Nearly two decades ago, criminal activity unearthed at Gunderson Chevrolet rocked the automotive retail world.
A CBS TV affiliate in Los Angeles sent employees to dealerships undercover to expose deceptive practices. In an investigative series that followed, rogue behavior at Gunderson Chevrolet, which was at the time one of AutoNation Inc.'s largest dealerships and one of the largest Chevy stores in the country, ended up setting a precedent for the industry.
According to reporters — and later, prosecutors — the El Monte, Calif., store was charging for service contracts and anti-theft devices without the customer's consent and lifting the interest rate on finance contracts.
Marked as the first time dealership employees had been criminally prosecuted for tactics common in the industry, the Gunderson case birthed a new era in auto retail compliance.
Yet in 2018, stories of dealers behaving badly still churn through the news cycle. From payment packing to phony protection products, unscrupulous business practices in the F&I office today are similar to supposedly bygone tactics.
This summer, an Arizona-based dealership group was accused of inflating the incomes of their Navajo customers and advertising for deals and discounts without disclosing real terms and conditions. In Pennsylvania, a dealership was accused of coaxing customers to lay down costume jewelry on the hood instead of a legitimate down payment to defraud lenders.
A dealership in Brooklyn, N.Y., was accused of using fraudulent sales tactics toward non-English-speaking Chinese customers. Two months later, two other New York dealerships were accused of defrauding customers in the same way as Gunderson Chevrolet — by adding and upcharging thousands of dollars for an "etch guarantee" product in as many as 1,100 deals.