two-column headline, "Did You Overpay For Your Car? States Sue Dealers Over Fees." The story ran under a photo of a red '02-model Toyota Celica GTS, around which were shown six F&I products and their prices as quoted by a Florida dealer: GAP, $499; extended warranty, $699; LoJack security system, $699; vehicle car program, $329; theft etch, $395; and environmental protection plan, $499.

"Consumers don't need many of the items; others could be found more cheaply elsewhere," the photo's caption stated.

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