Online Car Referral Bait and Switch: Old Tricks, New Technology

Los Angeles, CAIf you’re like most computer savvy people today, you’ll go online to research your purchases. Whether you intend to buy online or retail, the draw of the Internet translates to increased awareness and information for the consumer that can be brought to the fore when it comes time to make an educated purchase. As the late advertising guru David Ogilvy famously espoused, “an educated consumer is the best customer.” However, when it comes to car dealer kickbacks, that educated consumer suddenly becomes an unwitting victim.

Due to the competitive nature of the retail automotive industry, many a California car dealer will seek a presence online, where they know many of their customers live. And while a car dealer may have their own Web presence, they will often tether themselves to online car referral sites that take advantage of online searches and attract consumers to their sites by way of specific keywords.

A revenue source for such online car referral sites lay within the descriptor: “referral.” Should a consumer come calling looking for a specific make and model of vehicle, the online referral site can do just that - refer the consumer to a nearby dealer that carries the make and model sought.

Of course there is a fee to the California car dealer for this service. Nothing wrong with that. Call it a subscription, part of a savvy marketing strategy that relies on the online car referral site to locate potential customers. Such subscriptions are perfectly legal in California.

What isn’t legal are car dealer kickbacks. This is when the dealer pays a commission or fee back to the online car referral in exchange for a successful sale. Not only are such kickbacks illegal in California and constitute car dealer fraud, the consumer unwittingly pays more for the vehicle, as most kickbacks are simply built into the final selling price of the car.

Then there is bait and switch. With a consumer harboring a specific make and model in mind - including color, accessories and so on - they are referred to a California car dealer who claims to have the desired model on their lot. Upon arriving at the location, the consumer is met with the news that said model is not available after all, due to an unforeseen “error.” However, there IS a model available with most, if not all, of the desired attributes and then some - for a higher price.

Many consumers, having traveled all that way and not wanting to go home disappointed, will leave with a vehicle costing much more than they had intended on spending. In reality, the consumer was played by a fraudulent California car dealer, or an online car referral site - or both.

Such conduct is not only illegal, it’s grossly unfair to the consumer and amounts to car dealer fraud. A car dealer kickback lawsuit is often the only recourse a consumer has to not only recover the overpayment and damages, but to send a message to the industry that this kind of activity will not be tolerated.