Old Auto-Retailing Tricks Are Today’s Crimes

Car dealership F&I managers with a modicum of experience should recognize when a credit application has been manipulated and what to do next.

Marv Eleazer

September 18, 2019

4 Min Read
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Marv Eleazer

As a kid, I recall being anxious and impatient when expecting the ice cream truck.  Everyone in the neighborhood knew it was near because of the little tune it played when idling down the street. 

We were issued allowances each Friday after completing our chores and it was up to us to manage it. Spend it all before the truck came and you were out of luck.

My dad would always say, “Don’t spend it all in the same place.” But one week, my habit for the latest DC comic issue got the best of me and I found myself without money for a Snow Cone. 

I was green with envy that my brothers were enjoying theirs and I had no money so I decided mom wouldn’t miss a few extra coins. I snuck some from her purse and hurried outside to meet the truck. 

Excited I’d gotten away undetected, I repeated the stunt a couple weeks later. It seemed so easy that I found myself regularly stealing from her. I was so sure I’d covered my tracks, but we know moms have eyes in the back of their heads.

My punishment was epic. I never did that again. 

So, why do some people cheat in the car business? I mean, there’s plenty of money to go around without having to break laws. We’ve all been taught that honesty is the best policy, yet we read about car people chancing their careers, and wonder what’s going on in their heads. 

I suppose the first answer that comes to mind is greed, but what baffles me is the ingenuity needed to commit the lies and coverup necessary for the scam. It seems harder cheating and trying to remember where all the bodies are buried than using that same intellect doing things the right way from the start. 

I wonder if our auto-retailing industry causes some of this. I say this because the competitive environment we face every day doesn’t leave much room for failure. Those times can be great reminders of how to improve if you’re honest. Or they can motivate dishonest folk to do wrong. 

It can start with rounding up someone’s Social Security income to meet minimum requirements. No harm, you might say.

Sometime later, a customer is upside down on a trade-in and unable to put cash down. Adding a navigation system, power running boards and a sunroof to the loan application increases the loan amount, solves the problem and funds the deal quickly. Seems easy enough, eh?   

No matter how much we try to justify pushing the envelope for that next deal, there’s just no excuse for unethical behavior. 

Any F&I manager with a modicum of experience should recognize when a credit application has been manipulated and what to do next. Part of an F&I manager’s duties involve a sharp eye and keen instinct in keeping everything crossing the desk straight up. 

This includes suspicious activities such as power booking, desk managers using 365 days to first payment, desked deals coming to you with leg (a form of payment packing) and straw purchases. The list goes on.

I’m not trying to condemn anyone here, I’m simply stating the obvious. I’ve been in the F&I chair long enough to have seen just about every twist to deal manipulation there is, though I’m fairly certain I’ve not seen it all.

I was conversing recently with a comptroller of a store who’s disgusted with some of the things he’s witnessed. 

Seems the sales department has developed creative ways of collecting down payments. In addition to an old tactic of down payment loans, they’ve resorted to copying credit cards and hitting the account monthly until the down payment is paid off. 

This practice violates the dealer/lender agreement. It’s illegal because it misrepresents the actual facts of the installment sales contract. Imagine what else must be going on behind closed doors.

The media recently reported a Missouri dealership that got themselves in hot water with Capital One Auto Finance.

Coad Toyota was accused of fraud, misrepresentation and violating the dealer/lender agreement on dozens of contracts. In addition to power booking, it was accused of grossly overcharging state sales tax and pocketing the difference.

Capital One seeks $619,690 in compensatory and punitive damages, claiming that in at least 34 separate transactions, the dealership misrepresented material facts. 

And this one took the cake:

Andrew Gabler, owner of Lakeside Chevrolet-Buick and a used-car store in Pennsylvania, and his F&I manager, Chad Bednarski, last month were named in a 17-count federal indictment accusing them of reporting bogus sales to General Motors and failing to repay the floorplan lender.

The indictment accuses the duo of lying about down payments and inflating customer income to banks. If you think an F&I manager can’t be indicted, think again.
Gabler faces up to 510 years in prison and a fine of $17 million. Bednarski faces 330 years in prison and an $11 million fine.

Do cheaters ever win? Maybe some do in the short run, but eventually their misdeeds will catch up to them like my mom caught up to me.
Good luck and keep closing.

Marv Eleazer, author of this “Real F&I" column, is the lead F&I Manager at Langdale Ford in Valdosta, GA. He has 30 years F&I experience. He is the founder of a Facebook group, Ethical F&I Managers (TM). 

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