Consumer Protection: June 2007 Archives

What do you look for in a car? Safety? Fuel economy? Comfort? Affordability? How about whether you are inadvertently making a campaign contribution to the Republican party?

Auto dealers are among the most aggressive contributors to the Republican party and Republican candidates. Compared to other industries, they are among the most lopsided in their giving. During the 2000 election cycle, 96% of the auto industry's soft money went to the GOP.

In addition, some of the largest auto dealers are among the Bush Pioneers, who raised many millions for Bush's election and re-election campaigns. According to Automotive News, auto dealers played an active role in funneling a whopping $150 million to the Bush-Cheney campaign. Dealers also crowed about the pivotal role they played in the battleground state of Ohio.

How do auto dealers make so much money they can afford to write those big checks? To extract the last possible dime from even the most wary customers, auto dealers commonly engage in highly sophisticated scams like "loan packing," auto salvage fraud, dealer "markups" of interest rates, "yo-yo" financing, high-pressure sales tactics, and other forms of predatory practices.

How can you avoid making a inadvertent contribution to the Bushites? Next time you buy a car, consider buying a used car from an individual. By eliminating the middle man (yes, the biggest auto dealers are almost exclusively white and male), you can save a bundle--and also avoid contributing to the auto dealers' political agenda.

Nationally, auto dealers' top legislative priority is elimination of the estate tax. They have also invested vast sums in opposing improved fuel economy standards. (Global warming? Forgetaboutiit. Gotta hype those Expeditions, Escalades, and Hummers.) They are hugely active in pushing to eliminate longstanding state and federal consumer protections. They have a long history of opposing safety advances including shoulder harnesses to protect kids in the back seat, air bags, safety glass, side impact protection, public information about crash tests, and disclosure of vehicles' likelihood of flipping over in a crash. To top it all off, they are increasingly inserting mandatory arbitration clauses into their contracts--forcing you to give up your constitutional rights when you buy a car from them.

When you go somewhere other than a dealership to buy, you are not only saving money, and withholding funds from the GOP, you are also preserving your constitutional rights--and helping save the planet.

Just make sure you aren't buying from a curbstoner---an unlicensed dealer. Google "curbstoner" to find out how to avoid them too.

As if life in California weren't exciting enough, we are getting dumped on by unscrupulous insurers and auto dealers who profit from the illicit trafficking in total loss vehicles, including hurricane flood cars. Yup, that cute red number your teenager finds so alluring may be a killer car that swam with the fishes.

Remember the 500,000 flood cars that we all saw on TV, submerged up to their rooftops in the wake of hurricanes Katrina, Rita, and Wilma? Experts warned everyone to look out for them, since they are basically rotting from the inside out, and are totally unreliable.

According to the former president of the National Automobile Dealers Association, a lot of them were headed to auto auctions in--yes, you guessed it--California. The auctions advertise them on the internet and sell them to the highest bidders--typically, unscrupulous auto dealers who hose them down and spiff them up, to disguise the fact they are worthless, hazardous junkers. Then they sell them to unsuspecting used car buyers, usually for the going Blue Book price.

It's illegal, of course, but enforcement to curb the frauds is extremely lax, and the profit margins are staggering. An unscrupulous dealer can nab a flood car at auction for $3,000, spend $1000 to power wash it and replace the upholstery, then turn around and sell it for $12,000. They don't usually offer discounts, because that would arouse suspicion among potential buyers. It would also reduce their ill-gotten gains.

California, the nation's largest auto market, is famous worldwide as a dumping ground for hazardous junkers. According to the DMV, a whopping 2.5 million vehicles that were totalled in crashes, floods, or other disasters are being driven on our roads. Look around you---even if you don't own one, you may be killed or injured by one of the clunkers when the axle falls apart, the steering goes wacko, the brakes fail, or it stalls out in traffic.

Auto insurers and dealers have cleverly devised ways to profit from the frauds involving killer flood cars. When insurers total a car, it is rarely destroyed. Instead, they send totalled autos to auctions known as "salvage pools,." which are basically an arm of the insurance industry. Insurers get a cut of the take at the auction. When the junkers are sold for fraudulent purposes, they command a higher price, enabling insurers to recoup more of their losses or even turn a profit.

