Did dealer pitch have a catch?

2 Kansas City area Suzuki stores accused of TV ad deception

When a local TV station brings a hidden camera into your showroom, secretly records your finance manager in action and then puts the guy on the 6 o'clock news, you know you've got a problem.

That's what happened in April at Chad Franklin Suzuki in Kansas City, Kan., after customers complained of wildly deceptive sales promotions — like "Drive a different brand new Suzuki every year and never make a single car payment."

Now attorneys general in two states — one citing "ridiculous advertising claims" — have sued a pair of Chad Franklin Suzuki dealerships, the one in Kansas and one in Kansas City, Mo.

For seven months, the stores had bombarded local airwaves with improbable come-ons — nearly 10,000 TV and radio spots. The offers varied. One in-your-face ad promised: "No money down and a brand new vehicle for $43 a month," gasoline included.

The TV spots — created by a Florida agency, The Christopher Advertising Group — used flashing, boldface words on the screen to drive home messages such as "no payments for life."

One ad claimed: "Chad Franklin will make your first year's worth of payments using special factory rebates. Then if you want, Chad Franklin will pay the vehicle off, and you'll pick out another new Suzuki, and the process starts all over again and continues year after year."

But there was a catch. The actual contracts that people signed required them to buy the vehicles at the normal price.

About 650 customers took advantage of the sweet deals, some from as far away as California.

Broken promises

Some deals worked as promised for a while. Buyers signed a standard sales contract, then got a check from the dealership to cover all or part of the monthly payments. But the deals started to sour, in some cases because the checks stopped coming.

According to the attorneys general, a customer typically got a Suzuki to drive for a limited time, usually six to 10 months. At the end of that time, the customer was supposed to return the car and exchange it for another Suzuki, which the customer then could drive for another limited period of time at the same low price.

But when the customers returned to the dealership, they allegedly were told that the promotion had ended and that they were responsible for the terms of the original contract — a standard purchase agreement.

When buyers began to complain, Jenn Strathman, the local NBC affiliate's "Call for Action" reporter, got on the story. Her reports alerted both the Missouri and Kansas attorneys general. Last month, each filed broad consumer-protection lawsuits against the Chad Franklin Suzuki stores, which have been renamed Legend Suzuki.

The Kansas store was the focus of Strathman's news report on KSHB-TV. The reporter, accompanied by an unhappy customer, entered the dealership with a camera that looked like a pager clipped to the front of her purse. The station also rounded up six consumers who say they were scammed, assembled them on camera and let them talk.

"I said, 'OK, what's the catch?' " Tracey Wright told Strathman. "There's got to be a catch because you can't be just giving out cars for $43 a month."

Still, Wright signed a contract and last September drove a new 2007 Grand Vitara SUV off the lot. In a report Wright filed with the Web site Ripoff Report, she said Chad Franklin Suzuki agreed to pay $559.89 of her $602.89 monthly payment and her fuel costs up to 15,000 miles until February. At that time, Wright said, she was to return the vehicle and exchange it for a 2008 Grand Vitara and get the same attractive terms.

When Wright returned the 2007 Grand Vitara, she said, a dealership employee told her the promotion had ended and she had to put down $9,500 to get into a new SUV.

Kansas Assistant Attorney General Emilie Burdette said the dealership made a variety of promises in the TV ads and different representations at the point of sale. One incentive allowed the consumer to take part in a "two-, three- or four-year vehicle performance test."

Matthew Donnell, a professional dancer in the Kansas City Ballet, said the salesman told him they were looking for people to "performance test" cars for six-month periods.

"They give you payments for 41/2 months," he said. "After six months, you could take over the loan yourself and make full payments or bring it back and trade it back in. They said they wanted to build up their used-car inventory, but they wanted to get their own cars back with low miles. I bought it hook, line and sinker."

Donnell said he signed a standard sales contract for 72 months.

"I'm sitting in front of the finance guy, and he's circling the big numbers," Donnell said. "The payments were $574, and he circled it and said, 'Don't pay attention to this.' And I kept saying, 'My payment will be $47, right?' And he's like, 'Yeah.'

"Then they sent me the dealer's check, and it was $700 shy of what it should be to make payments of $47. They said that was due to the negative equity of the car that I traded in."

Auto dealer family

Chad Franklin, 35, is the son of a longtime local car dealer, Pete Franklin, who started out in 1968 with a Chrysler-Plymouth-Dodge store in the Kansas City area. His Kansas City, Mo., store sold 707 new vehicles in 2007, according to the Missouri Department of Revenue.

In a court filing in response to the Kansas suit, the dealership group denied the allegations. Chad Franklin was not available for comment. A store manager for Legend Suzuki in Kansas City, Kan., declined to speak.

Gene Brown, vice president of marketing and product planning at American Suzuki, told Automotive News that the company is aware of the lawsuits but cannot comment.

Rachelle Sanborn, media director for Christopher Advertising, said all the deals offered by the ads were "doable" and complied with federal trade law. Sanborn said the dealership had the responsibility to follow through on the offers.

The TV spots ran 9,484 times from June 2007 to January 2008 and cost the dealership about $1,090,000 to produce and air, according to court documents.

Nearly identical ads, also created by the agency, have led to problems for another Suzuki dealership: Joe Gibson Suzuki, of Spartanburg, S.C.

The dealership, which ran the ads beginning last year, was found to be using "a particular type of false, misleading or deceptive advertising — what the Federal Trade Commission calls bait advertising," according to a letter to the dealership from Danny Collins, deputy for regulatory enforcement at the South Carolina Department of Consumer Affairs.

After more than 100 consumer lawsuits were filed, Gibson filed for Chapter 11 protection in U.S. Bankruptcy Court in South Carolina on July 16. The dealership closed in August.

Back in Kansas, some customers voluntarily repossessed their cars, dropping them off at the dealership. Both attorneys general are seeking restitution for the consumers.

"We want to get consumers to a place that makes sense, given all the unique circumstances," said Burdette, the assistant attorney general in Kansas. "But there's not going to be an easy, clean solution." 

You can reach Patricia Scott at pscott@crain.com

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