Car dealerships should avoid negotiating prices or pitching aftermarket products during an at-home vehicle test drive.
Otherwise, it gives a vehicle buyer a legal opportunity to cancel the sale within 36 hours, says Randy Henrick, an attorney who specializes in laws affecting car dealerships.
Many dealers have resorted to online sales and at-home test drives and deliveries amid restrictive cornonavirus-related stay-at-home orders.
Rules of engagement with customers at their homes are stricter than they are at the dealership, Henrick says. (Henrick, left)
He advises dealership representatives not to negotiate, pitch F&I products or upsell when they bring a vehicle to online customers’ homes.
If such price and product discussions occur at a residence as part of a remote sale, it can trigger a Federal Trade Commission regulation. That says a customer who buys a vehicle under such circumstances has a 3-day “cooling off” period during which he or she can cancel the sale.
“It’s becoming a huge issue now,” Henrick says during a webinar put on by the Association of Dealership Compliance Officers. “Where the deal starts is important.”
The FTC regulation is not applicable if negotiations and product discussions occur at the dealership or online. In a customer’s driveway is a different matter.
“The remote test drive is strictly for showing the customer the vehicle,” Henrick says. “There should be no discussion of terms, negotiations or aftermarket products.”
Hold those discussions online or at the dealership, not at the customer’s home, he says, urging dealers to make it a formal policy.
That protects everyone, including the dealership and customer, says webinar participant Shannon Robertson, senior vice president of the Association of Finance and Insurance Professionals.
Robertson and Henrick also recommend that a dealership staffer not involved in the online transaction deliver the vehicle to the customer. That employee should validate customer identity, get the necessary paperwork signed and leave it at that.
“Otherwise, it will trigger the right-to-cancel regulation,” Henrick says, noting the rule stems from state laws governing door-to-door selling.
He also recommends the salesperson put in the deal jacket a brief note saying no deal terms or aftermarket sales opportunities were discussed during the delivery or test drive.
Most dealership trainers recommend against discussing price and payments during test drives anyway, notes webinar moderator Matt Woods, a regional manager for Service Group Insurance & Financial Services.
It’s not the time and place to do that, he says, citing best sales practices.
Dealerships that insist on negotiating and upselling in customers’ driveways are legally obligated to tell them orally and in writing of the 3-day cancellation right, Henrick says.
Failing to do so can result in fines of up to $43,280 per violation. The FTC views it as unfair and deceptive.
Meanwhile, Robertson urges dealers to resist the urge of charging extra to deliver the vehicle purchased online. “Now is not the time to add fees to the process.”