AG Cooper reaches agreement with Vester dealerships
Release date: 12/27/2006
Vester agrees to reforms and will pay $100,000 to the state
Raleigh: Alan Vester and his automotive dealerships have signed an agreement to stop deceptive advertising and financing practices so that consumers and lenders get accurate information, Attorney General Roy Cooper said today.
“Buying a car can be expensive and complicated,” said Cooper. “We want to make sure that consumers get good information about the true cost of buying a car.”
The six Vester dealerships have agreed to numerous reforms including capping the percentage points added on to transactions financed through the dealer, providing consumers with detailed information about finance charges and “back-end options” such as extended warranties, and complying with state and federal advertising and lending regulations. In addition, Vester, who owns dealerships in Roanoke Rapids, Henderson, Oxford, and Burlington, must pay the Attorney General’s Office $100,000 for customer education and attorneys’ fees.
Attorneys in Cooper’s Consumer Protection Division began looking into the advertising, sales and financing practices of the Vester dealerships in July 2005. Based on the investigation, the attorneys contend that Vester dealerships targeted consumers with poor credit, including people who were going through bankruptcy, divorce, or had lost their jobs, with misleading ads. The Attorney General’s Office also alleges that Vester misled finance companies by providing false income information and misrepresenting the source of down-payments to help qualify consumers for financing.
The agreement caps the interest rate mark up that Vester dealers can charge consumers who finance their cars through the dealership. When a dealer arranges financing for a consumer, the lender quotes the dealer an interest rate. Many times, the dealer adds percentage points to the rate to make more money off the transaction. Vester has agreed to limit that mark up to no more than 2.5% over the quoted rate for loans of 60 months or less and 2% for longer term loans.
Vester must also give consumers a list of prices for all back-end options included in the price and the total price of the car without the options. If the consumer is financing through the dealership, the dealer must show consumers how much their monthly payments will increase due to these options.
To improve its handling of consumer complaints, each Vester dealership will designate a coordinator to review and respond to complaints and serve as the primary point of contact with the Attorney General’s office. Finally, the Vester dealerships will train management on financing, sales, and advertising laws and guidelines.
“We’d like to see all car dealers make these changes,” Cooper said. “My office stands ready to work with dealers and consumer groups to make sure that North Carolina consumers are treated fairly when they buy a car.”