Subaru sues Calif. dealership, claims it filed false customer surveys
Subaru of America filed a federal lawsuit against one of its California dealerships and its employees, accusing them of forging more than 200 customer satisfaction surveys to improve the dealership’s reputation and avoid termination.
A September investigation of South Coast Subaru in Costa Mesa, Calif., showed that 224 dealership customer service evaluations from 2014 had been generated from an IP address at South Coast Acura, another dealership owned by South Coast, website Law360 reported Monday.
Managers instructed employees to fill out surveys, the suit contends. They were completed every few minutes throughout employees’ lunch hours, according to court documents.
Subaru’s suit, filed Friday in U.S. District Court in Santa Ana, Calif., accused the dealership, sales managers Tuan Pham and Gordon Min and 10 unidentified employees of breaching the dealer agreement contract.
The dealer agreement orders that dealership employees refrain from all conduct that could harm Subaru’s product reputations or the marketing of Subaru’s products. It mandates that dealerships do not engage in any unfair, deceptive, misleading, unethical, discriminatory, fraudulent, illegal or otherwise prohibited practice, court documents said.
The dealership is expected to collect valid email addresses from customers at the time a Subaru vehicle is purchased. Dealerships are then supposed to share customer email addresses with Subaru for additional customer surveys after a vehicle purchase and completions of vehicle service. Subaru also uses these email addresses to send service reminders and information about other service-related issues.
The investigation revealed that customer orders and deal jackets that matched with false surveys did not originally contain an email address for the buyer or contained an email address that was incorrect. South Coast reported sales of those vehicles with “sham email addresses,” and the surveys were sent to email inboxes controlled by South Coast, Subaru accused in the complaint.
“Defendants prevented Subaru from discovering the actual customer satisfaction level of Subaru retail customers at South Coast Subaru by providing sham customer surveys to [Subaru],” the complaint said.
Subaru “did not, does not and will likely never know the actual customer satisfaction levels of Subaru retail customers at South Coast Subaru.”
Subaru has suffered monetary damage and injury to its business, reputation and goodwill and will sustain loss of revenues and profits, court documents said.
In November 2012, South Coast Subaru had not met its contractual obligation to provide a high enough level of customer satisfaction for an extended period, and Subaru took action -- called a “notice of requirement to cure” -- that could have resulted in a termination of its agreement with the dealership.
During 2013, South Coast’s customer satisfaction performance improved, and the dealership broke free from the cure program, according to court documents.
Because of the survey meddling, South Coast failed to advance the goals of customer satisfaction, update Subaru with customer complaints and resolve customer satisfaction issues, the documents said.
Subaru’s attorneys and South Coast’s staff have not returned phone calls or emails from Automotive News so far this week. Subaru declined to comment on the case.
Subaru has posted seven years of consecutive U.S. sales growth and significantly outpaced the market last year with record sales of 513,693 vehicles. Dealers were told at this year’s National Automobile Dealers Association convention in San Francisco that 97 percent of Subaru's 617 U.S. dealers are profitable -- a record for the Japanese brand.
Diana T. Kurylko contributed to this report.
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