Thursday, July 30, 2009

Lawsuit alleges that Dick Edwards Auto Plaza scammed soldiers

Posted By on Thu, Jul 30, 2009 at 9:01 AM

click to enlarge dickedwardsautoplaza.jpg

Five Fort Riley soldiers were allegedly conned into paying for "phantom options" on vehicles they bought from the Dick Edwards Auto Plaza in Junction City, Kansas, according to a lawsuit filed June 23. The Auto Plaza, which derives approximately 75 to 80 percent of its sales from military personnel, allegedly raked in a profit of $56,000 over a four-month period from soldiers who overpaid for their vehicles.

The five plaintiffs weren't informed that they were paying extra for optional features that weren't actually on their cars, like leather, high-end stereo systems, anti-theft

systems, upgraded wheels, and power sun roofs and seats, the lawsuit states.

The practice, which is called "over booking" or "power booking," isn't uncommon in the car business, according to attorney Michael Shultz of Kaup & Shultz, a law firm based in Lawrence, Kansas.

Each of the plaintiffs bought their cars through a program known as MILES, which stands for Military Installment Loan and Educational Services, operated out of Lexington, Kentucky, by a private L.L.C. called Dealers' Financial Services (DFS).

According to the lawsuit, "DFS states that military personnel face

serious issues when purchasing an automobile" because service members

are often too young to have built up much credit history, have a

limited income and no stable address, making it harder to obtain a

loan. The MILES program purports to make car purchasing easier for

servicemen and women by providing lending while prompting the buyers to

purchase warranty services and liability car insurance. DFS pays fees

to dealerships for every car sold through the MILES program.

But

Shultz contends that his clients, most of whom had decent credit

scores, were misled by the Auto Plaza regarding their ability to

finance vehicles. Through the MILES program, they ended up paying

interest on their car loans averaging 17.95 percent. The amount of

credit extended to them included the price of the phantom options.

"As

a result," the lawsuit states, "the Auto Plaza sold cars at prices that

were substantially higher than comparable cars sold by other car

dealerships in the Junction City-Manhattan area."

DFS completed

an audit of 91 cars sold through the Auto Plaza between January 1, 2007

and April 23, 2007. Of the 48 cars for which information was available,

DFS found that 46 of them were over booked. In those instances, the

soldiers overpaid between several hundred dollars to as much as two

thousand dollars for phantom options. The Auto Plaza's gain of $56,000

benefited Richard Edwards, the dealership's owner and principal stock

holder, and his sales manager, Lloyd Richard Roberts, the suit alleges.

Shultz tells The Pitch that

he suspects there are many more potential victims of the Auto Plaza's

over booking, but because many are now deployed in Iraq and

Afghanistan, they're hard to contact. Fort Riley's JAG

office sent out letters and e-mails to everyone on Shultz's list of

potential victims, but "the list is only for a four month period in

2007" -- i.e. the scope of DFS's audit -- "and we believe that the over

booking had been going on for a lot longer than four months," Shultz

says.

The defendants have yet to file a response to the suit. Shultz hopes to try the case in front of a jury in Kansas City, Kansas.

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