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FOR IMMEDIATE RELEASE
CONTACT: Center for Public Integrity
Steve Carpinelli (202) 481-1225
Randy Barrett (202) 481-1256
Car Dealers’ Tactics Echo Subprime Lenders
WASHINGTON - June 22 - Twenty former auto dealership whistleblowers in Arizona,
California, Florida, Hawaii, Illinois, and Michigan say they saw
questionable practices such as falsifying information on loan documents
to boost sales – a practice lately associated with the subprime mortgage
Drawing from interviews and court documents, a Center for Public Integrity investigative story reveals dubious auto financing practices, such as forging customer signatures on documents. One ex worker alleges that a manager prodded him to target African American and older customers -- referring to the elderly as "people with oxygen tanks." Financing is a crucial profit center for many auto dealers.
Meanwhile, Senate and House negotiators will decide as early as today whether to exempt auto dealerships from oversight by a planned consumer financial protection agency being created as part of broad financial reform legislation.
Auto dealer lobbyists spent almost $3.5 million in 2009 and the first quarter of 2010 to lobby Congress on financial reform and other issues, and say that car loan abuses are rare. Insider allegations suggest otherwise.
AutoNation Inc., the largest U.S. automotive retailer, has fought several lawsuits from customers and former employees, including one brought by a former worker in the company’s auto financing department that documented dishonest lending practices. But Charles Cyrill, a spokesman for the National Automobile Dealers Association, said auto financing practices were nothing like those used in the subprime lending industry before the mortgage meltdown.
California Republican Rep. John Campbell, a former auto dealer, was a key force behind language in the House financial reform bill that exempted auto dealers from oversight by the proposed consumer-protection agency. The Senate’s version of the bill did not include an exemption.
On Tuesday afternoon, Congressional negotiators are expected to take up the auto dealer exemption issue as they meet again to reconcile the Senate and House versions of the financial reform bill.
Read and link to the story Car Dealers’ Tactics Echo Subprime Lenders