When Car Dealers Make Mistakes, Who Should Pay?

October 5th, 2012

2012 Chevrolet Traverse

I’m going to spill a secret here.

Once, when I went to the grocery store, I asked the checker for a book of stamps. I got the book of stamps. But the stamps were never rung up, and I never paid for them.

I did what any good American would do. I didn’t say a word and kept the secret until blabbing it to the world on a blog. I hope I won’t get arrested now, because apparently, if it were a car I had underpaid for, that’s a real possibility.

A Jalopnik story tells the tale of a man in Virginia who got arrested after buying a Chevy Traverse for 33 grand instead of the 39 grand the dealer determined the vehicle was worth. I won’t rehash the whole story here, but the guy ended up in jail for theft after the dealer called the police, only to bail himself out, find himself carless and walk 5 miles home. All charges were dropped upon review of the signed purchase agreement, but the man has countered with a $2.2 million lawsuit against the dealer.

In another recent case, this one in Australia, a dealer accidentally posted a 1994 BMW 320i for $1, which was purchased immediately. In that case, the dealer lost out on about $3,000. The dealer’s response?

I thought, ‘Whoops’, but it is what it is. You can only laugh about it. It was the cheapest car ever sold by the dealership and hopefully the only car we sell for $1. Obviously not an ideal outcome for us as the seller, however, we are firm believers in the auction process and for it to be fair to buyers and sellers alike.

How about that difference, huh? Obviously, there’s nothing wrong with dealers making a fair amount of money on car deals. They deserve it and should be profitable. However, when a mistake is made, I don’t believe they have the right to harass customers and beg for more money. Or have them arrested. Personally, I’d avoid the Virginia dealer but gladly give my business to the Australian one.

There is a double standard here. Had either of these customers found out they overpaid by thousands of dollars, you can bet they’d knock down the doors demanding a refund. This is the world we live in, though. When a business undercharges, or forgets to charge at all, they should eat the cost.

Should a car dealer be able to go after a customer for more money after making a deal?

-tgriffith

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Used Chevrolet Traverse

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  1. | #1

    Careful, we are treading on a fine line here. I am sure there is more to this story. I am sure the dealers accounting office did not just see this oversight and call the police. Was the customer called and asked to come back in to review the errors? Was he given the chance to make it right or bring back the vehicle? If so, and he blatantly avoided the dealer and would no bring the car back, then he stole $6,0000.00.

    Mind you that before any paperwork is ever signed figures are always discussed beforehand. And most customers usually shop on the INTERNET now before buying.

    Also, Customers do come back all the time and ask for a lower price. However, it usually is on a much smaller scale, because you never could have overcharged them that much the first time, they would never have allowed it. Customers are savvy now. They no exactly what they are doing when purchasing a vehicle. For the most part the customers are usually more prepared and well versed then most salesman before they ever step foot on a lot.

    Just my .02,

    Mike Mattingly

    Mattingly Motors

  2. | #2

    Mike-
    Thank you for this! Yes, of course there is more to the story and it does appear the dealership asked numerous times for the customer to come back and discuss the situation. It’s a fine line for sure. From my end (the consumer side), once the paperwork is signed the deal is done and errors should be caught during the sales process. Granted, we don’t know everything that happened and there could much more to the story that remains unknown, but from the basic facts it seems the dealership overstepped. It’ll be interesting to see what happens with the lawsuit. Again, thanks for the .02, quite valuable, and hope to see you here again.

  3. | #3

    As a former dealership employee who made a series of mistakes (mostly small), I’ll tell you how it should work and how it does work.

    First, understand that most dealership “mistakes” aren’t actually mistakes at all. The dealership will offer to secure financing at a specific set of terms, and if those terms aren’t found, the dealer has right to either a) ask the customer for more money or b) take the car back (assuming the consumer signed a disclosure to this effect). Consumers howl about this practice (rightly so), but it’s not a mistake if you sign a piece of paper acknowledging this exact scenario can occur.

    We used this tactic fairly regularly when a customer had bad credit, the thinking being that we would either convince a bank to do the loan or we would convince the customer to give us more money after they’d been in the car a while…and it worked.

    This practice isn’t illegal, but some states would like to make it that way. In all honesty, I think that’s a good idea. If dealers can’t roll a car until financing is secured, consumers are more likely to make rational economic decisions.

    Next, if the dealership makes an honest mistake like forgetting to collect a down payment or failing to get the customer’s signature on a document, most people understand and help the dealer make it right. I made both of these mistakes a few times, and all but one person was happy to come back and fix it. The one exception turned out to be a liar (he falsified his credit application), so we had to get that car back anyways.

