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When Little Complaints Become Big Problems

April 12, 2015 by Jim Radogna

The majority of disgruntled customers who threaten to call an attorney never do. For the few that do, the results can be devastating. While it’s true that many customers’ complaints have little or no merit, there can be a real danger if the wrong plaintiff’s attorney gets involved.

You may be thinking “we have lawyers of our own and insurance for that sort of thing, so bring it on”. Here’s the problem: many lawsuits that stem from seemly unimportant complaints snowball into large class action cases based upon other issues entirely. There are a number of plaintiffs’ attorneys who are absolutely brilliant at turning dealer oversights, or technical violations into class action lawsuits. One dealership’s failure to honor its promise to swap rims on a vehicle resulted in a class action lawsuit for backdating rewritten contracts where the court ordered that the over 1,500 class members could elect to return their vehicles and withdraw their contracts.

Let’s face it, most common consumer vs. dealer lawsuits or Lemon Law claims don’t pay big attorney fees. However, class action lawsuits do. It doesn’t matter if the customer’s complaint is valid or if they have actually suffered any real damage; these attorneys only want to get their hands on your files. A Missouri dealer group recently settled a documentation fee class action lawsuit for over $8 million. The attorneys alleged that the charges constituted the “unauthorized practice of law”.  Ridiculous, yes, but the attorney fees totaled $675,000.

Other lawsuits have begun from mechanical issues, alleged misrepresentation of a vehicle’s condition, lies or unkempt promises, undisclosed prior damage, vehicle history, payment packing claims, failure to honor warranties or service contracts, you name it. They’ve ended up becoming class action claims for improper disclosures, overcharging of fees, improper contract rescissions, undisclosed deferred down payments, backdated contracts, the list goes on.

Even if  class action status is not pursued or settled, attorneys often seek unfair and deceptive acts and practices claims for technical violations by painting a picture of “the greedy dealer profiting from the poor, unsuspecting consumer”.  Believe me; it’s not that tough to sell to most judges and juries, and the ultimate cost to the dealership is often substantially more.

The good news is that these lawsuits are avoidable. Most customers will not seek out an attorney unless they feel they have no alternative choice or feel they are being ignored or mistreated by dealership personnel. Two things that are basically guaranteed to anger a customer are unreturned calls or being treated in a confrontational way. Many potential legal issues can be avoided by simply being courteous, responding to customer complaints or offering a goodwill concession.
All customer concerns should be addressed promptly by qualified personnel, regardless perceived validity. It’s extremely important that care be taken when communicating with customers – their attorney may use what you say against you. Many times a customer will contact an attorney after they have felt ‘bullied” into signing a new contract or threatened with repossession, legal action or consequences to their credit rating. It’s a good idea to have customer complaints reviewed by your legal counsel or compliance officer to make sure there are no foul ups.

Finally, check your ego at the door. While it may be distasteful to let an unreasonable customer “win” when you feel you’ve done nothing wrong, it makes good business sense to take a step back and examine the downside. Once an attorney gets involved, your chances of working out the problem diminish drastically. At the end of the day, does it make more sense to give in to the customer and move on with life or dig in your heels and risk a devastating lawsuit?

Would your business benefit from sales and finance compliance training, a F+I policy audit, or some HR consulting to ensure little customer problems are resolved quickly?  Call KPA to discuss ways we can help you find and implement the right solutions.


Posted in: Sales & Finance Compliance Tags: F+I Compliance, lawsuit prevention, prevent class action suits, reduce customer complaints