Another Big Yawn for Car Dealers

Some articles I could write in my sleep. This is one of them.

“Why?” you say. Because I’ve written essentially the same article for several years in a row.

On February 28, the Federal Trade Commission released its list of top consumer complaints received by the agency in 2011. For the twelfth year in a row, identity theft complaints topped the list. Of the more than 1.8 million complaints filed last year, 279,156 were identity theft complaints. That’s 15 percent.

OK, but the FTC is the federal agency that scheduled three “Roundtables” around the country last year in order to learn about all the bad stuff that consumer advocates complained that car dealers were up to, right? So complaints about car dealers and their abusive practices had to be in second place, right?

Nope. The next nine complaint categories are as follows:

Complaint Category                                                            Number                Percentage
Debt Collection Complaints                                               180,928               10%
Prizes, Sweepstakes and Lotteries                                  100,208                 6%
Shop-at-Home and Catalog Sales                                     98,306                  5%
Banks and Lenders                                                               89,341                  5%
Internet Services                                                                     81,805                  5%
Auto Related Complaints                                                     77,435                  4%
Imposter Scams                                                                     73,281                 4%
Telephone and Mobile Services                                          70,024                 4%
Advance-Fee Loans and Credit Protection/Repair          47,414                  3%

So, out of 1.8 million complaints, 77,435 involved “auto-related” complaints. That’s 0.043 percent. If, like me, you are math-challenged, that is less than one-half of one percent. Even that amount isn’t a reflection of problems that consumers encounter when dealing with car dealers, though. Why not? Because the FTC calls a complaint an “auto-related” complaint if it involves “misleading or deceptive claims regarding auto warranties; repair/maintenance issues with newly purchased used or new cars, including dissatisfaction with service provided by auto mechanics; price fixing and price gouging concerns against gas stations and oil companies; etc.”

Let’s be charitable and assume that about half of the 77,435 complaints actually involved problems with car dealers. That leaves about 38,750 complaints. Then consider that there were, what, about 13 million new car sales in 2011? I don’t know the used car sales number, but let’s assume, conservatively, that it was double the new car number. If that’s roughly accurate, that’s 38,750 complaints arising from 39 million transactions. If I did the math right, that equals a complaint in less than one-tenth of one percent of the transactions.

If complaints about car dealers and their practices are so numerous that they deserved FTC attention in the form of three Roundtables during 2011, wouldn’t you think that the FTC would have a complaint category that isolated dealer misdeeds from complaints about mechanics and the price of gasoline? And wouldn’t you think that there would be a big enough number of such complaints to move the needle just a little bit? I’m just sayin’.

Vol. 9, Issue 5

About the author
Tom Hudson

Tom Hudson


Thomas B. Hudson Esq. was a founding partner of Hudson Cook LLP and is now of counsel in the firm’s Maryland office. He is the CEO of LLC and a frequent speaker and writer on a variety of consumer credit topics.

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