Kay Sarlin/ Abigail Lootens/ Shannon Paz
DEPARTMENT OF CONSUMER AFFAIRS (DCA) CONDUCTS USED CAR DEALER “BAIT AND SWITCH” ENFORCEMENT SWEEP
FINDS 90 PERCENT OF DEALERS IN VIOLATION
Department of Consumer Affairs (DCA) Commissioner Jonathan Mintz today
announced the results of a 12-week investigation into used car advertising and
the bait-and-switch tactics targeted to lure consumers into their
dealerships. DCA’s comprehensive review of hundreds of print
advertisements in every major newspaper featuring car advertising resulted in
violations being issued to 90 percent of the used car dealerships that
advertised, which may yield up to $177,000 in fines. More than half of these
dealerships used bait-and-switch tactics by advertising cars after they had
already been sold.
“With our finding that more than half of used car ads are fraudulent, it’s no
wonder that consumers are reluctant to trust car dealers with their hard-earned
dollars,” said Commissioner Mintz. “‘Bait-and-switch’ schemes are not only one
of the oldest tricks in the book; they are also unfortunately often just the tip
of the iceberg when it comes to dishonest business practices. I urge New Yorkers
to check with Consumer Affairs before choosing a dealership, and I warn used car
dealers that they will continue to answer to us if they don’t clean up their
DCA investigated all 31 of the New York City dealerships that advertised used
cars in more than one advertisement between June 28 and September 8, 2010 in the
New York Daily News, New York Post, Staten Island
Advance (Friday Edition) and El Diario. DCA inspected each
dealership to determine whether the more than 200 advertised vehicles were
actually available for sale at the time that they were advertised. As a
result, DCA charged fifty-five percent of the dealerships under the
City’s Consumer Protection Law for deceptively advertising cars
after they already had been sold. One dealership advertised a car at least
eight times after it had been sold and another advertised a car that had been
sold nearly a year before they ran the advertisement.
While the sweep focused primarily on bait-and-switch advertising, DCA also
issued other violations for failure to have the Police Log Book available for
inspection, failure to record transactions in the Police Log Book, and failure
to include a valid DCA license numbers in advertisements. Police Log Books
contain critical information about the cars including when the dealer took
possession of the car and when the dealer sold the car. The New York City
Police Department refers to these police books when conducting searches for
stolen vehicles. Nine dealers failed to record transactions in the police
book and two failed to produce their police books. Three out of four
dealers failed to include any license number or included the wrong license
number in their advertisements. Consumers can use the license number to check
that a dealer is licensed by DCA, check a dealer’s complaint history, and also
to file complaints about the business.
In 2009, DCA conducted a similar two-month investigation into the advertising
of used car dealerships, issued violations to half of the 18 dealerships
inspected, and charged 27 percent of the dealerships with advertising cars after
they had been sold. This year, six of those nine used car dealers
advertised again and three were once again found to be engaging in these
deceptive trade practices.
DCA licenses almost 1,000 used car dealers Citywide. Last year, DCA received
366 complaints about used car purchases and won more than $3.75 million in
restitution for consumers who filed complaints about used car dealers.
Most complaints report “bait-and-switch” offers to lure potential customers into
the dealership, unclear contract terms and high pressure sales tactics.
DCA actively pursues unscrupulous used car dealerships and in the last year
issued almost 200 violations and revoked licenses from nine dealerships.
DCA enforces the Consumer Protection Law and other related business laws
throughout New York City. Ensuring a fair and vibrant marketplace for consumers
and businesses, DCA licenses more than 71,000 businesses in 55 different
industries. Through targeted outreach, partnerships with community and trade
organizations, and informational materials, DCA educates consumers and
businesses alike about their rights and responsibilities. DCA’s Office of
Financial Empowerment (OFE) is the first local government initiative in the
nation with a mission to educate, empower, and protect New Yorkers with low
incomes so they can build assets and make the most of their financial resources.
Toward that end, OFE seeks to increase access to high-quality, low-cost
financial education and counseling; improve access to income-boosting tax
credits; connect households to safe and affordable banking and asset-building
products and services; and enforce and improve consumer protections to enhance
financial stability. For more information, call 311 or visit DCA online
Shopping for a car? Follow these
If buying a used car, first check if the dealership is licensed by
DCA. Use the instant license check tool on the DCA Web site or
call 311 to confirm that a used car dealer is licensed.
Get a copy of your credit report before you start shopping
around. Correct any errors, or work on improving it before you
apply for a car loan so that you get the best deal. Go online to www.annualcreditreport.com for a
free copy of your credit report.
Get pre-approved for a loan BEFORE going shopping. The
terms and eligibility requirements for financing can be complicated. If you
are going to finance your car purchase, knowing rates before you shop will
help you compare rates and find the best option for you. If you use your own
bank or credit union, you will also be dealing with an institution with which
you have a relationship if anything goes wrong.
Don't negotiate a purchase based on a monthly
payment. Your goal is to negotiate the best price for the car at
the lowest interest rate and for the fewest number of payments. Pay close
attention to the terms; negotiate the total cost of the car, the interest rate
and the total amount that you are financing. Then estimate the monthly payment
Say no to "add-ons" and options. Most add-ons or
options like paint and fabric protection, rust-proofing, extra security
systems, extended warranties, etc. are cheaper when bought separately. Ask for
a calculation of your monthly payments with and without the add-ons and
Never sign a blank or incomplete agreement or contract.
Only sign complete contracts. Never sign a contract if you don’t understand
the terms. If a car sale is negotiated in Spanish and will be paid in
installments, the contract must also be written in Spanish. Always keep all
copies of any contract or paperwork signed.
File a complaint with DCA. Call 311 or go online to
nyc.gov/consumers to contact DCA.