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by Randy Henrick
It has been a busy year for state Attorneys General, at least ten of whom have taken legal action against so-called "staffed event" companies that conduct short term (generally three to five days) used car sales events for local dealers in locations away from the dealerships. These companies publicize and run the sales events using their own salespeople and are paid on commission. The complaints have charged these companies with a variety of unfair and deceptive trade practices directed at consumers in the advertising and conduct of these sales events.
Perhaps the leading alleged offender is a company called Gunning & Associates Marketing, Inc. with does business under a variety of names including G & A Marketing and Fleet Liquidators. G& A entered into an "Assurance of Voluntary Compliance" with AGs from California, Delaware, Florida, Iowa, Maine, North Dakota, Oregon, Tennessee, Vermont and Washington relating to their practices in conducting "sales events" for dealers.
The alleged bad conduct included misrepresenting the nature of the vehicles as repossessions, liquidations and government seizures when the cars typically came right from the dealers' inventory. The vehicles were marked up in price to create the illusion of deep discounts while the salespeople used high pressure tactics to overcharge and confuse customers on price, add-ons, and other terms. The AGs also alleged violation of state licensing, gaming, and advertising laws by creating illusory "prizes" and redemption vouchers.
G&A paid $300,000 to be distributed among the ten state AGs. G&A signed a similar settlement with the Attorney General of Ohio and agreed to pay an additional $200,000, making their total liability $500,000 before you even start counting their attorneys' fees. That's a lot of used car commissions.
G&A also agreed to clean up their sales practices making fundamental changes in the way these "sales events" will be conducted. Along with promising not to lie, cheat, or misrepresent, the reforms include a requirement that consumers be given the cash sale price and monthly payment amount prior to the addition of any aftermarket products in a manner similar to the requirements for aftermarket selling under the California Car Buyer's Bill of Rights. (See our May 2006 Compliance Corner column for a discussion of the Car Buyer's Bill of Rights). G&A also agreed to submit all proposed advertising to the AGs at least 14 days prior to any sales event. Persons conducting the sale must sign a code of conduct setting forth detailed promises of specific above-the-board behavior.
The Oklahoma Attorney General has been particularly forceful and has entered into consent judgments with other "staffed event" companies as well. New York's Attorney General has sued dealers as well as the companies that ran the events for them.
If you are planning to retain such a company to run a "sales event" for your dealership, or if you are planning to do one yourself, beware that these activities are high on the Attorney Generals' radar screen. Treat these sales events as you would sales for people who walk into your showroom. Avoid the traps of promoting them as private events, sales of distressed autos, liquidations, government seizures, or other false or deceptive come-ons.
Originally published October, 2006
thecomplianceguide.com is intended for information purposes only and does not constitute the giving of legal or compliance advice to any person or entity. Because of the general nature of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on your particular situations and circumstances.