Automotive News - February 11, 2008 - (Page 56) 56 • FEBRUARY 11, 2008 ‘MR. BIG VOLUME’ GO-REAHARD.COM A spotty record of ‘spot’ deliveries In Houston, Bill Heard’s dealerships have generated a lot of customer complaints about so-called “spot” deliveries of new vehicles. A customer is conditionally approved for a loan and takes possession of a vehicle “on the spot,” with the understanding that the deal is contingent on the bank’s acceptance of the finance agreement. It’s a common practice among dealers, but one that can be abused. Consumer advocates are concerned about a type of spot delivery called “yo-yo” financing. Here’s how it can work: A customer makes a down payment, trades in a vehicle and drives away, thinking the sale is final. Later, the dealer contacts the customer to say the financing has fallen through and the vehicle must be returned. If the customer does not bring the vehicle back or agree to a higher interest rate, the dealer repossesses the vehicle. If the customer demands to call off the deal, he or she is told the tradein vehicle already has been sold. Nine states have statutes outlawing yo-yo financing, according to the National Consumer Law Center in Boston. Two other states have regulatory provisions, while four have issued administrative interpretations decrying the practice, the Boston group says. Complaints about spot deliveries show up time and time again in Bill Heard files at Better Business Bureaus. One man who filed a complaint with the Nashville BBB had been driving a truck he bought from the Antioch dealership for about seven months when a manager called him back in to renegotiate the loan, says Kathleen Calligan, CEO of the BBB of Middle Tennessee. Calligan says she knows many dealers offer spot deliveries with no problems. What she doesn’t understand is why, in an era of instant credit checks, it took Bill Heard Chevrolet so long to approve a customer’s loan. Dent Morton, a lawyer representing Bill Heard Enterprises Inc., told Automotive News that customers are told a transaction is not final until a lender has approved the financing. He said he was unaware of the situation involving the Nashville man. — April Wortham Word tracks don’t sell products. F&I Professionals do. The sale that wasn’t: A Tahoe’s trail of tears J.R. Todd was a Chevy truck loyalist — until he got one from Bill Heard. In 2003, Todd says, he bought a new Chevrolet Tahoe from Bill Heard Chevrolet in Sugar Land, Texas. A year and a half later, Todd and his wife took the Tahoe back to the dealership with the idea of trading it in. A manager told the Todds they couldn’t trade in the SUV because they had not purchased it. They had leased it, the manager insisted. “We were shocked,” says Todd, who has a master’s degree in economics. “We couldn’t believe it. I said, ‘You must have made a mistake on the documentation.’ So we pulled out the documents, and nowhere did it say anything about a lease.” Todd says the manager gave him two choices: He could keep the vehicle and pay a $16,000 balloon payment at the end of the 60month finance term. Or he could return it and pay 30 cents for every mile over the lease’s 12,000-mile annual limit. Because Todd’s wife used the Tahoe for her 120-mile daily commute and thus had a lot of miles on it, he didn’t accept either option. Todd sued. J.R. Todd: “We were shocked.” CRAIG HARTLEY He says he has paperwork proving the dealership gave him a purchase agreement, but filed lease documents with the bank. Bill Heard Enterprises, which owns the dealership, declined to comment because the case is pending. While the suit drags on in a Texas court, Todd continues to make monthly payments on the Tahoe. Todd says he has paid more for the SUV than the original $40,000 sticker price. “My first three vehicles were Chevy Silverado pickups,” Todd says. “However, this will be the last Chevy I ever buy, which is kind of sad.” — April Wortham HEARD Dealer ranks high in sales, complaints continued from Page 54 Big volumes, big problems The country’s largest Chevy dealer has gotten more than his share of customer complaints. In 2003, a Texas man bought a new Chevy Tahoe from a Heard dealership outside Houston, only to find out a year and a half later that the the dealership considered the SUV to be leased. A Tennessee man complained to the Nashville Better Business Bureau that a Heard dealership approved him for a loan, gave him the keys to the truck, then called about 7 months later to say the financing had fallen through. At one point, the Nashville Better Business Bureau assigned a staff member full time to investigate complaints about Heard’s store there. In November, Florida Attorney General Bill McCollum fined two Bill Heard dealerships $400,000. general’s office had investigated Heard’s Florida dealerships over issues such as customer service and inadequately disclosed prices and fees in advertisements. At the time, the attorney general’s office said it had fielded more than 100 consumer complaints about Heard’s stores, all of which eventually were resolved. But a follow-up investigation by the Economic Crimes Division uncovered lingering issues related to poor customer service and failure to address consumer concerns. McCollum’s press secretary, Sandi Copes, says the attorney general’s office has received 11 additional complaints about Heard’s dealerships since the settlement was signed. Regulators are chagrined In settlement documents, court records and interviews with Automotive News, regulators and business watchdog groups expressed frustration, contending fines and government actions have had a negligible impact on Heard’s business practices. “When you get to the point where your business culture says, ‘We’ll take this slap on the wrist, because the financial reward is still great for us,’ that violates everything that business is about,” Calligan says. She says the Nashville BBB had met with nine general managers who had run the Antioch dealership over 13 years. Calligan says she also flew to Bill Heard headquarters in Columbus, Ga., to meet with Heard himself. Everyone promised to make changes, Calligan says. “Mr. Heard always told me he didn’t want that to be going on, that he wanted to run his dealerships the right way,” she says. “We remain very disappointed that it wasn’t backed up with action.” c Jamie LaReau contributed to this report “ When you get to the point where your business culture says, ‘We’ll take this slap on the wrist, because the financial reward is still great for us,’ that violates everything that business is about. KATHLEEN CALLIGAN Better Business Bureau ” Vacation? Or coffee mug? The trail of complaints continues to Tennessee. Heard’s two dealerships there, one in suburban Memphis and a former Heard store in Antioch southeast of Nashville, have paid more than $183,000 in penalties. The fines were part of six settlements between Heard and the state’s attorney general’s office, the Motor Vehicle Commission and Office of Consumer Affairs. In 2000, the Antioch dealership got in trouble for sending mailers to 15,000 residents with Hispanic surnames, telling them they had won money and round-trip airline tickets to such destinations as Hawaii and Florida. The promotion was printed in Spanish, but the disclosures — including the fact that the recipient had to pay for a hotel room to receive the airline tickets — were in English. According to the settlement, about 225 customers visited the dealership to claim their prize: an airline ticket discount booklet, a Bill Heard cap, a coffee mug and $5. Bill Heard is a name well-known at the BBB of Middle Tennessee. A few years ago, the Nashville BBB had a full-time staff member dedicated to handling 100 to 120 complaints per year involving the Antioch dealership, says CEO Kathleen Calligan. Heard sold the Antioch dealership last June, a few months after a local TV station broadcast a story about consumer complaints. It now operates under a different name with a new owner. Morton told Automotive News that the Antioch dealership had been underperforming long before the TV report and that its sale was a business decision. www.UnitedCarCare.com 1-800-571-6412 http://GO-REAHARD.COM http://www.UnitedCarCare.com http://www.UnitedCarCare.com
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