How Do Online Car Dealer Kickbacks Work?

Anaheim, CAFor the average person who conducts online research to determine which car to buy, car dealer kickbacks are likely not high on the list of concerns. They are more worried about the price of the car, how reliable it is and any safety concerns related to the car, not worried about whether the online car referral site will receive a kickback if they buy a certain car. But allegations have been made about car dealer fraud, in which online referral companies reportedly received compensation for recommending specific dealerships to online automobile browsers.

Online car referral companies advertise specific vehicles that consumers can purchase at their local dealerships. Customers browse online for a specific make and model of car, and a car referral site will suggest where to go to get the best price for that specific vehicle. The referral company will show the customer what the price of the car is, including all fees but no taxes.

This is not illegal, and it is not illegal for car companies to pay advertising fees or subscription fees on a monthly basis to such sites. What is illegal is when the dealership pays a direct marketing fee for each vehicle sold. In this case, it becomes similar to a commission for the online car referral company. In some cases, referral companies are alleged to have been paid up to $300 for each car sold.

If the online referral company received any form of compensation for sending a car buyer to a specific dealer, this could be a violation of California law. In such cases, the consumer is a victim even if he or she does not realize it, because he or she may not actually be getting the best price for a vehicle, regardless of what the website advertised.

A further concern is the risk of bait-and-switch tactics, where the car a customer chose online is no longer available when the customer goes to the dealership, and the dealer then attempts to sell a different automobile or a similar automobile but with more expensive features.

Some states are investigating lawsuits against online car referral companies, alleging they violate regulations against kickbacks. Consumers who have used such car referral companies may also be eligible to file a lawsuit.