Surprise! Car buyers still asked to pay 100s in extra fees despite new law
I-Team investigation shows extra fees routine part of car deals
It's a law that is supposed to protect car buyers from surprise fees. But more than a year after it came into effect, extra fees are routinely being added to the advertised price of vehicles at many dealerships.
As of June 1, 2015, car ads in Manitoba must state the total price, including all additional charges except the PST and GST. Charging extra fees in and of itself is not against the law. The legislation aims to ensure "truth in advertising."
But that is not what the I-Team found at dealership after dealership when it sent in undercover shoppers. Seven out of 10 salespeople stated there were fees and charges ranging from $599 to $1799 on top of the advertised price.
All three Gauthier and four out of five Birchwood salespeople said fees over and above the advertised price had to be paid.
"It's a deceptive practice. It's a form of consumer fraud," said George Iny, director of the Automobile Protection Association. "It hurts the customer because of course, they don't realize that was part of the bargain."
A veteran salesperson who has worked at several major dealerships is not surprised by results. CBC is protecting his identity because he is still working in the industry. He said the new law had little to no impact on how car deals go down.
'Business as usual'
"Nothing really changed. It was business as usual. As a matter of fact, some of my colleagues weren't even aware that there's such a legislation," he said in an interview with the I-Team. "It was not very important to the dealer."
At one of the Birchwood dealerships, the secret shopper asked about the new law. The salesperson hadn't heard about it, went to talk to the manager and came back with this response:
"He said he's not aware of it, but something like that, that's something we could look into, if you were interested in taking the vehicle."
The salespeople put a slightly different spin on what the fees included. Some described it as paperwork fees or documentation fees; another called it "paying for the business office."
The Birchwood Advantage includes three years of roadside assistance, a three-year tire warranty and "all administrative expenses and fees have been included."
Salespeople at both Gauthier and Birchwood told the secret shoppers all dealerships charge extra fees, and then turned the conversation to why that's a good thing.
"The documentation fee, it's actually pretty cool. It's not only paying for the business office, and the CarProof [reports] and stuff like that. You also get a two-year tire and rim warranty through that fee as well," said a Gauthier salesman.
The veteran salesperson who spoke candidly to the CBC about the practice called the fees "all profit" that have to be sold to the customer just like any other feature of the car.
"What they've done over the years, rather than just having a documentation fee … they've given you something for certifying. That fee includes a tire warranty, a rim warranty," said the veteran salesman. "So basically they're giving you something so it doesn't appear a money grab anymore, taking money without giving something."
Chipman supported legislation from day one
Birchwood Automotive Group president Steve Chipman has not been shy about showing his support for the new law. Not only did he host Consumer Protection Minister Ron Lemieux's press conference announcing the new rules at his dealership in May 2015, he spoke at it, too.
"We feel the new legislation will improve transparency and has the full support of our membership," said Chipman who, at the time, was also chairman of the Canadian Automobile Dealers Association.
When asked to comment on the I-Team's investigation, Chipman reiterated his commitment to following the rules.
"A person must be able to buy any vehicle displayed in a Birchwood advertisement at the advertised price plus PST and GST with no extra charges. That is what 'all in pricing' is all about, and that is our mandated policy," said Chipman.
"I am very disappointed to discover that," he said when he was told four out of five Birchwood salespeople said there was an extra fee.
Chipman said Birchwood salespeople "at some dealerships are confused and could not properly explain our policy to our customers." He added he is taking action to make sure it does not happen again.
Birchwood salespeople to get retrained
Chipman has ordered immediate re-education and training so all 135 salespeople and their managers fully understand the new legislation.
"We will learn from our mistakes so we can better serve the buying public," said Chipman, who emailed written responses but declined an on-camera interview.
Iny said improvements in car advertising are possible where there is vigorous involvement by regulators.
"What we have found is that the regulators are somewhat sensitive to outside scrutiny, and in that case, they are able to take the leadership," Iny said.
Vickar salespeople: 'no extra fees'
Both Vickar salespeople told the I-Team's secret shoppers no additional fees applied.
"Legally, the way we're supposed to be advertising, it's price plus tax," said a Vickar salesperson.
Don Lachance, new car sales manager at Vickar Community Chevrolet, was pleased to hear his salespeople were not adding fees. He said he reminds salespeople every second or third meeting that the only thing they can add to the advertised price is PST and GST.
"It's a law that's been long overdue and we are glad to have it come in. It is a much friendlier and nicer way to sell cars. It's much more pleasant, and we enjoy it. It makes life easier for everyone, especially the consumer," said Lachance.
Despite repeated calls and messages, Gauthier Automotive Group did not respond to a request for comment.
Salespeople at the two Vickar dealerships told the secret shoppers no additional fees apply.
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