“We'll be known as the helpful dealer, the friendly dealer, the dealer with a heart, the dealer that places public service ahead of profits. And consequently, we'll make more profits than ever before.” – paraphrase of a remark by Mr. R.H. Macy, president of Macy’s Department Store in the 1947 film“Miracle on 34th Street.”
In this film, the Santa Claus character at Macy’s recommends that parents buy gifts that are in the best interest of the children, whether the store carries them or not. A recent National Automobile Dealers Association publication, “Know Before You Buy,” echoes this sentiment.
Know Before You Buy
The one-page NADA publication offers nine suggestions to consumers to ensure their vehicle purchases are affordable and support their transportation needs. Federal agencies, attorneys general and consumer-protection websites have offered similar advice for many years.
Do Dealers Concern Themselves With These Issues? Should They?
These are the issues the NADA frames for consumers:
1. How much can they afford?
2. What type of car is needed?
3. What is the price of the desired vehicle?
4. The difference between buying and leasing should be understood.
5. If there is a trade-in, that value should be researched.
6. Financing options should be known prior to discussing the purchase.
7. Potential voluntary protection products should be researched.
8. Negotiation should be part of the process.
9. They should always read the contract and related documents before they sign them.
In other words, consumers should come armed with detailed knowledge about the vehicle they wish to buy. Essentially, NADA is advocating for the concept of, "An informed consumer is the best customer," which dealers can advance in a manner that would make R.H. Macy proud.
Dealers should ask themselves these questions if they wish to minimize their legal risks. Clarity in business transactions is a good way to avoid accusations of deception, especially when retailing a vehicle. Deception can lead to prosecutions and lawsuits.
UDAP and Complaints
UDAP, or Unfair or Deceptive Acts or Practices is a ubiquitous and threatening law in every jurisdiction. Most prosecutions and lawsuits involving vehicle transactions stem from allegations of deception. And, quite significantly, they are fueled primarily by consumer complaints. Angry consumers complain, and those complaints are heeded by regulators. The rise in state “CARS Rules” being contemplated, such as the one recently passed in California, will add to this risk.
The New Frontier of Dealer Customers – Bobby Hill
Younger generations are becoming the majority of car buyers. Marketing studies assert that millennials and generation Z consumers are highly knowledgeable about their consuming predilections, including transportation decisions. They are digital-first researchers, heavily drawing upon all forms of electronic sources, using online tools and artificial intelligence extensively to understand their options deeply before engaging with dealers. They are also value-driven and seek transparency, products of the electronic universe. Quite significantly, they expect car dealers and other merchants to be helpful guides, not aggressive salesmen. They appear to reject traditional dealer sales models.
Relying upon a Hollywood production again, a recent “King of the Hill” episode featured a typical gen Z consumer, Bobby Hill. Bobby thoroughly prepared for his car purchase by using AI and online resources. Even the media portrays this new customer: ecce novum clientem.
Younger Consumers Complain More – a Legal Peril
Marketing studies further conclude that millennials and gen Z consumers complain more openly and frequently. Yelp and similar websites support this conclusion.
There are even terms for this newer brand of consumer, such as netizen or cybernaut, who rely upon the electronic universe for their commercial decisions. They expect fast, transparent service and will voice their disappointment for ethical lapses and unmet expectations. Government agencies and consumer attorneys happily monitor these websites for prosecutorial grist.
Conclusion
Treating consumers well goes beyond being just good business. Word of mouth is a powerful force in sales, and observing this NADA guidance can help increase positive chatter about your business.
In addition, curtailing complaints provides compelling legal protection against the genesis of legal attack. Dealers should adopt NADA’s wisdom in this publication and prosper, as well as be good corporate citizens.
Terry O’Loughlin is director of compliance for Reynolds and Reynolds and is admitted to the Pennsylvania and Florida bars. Before joining Reynolds, he was employed by the Florida Office of the Attorney General, where he investigated automobile dealers and financing sources. He previously was a public accountant.
