There is an old joke about country and western songs. When the song is played backward the vocalist avoids divorce, gets his job back, and his runaway dog returns home. 

However, in a recent case of a gospel singer/car dealer who apparently sang backward, he was sentenced to five years in federal prison for fraud. His reputation as a gospel singer garnered misplaced respect in his community and confidence from his customers and financing sources. 

One of his frauds was assigning retail installment sale contracts to numerous financing sources, an issue for which financing sources always remain vigilant, hence the underwriter’s demand for the original contract.

There are F&I managers who, like this gospel singer, engage in activities contrary to ethical or moral standards. In some quarters these activities are called crimes, and for lesser infractions they are defined as civil theft, fraud or unfair or deceptive conduct. These F&I managers at times suffer the consequences of their bad acts or car sins. 

A Modicum of my Experiences With Car Sinners

I spent many years with the Florida Attorney General’s Office policing car complaints. These are a few examples of people singing from the wrong hymnal:

Disguising Single-Pay Leases 

I identified a fraud by a finance manager who presented to a senior citizen market single-pay leases as special two-payment financing. The F&I manager explained to these people that they were such loyal customers that they deserved these special financing arrangements. The two payments presented on the buyer’s orders differed substantially from the two payments on the lease contract. These senior citizens had no idea that they were signing lease contracts. The F&I manager was incarcerated for many years for his iniquitous deeds. 

Hypnotizing Customers

I received a series of complaints from consumers who claimed that they had been hypnotized by the F&I manager. The agreements that they signed were truly exploitive and duplicitous. The allegation of hypnotism as a sales tool seemed ludicrous until I unearthed the fact that this particular F&I manager had been a practicing psychologist in another state. 

Pockets of Profit 

At one of my many depositions, a particular manager was questioned about his numerous transactions in which the consumer’s trade-in was absorbed or “swallowed,” as it’s termed in the trade. In other words, the consumers conveyed their trade-ins but didn’t receive any credit for them. In the law, taking title to an asset by deception is the specific intent crime of false pretenses. Another word for deception is treachery, the term that I prefer. The F&I manager saw no problem with this practice and said these were simply additional “pockets of profit in the deal.” 

Murder

My career in the car business began with a murder by a woman who was, reputedly, a wrecker or repossession agent. The woman ultimately pleaded guilty to a second-degree murder, dressing as a clown and murdering the wife of the man she later married. At the time of the shooting, she was an employee of her future husband, who owned a used-car lot. He was also convicted of grand theft, racketeering and odometer tampering. I participated as the receiver of the store after it had been forfeited to the state. 

‘Payment Packing Is Not Illegal.’ (It most certainly is.)

At a major conference, a celebrity of F&I training stated with the greatest confidence, before a large audience, that payment packing had not been found to be illegal. I had to interrupt the speaker from the floor because this is a horrendous misstatement of the law. It is illegal in every state. 

Hallelujah, Brothers and Sisters!

There are multifarious practices employed to fleece the public in vehicle transactions, way beyond the scope of this article. 

The people who normally read these articles are usually not those who engage in these types of sinful practices. However, they probably know people who do. My recommendation is that the more saintly F&I managers counsel the sinners or appropriately report them to management. If they don't, everyone’s reputation in this industry will continue to be sullied. Repentance is good for the soul and for business. 

Terry O’Loughlin is director of compliance for Reynolds and Reynolds and is admitted to the Pennsylvania and Florida bars. Before joining Reynolds, he was employed by the Florida Office of the Attorney General, where he investigated automobile dealers and financing sources. He previously was a public accountant.