The Justice Department Alleges “BHPH” Used-Car Dealerships Engaged in Illegal Lending

Attached is a link about the U.S. Attorney’s Office of the Western District of North Carolina filing a lawsuit on a pair of BHPH Dealers. The State of North Carolina is stating these dealers have violated the state’s Unfair and Deceptive Trade Practices Act.

The government is seeking customers who entered into sales contracts with these dealers since 2006, former employees of these dealerships and any other individuals with information about the sales practices of these dealers. These individuals are encouraged to contact the U.S. Department of Justice as they move forward with this lawsuit. If this seems intense, you might want to consider what these dealers are alleged to have done.

The complaint states that these dealers used predatory terms on customers that had limited credit options. They alleged these dealers increase prices on add on services such as vehicle service contracts, and changed prices on vehicles when they had to be finance using sub-prime lenders. The complaint also alleges that the defendants fail to provide the customers with reasonable notice of repossession and even repossessed vehicles of customers who were not in default on their contracts.

Now before you say, that is not me …consider some of the following:

  • Do you increase the selling price of the vehicle because you have to finance the vehicle?
  • Do you not post your dock fee in your Internet prices but instead list them in the small print that discusses the tags and fees?
  • Do you adjust the selling price of your vehicle service contracts based on what you feel you can get away with?
  • Ever change the price of your vehicles just because you have a “hedge fee”.
  • Do you bump your “buy rate” to make reserve?
  • Ever attempt to repo a vehicle without giving a written notice?
  • Have you ever told a customer they must get a vehicle service contract or GAP policy to just make the deal possible?

If by chance you are wondering if your practices and policies might be out of date, most likely they are. Reach out to the ones you trust and make sure you have a compliance and sale process in place that can protect your assets while giving you the edge in the market.

This is not going away. If you are a license dealer / retailer, your business practice will be audited. Be ready and do the right thing.

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