Consumer groups and CA Insurance Commissioner Steve Poizner backed legislation to prohibit the sales of totalled hurricane flood cars in CA. But insurers like State Farm, Geico, Farmers, Allstate, and auto dealers killed the bill. It was SB 498, authored by Senator Jenny Oropeza. No Republican senator would vote for it, since it was opposed by some of their biggest contributors. While most democratic senators supported it, a handful of so-called "moderate" democratic senators who usually side with business interests blocked its passage.

keep an eye out for toxic flood cars that are contaminated with bacteria, mold, and mildew, have air bags that may not inflate in a crash, and electronic systems that are madly corroding away. Even if you don't buy one, you or your family could end up riding in one. If you happen across a flood car, get in touch with CARS. We're working to protect American families from flood cars, including testifying before Congress , working to get laws passed to prohibit dumping flood cars back into the market in the first place, and doing interviews with national news media.

More info about why flood cars are so hazardous in posted on our website, at: http://www.carconsumers.com.

Rosemary Shahan
President
Consumers for Auto Reliability and Safety

(Rosemary Shahan)

Caving in to aggressive lobbying by auto manufacturers and dealers who profit handsomely from the sales of muscle cars and enormous gas-guzzlers, California politicians refused to pass legislation that would have curbed greenhouse gas emissions and made fuel-efficient SUVs, pickups, minivans, and sedans more affordable. However, the author has vowed to continue the fight and revive the legislation next year.

The Clean Car Discount Act of 2007, AB 493, is championed by Assemblymember Ira Ruskin (D-Redwood City). It remains a top priority for environmental and consumer groups, as well as socially responsible businesses and faith-based organizations. Consumers for Auto Reliability and Safety has been working actively to get the bill enacted.

Auto dealers made many legislators fearful of voting for the measure. Auto dealers are extremely active and well-connected politically. They spend heavily on political campaigns, and generally back conservative candidates. They take pride in punishing lawmakers who dare to stand up for consumers and the environment.

No Republicans were willing to vote for the bill, and a handful of anti-consumer Democratic lawmakers also voiced a reluctance to vote for it, despite polls showing strong public support for the measure.

"The Clean Car Discount program is designed to ensure choice by providing that some vehicles of every type will be unaffected or receive a rebate. Over 40 percent of the 1.7 million new vehicles purchased in California each year will be eligible for a rebate, and another 20 percent will not be affected at all. Given the breadth of choice, the Clean Car Discount program will help make cleaner vehicles more affordable for every California family," said Ruskin in his explanation of the measure.

In their attempt to kill the bill, auto dealers stooped to misleading tactics. One auto dealer, Fritz Hitchcock, President of Puente Hills Toyota in City of Industry, claimed in a letter to lawmakers that AB 493 would "penalize" disabled Californians. But in fact the bill expressly exempts persons with disabilities from having to pay any additional charges, and would have made various models that can accommodate wheelchairs less expensive.

More information about AB 493 is posted on Assemblymember Ruskin's website, at: http://democrats.assembly.ca.gov/members/a21/

Auto interests also ran a deceptive ad in the Sacramento Bee the day before the vote. To get the scoop on the ad, check out the California Progress Report, at:

http://www.californiaprogressreport.com/2007/06/deceptive_ad_in.html

"The automakers have a long history of whining that they can't improve their products," said David Friedman, research director for the Clean Vehicles Program at UCS. "But the National Academy of Sciences concluded that conventional technology can boost the fuel economy of all vehicles, from two-seaters to four-by-fours. They can produce 34-mpg SUVs, 37-mpg minivans and 41-mpg family cars. UCS studies concluded that the auto companies can do even better."

Passage of AB 493 would have sped up the day when you can have your automotive cake and eat it too--by getting the vehicle you want, while paying less for fuel.

Steamed over global warming? Tired of paying through the nose for gas? Want to send a message? Let your local dealership know you won't buy another car from them until they drop their opposition to AB 493. The politicians have let us down. Now it's up to us. The auto market is softening, so even if only 10% of prospective buyers defer buying their next vehicle, it will have a huge impact.

Rosemary Shahan is the Executive Director of Consumers For Auto-Reliability and Safety. She wrote the first Lemon Law and has championed Consumer causes for over two decades. She serves on numerous progressive boards, including the Consumer Federation of California , Consumer Federation of America and is also a member of the Board of Speak Out California.