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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