    Finally, if a dealership makes a mistake in their own favor, they’re supposed to call the customer and give them the good news. If we forgot to credit a rebate, for example, we ALWAYS called them and offered to cut them a check or re-sign documents.

    This is how it should be.

    However, in the real world, some dealers try to trick customers and some customers try to trick or cheat dealers. I have no sympathy for either party. What’s more, if a dealership manages to convince the local police to arrest someone, there’s a very good chance that person was in the wrong…you don’t get the cops involved unless it’s serious, and they don’t like to get involved unless they’re reasonably certain a crime was committed.

  4. Jim Redd
    | #4

    This is an interesting conversation and its good to hear from some dealers here. As a car buyer, I’d be pissed (excuse the langusge) if I were asked to come back and write another check. I’ve heard of things like Jason explained before, but I can’t imagine it happening to me. Then again, I’m the kind who either pays cash or uses my bank financing so the odds are low of that happening to me. It’s an interesting business, and it seems like more regulations might be good. Thanks for the honesty here, Mike and Jason.

  5. Caspar Dioge
    | #5

    It is a fairly common practice for deals to do a deal, allow the customers to drive the car home and then call them up, claiming a mistake and saying the customer owes more money.

    I have been witness to a half a dozen deals with friends where this is claimed and in each case, I determined the dealer was trying to upcharge the cusotmer for no reason, claiming a “mistake” on their part, needed to be rectified.

    Perhaps there are legitimate reasons, but in the cases I sat in on, I found the dealer had tried to slip in unwanted and uninstalled accessories, or added a long term warranty to try and boost profits, or some other ADP (additional dealer profit) item.

    It just boosted my belief that dealerships are a vast criminal class that buy their way into respectability. In no other business would this kind of behavior be tolerated in business, but in car sales, for some reason, it’s a case of “Come catch me, come F**k ME!” This won’t end until some dealers are jailed for fraud, racketeering and grand theft and the keys tossed away.

  6. Randy
    | #6

    Some interesting comments including an admission from a former dealership employee admitting some deceptive practices, and outlawed in most states. Some dealers are starting to ask buyers to sell some onerous and absurd terms, such as agreeing to binding arbitration in case of disputes or wholesale dismissal of buyer rights under state consumer laws. Smart consumers read the contract and flee when they realize they’re sitting across from a 200 pound rat.

    The operative principle in these deals is “good faith” and the example of the Virginia man is a clear case of good faith dealing. The real stinker here are the stupid cops who were dumb enough to arrest someone in such a case. Guess the main qualification to be a cop in Virginia is to be someone’s relative and any knowledge of the law is gained from losing lawsuits. (which they will if the victimized buyer is smart enough to sue the cops, too, for false arrest.)

  7. Rob
    | #7

    An arrest!? That’s unbelievable and I had to look it up from another source to believe it. Wow. Seems like a terrible business practice. Makes me want to just buy used from a previous owner.

  8. Tom D
    | #8

    I hate to say it, but I hope the guy wins his 2.2 million dollar lawsuit. And I hope the dealership has enough “pride” and “honor” after all this to eat the cost, rather than force the employee who made the mistake(s) to pay for the cost difference. Afterall, it’s the dealership that pockets all the profits………

  9. Jim Redd
    | #9

    @ Tom D
    I hope he wins too, Tom! This’ll be interesting.

  10. Tremec
    | #10

    @ Caspar Dioge I agree with you Casper! I have a friend that lives in the area of the dealership and according to them The dealer in question sold the guy a blues SUV, the guy came in looking for a black one but one was not available in the (stripped down special package promo model only one advertised to lure marks on to the lot), financing was secured on the blue SUV and 3 days later the $tealership calls up and states that they have a black one there now for the same price if the guy wanted to come back in they could swap out and redo the paperwork. The guy comes in does the swap re-signs all the contracts then 3 days later the dealer called and said they made a mistake and need to add $9k to the paperwork! A clear bait and switch tactic gone wrong.

  11. Mel Firer
    | #11

    I recently purchased a new BMW 550xi, approximately 78,000. In any case it appears the dealership among some other mistakes, forgot to order my permanent license plates. Long story short, I’m without use of my car for a week now. The dealership gave me a loaner, not equal in model but a vehicle none the less. In any case, am I entitled to compensation for loss of use of my vehicle?

  12. Dawn
    | #12

    I just bought a used car on tues we settled for price of 17000.00 in Fridays local news paper the price for same exact car same vin# the price is 15999.99. I went to dealership they asked me to come back at 300 today to speak to general manager. I am sick to my stomach. I am taking the add in with me, wish me luck!

  13. | #13

    @ Dawn
    Good luck, Dawn! Let us know how it goes.

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