Car dealers jacking up add-on prices, discriminating against Hispanics, study finds
One
"Pricing of add-ons is something we've been looking at for years," said
Read more:
What's more, he said, even if customers didn't want to buy the add-ons, they often felt forced to just to bring the long, arduous negotiations to an end.
The
The study also urged some public policy recommendations that would make pricing more transparent.
In response to the study, the
That's just part of the free-market system, said
Burns, who said he had not read the study, pointed out that many variables go into pricing.
He dismissed the study's claims of dealer discrimination.
"There is no disparate treatment," Burns said. "We have different programs, protocols, procedures and paperwork that we complete on each transaction to make sure everyone is treated fairly. But that doesn't mean that everybody has the same prices or financing because everyone is different."
The study found:
* Add-on products were sold at prices far above dealer costs. One dealer sold 1,000 window etching products, each with a dealer cost of
* Companies that provided car financing played a role in allowing excessive and discriminatory markups of add-on products. In order to get more business from dealers, some creditors allow higher markups for add-on products.
* Dealers inconsistently priced add-on products, which led to pricing discrimination. Hispanics were charged higher markups than non-Hispanics. Individual dealerships charged some consumers many times more than other consumers for the same product for which the dealer's cost was fixed.
Read more:
The study examined a long list of products including key, tire and dent protection plans, prepaid maintenance plans, warranty plans, credit insurance and guaranteed auto protection, which, in a collision, covers the difference between the outstanding debt on the vehicle and the insurance payout.
The source of the data was not disclosed, but the study said it did "verify the accuracy of individual data points through several sources including litigation, newspaper articles, bankruptcy filings and other independent sources."
To determine ethnicity, the nonprofit said it looked for Hispanic surnames and cross-referenced them with loan data to verify them.
Aside from add-ons,
"Any dealer who's had to deal with these programs can tell you that they are not only trust killers, but they're brand killers too," he said. "Not being able to offer two customers the same price on the exact same equipped vehicle, just because they came into the dealership on different days of the month, destroys consumer confidence."
"The fact that Latino consumers were charged in excess for unnecessary add-ons in the car buying process demonstrates a need for increased oversight in this sector of the market," she said. "We urge state and federal authorities to further investigate and bring enforcement actions against those found to be engaging in these discriminatory practices."
The state attorney general said if residents are concerned they were charged differently based on race, gender or country of origin, they can file a complaint by phone at 517-373-1140 or online at https://secure.ag.state.mi.us/complaints/consumer.aspx.
Contact
Recommendations
Based on its study's findings, the
--Dealers should be required to post add-ons and their prices. Each car should include the price of add-ons. This would make the deals more transparent and allow car buyers to compare prices among dealers.
--Require documentation of race or national origin for credit transactions. The data is required for mortgage transactions, but not for other credit agreements. Without the data, it is difficult to identify any discrimination patterns.
--Investigate discrimination pricing of add-on products.
___
(c)2017 the Detroit Free Press
Visit the Detroit Free Press at www.freep.com
Distributed by Tribune Content Agency, LLC.
Virtual house calls rise as doctors embrace new Texas telemedicine law
Skeptical appeals panel delays abortion for teen immigrant
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News