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Jan 30, 2004 - 11:15 AM

Another Kick Back For Car Dealers?

by Jamie Court
A report released this week by the Consumer Federation of America found that car dealers routinely mark-up car prices through a common bait-and-switch scheme. Car manufacturer financing departments approve a lower interest rate for customers, but car dealers get a kickback from manufacturers for getting the buyer to accept a marked-up interest rate. People of color are more often victims of the scam. It's just such deceptive schemes that California's Unfair Business Practices Act protects against, but now car dealers are collecting signatures for a November initiative to gut the law. The Gov, who has received over $750,000 in campaign contributions from car dealers, seems poised to help.

Under the car dealers' initiative, only government entities would be allowed to bring cases under the Act, not the consumer, environmental and civil rights groups that currently use the law to stop unfair and deceptive business practices. Also, cases could no longer be brought to prevent harm from happening, they could only be filed after some damage occurred.

A group of so-called "business-oriented" Democrats met with Schwarzenegger recently in Sacramento to talk about legislative approaches to gutting the Unfair Business Practices Act. One of the provisions purportedly discussed is not allowing cases if a regulator has taken action, even if it's a slap on the wrist. Given Arnold's hostility to regulation, that's a blank check for this Governor's Administration to take a token enforcement action to stop a lawsuit with far greater consequences.

The car dealers would be very grateful to Arnold for negotiating a deal on duped car buyers' rights because they don't want to spend more money on a ballot initiative with difficult prospects for success given the public's lack of esteem for car salemen. Arnold's been a pitchman for the industry before to cut the car tax and boost car sales. The industry no doubt believes that their proposals (either as legislation or initiative) will sound better coming from the Governor than a guy in a cowboy hat on a car lot. But what does it say about the integrity of a governor who takes three quarters of a million dollars from a special interest group and kicks back fewer remedies for the public to hold car dealers accountable in return?

Read the Consumer Federation report on car dealer scams at:

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