Another TV news show may be about to lower the boom on car dealers.
CBS' "60 Minutes" is preparing a report on dealer reserves, the commission dealerships earn by arranging financing for customers.
The segment, expected to be broadcast in early February, will focus on a class-action lawsuit filed by consumers last year against Covington Pike Toyota, a Memphis, Tenn., dealership owned by UnitedAuto Group Inc.
The suit alleges that the dealership violated Tennessee's Consumer Protection Act because customers were not told that the dealership receives a commission when it arranges car financing, and were not told what that commission rate is.
UAG, which is based in Bloomfield Hills, Mich., permitted one of its executives to be interviewed on camera. But executives at the second-largest publicly owned dealership group are worried that the program will have a strong negative slant.
In December, a report by "Dateline NBC" suggested that unethical and even illegal practices are commonplace in dealerships.The show focused on a Florida store owned by Sonic Automotive group.
"I don't expect ("60 Minutes") to be a piece like 'Dateline,' " says Rob Kurnick, UAG's chief legal counsel. "We've been told by the producers that it will be a fair and balanced piece about dealer reserves."
But Kurnick says he's concerned that some facts may be pulled out of context. The "60 Minutes" segment is expected to concentrate on the case of a couple whose loan package at Covington Pike Toyota included an especially large dealer finance commission. The two are plaintiffs in the class-action suit.
Kurnick says the exceptionally high reserve was due to the fact that the couple had a poor credit history.
UAG has argued that interest rate markups are a common way to compensate dealers for arranging loans.
A judge in the case is expected to set a trial date this month.
Kurnick says UAG is giving its dealers a heads-upthat the story is coming.
Network newsmagazine programs can have a big impact. After the "Dateline NBC" broadcast, Florida's attorney general said he would consider reopening an investigation of the dealership that was a subject of the report.