Detroit Free Press from Detroit, Michigan • Page 80

MONDAY.f JAfiTTRY 2 4, 2 0 0 0 LOCAL NEWS TROIT FREE PRESS 3B FARRI Dealer says slew of complaints a tiny part of input PREVENTING BAD CAR DEALS The best way to guard against a bad car deal is to arm yourself with information, experts say. i In V2 I St V-ZZKvcl O.d fairy) I i-f. I 4-i vv.f a it lx I -1 'O -TIL received $36.5 million from investors. He plans on used-car superstores MEL FARR AUTOMOTIVE GROUP President: Mel Farr Sr. Vice President Randall Secord Controller: Donna Davis Combined annual gross sales, 1998: $596.6 million Employees: 817 Subsidiaries 0 Triple Financing Triple Collection Agency, Royal Oak Township, created 1986.

Over $55 million in outstanding accounts as of June. 0 Mel Farr Ford, Oak Park, purchased 1975. 0 Mel Farr Lincoln Mercury, Waterford, purchased 1986. Mel Farr ToyotaMazdaVolkswagen, Bloomfield Hills, purchased 1989. 0 Mel Farr HyundaiSuzukiKia and Used Car Superstory, Royal Oak Township, opened August 1996, expanded in 1997.

Mel Farr Ford, Fairfield, Ohio, purchased 1991. 0 Mel Farr Lincoln Mercury-Trotwood, Dayton, Ohio, purchased 1995. Mel Farr Lincoln Mercury-Dayton, Ohio, purchased 1997. Note: Farr Is parl-onww of Mel Fair Ford of Grand Blanc, which Is not considered pan of the automotive group. Source: Free Press research From Page IB turn to the dealership for repairs or free oil changes suggests she didn't maintain the vehicle.

Banks said she refused to go back because she was mistreated. She is among nearly 250 customers who filed lawsuits or regulatory complaints against Farr since January 1996, claiming Farr sold them unreliable cars that drove them deeper into debt and ruined their credit. State regulators said they think Farr is a problem car dealer, but they said most of the complaints probably would go away if he tried harder to satisfy customers. The complaints have stirred a controversy that threatens to undermine Farr's reputation as a champion of poor people with battered credit. The controversy comes as Farr embarks on an ambitious plan to open more used-car superstores in Detroit, Baltimore, Houston, Cincinnati and Dayton, Ohio.

He is bankrolling his plan with $36.5 million he received from investors last September with the help of Rev. Jesse Jackson. The new stores, like the one in Royal Oak Township, will cater to people with the worst credit. Farr, 55, a former Detroit Lions running back who bought his first car dealership in Oak Park in 1975, said he could not have built the nation's highest-grossing black-owned business by mistreating customers. His company, the Mel Farr Automotive Group, grossed $596.6 million in 1998.

"Why are we having all these complaints?" Farr said. "It's because we've entered a market that other dealers don't want to do business in, and the reason they don't want to do business in it is because of all of the problems." But the problem is Farr, says Sharonda James-Cason, who sued his used car dealership in August. "People told me not to go there because he sells bad cars," James-Cason said. "I wish I would have listened." Growing complaints In the last four years, customers have filed 49 lawsuits, 161 complaints with state regulators and 32 complaints with the Better Business Bureau against Farr's four Detroit-area dealerships. Farr's 242 lawsuits and complaints nearly equaled the combined total of his five largest Detroit-area competitors.

Since 1996, the Michigan Bureau of Automotive Regulation, a division of the Michigan Department of State, investigated 106 complaints against Farr's dealerships. In 21 of those cases, the bureau issued warnings that the dealerships violated state motor vehicle sales laws. In September, Farr signed an agreement with the bureau pledging to obey the law at his Lincoln Mercury dealership in Waterford after investigators discovered a customer's name had been forged on a car title application. In the suits and complaints, customers said his dealerships: Overcharged them for old cars that often malfunctioned shortly after leaving the lot. Misrepresented the terms of car deals and failed to honor promises or costly repair warranties he required them to buy.

Kept their cars in the repair shop for excessive periods of time, complicating their efforts to get to work to earn money to keep up with their car payments. Sent them home in new cars with assurances that their financing had been approved when it hadn't. Days or weeks later, several customers complained, Farr's staff demanded they sign new leases requiring bigger down payments, higher interest or less desirable vehicles. Most of the complaints involved used cars sold at the Royal Oak Township used-car store run by his son Mel Farr and the Oak Park Ford dealership run by Farr's other son, Michael. Farr insists that the overwhelming majority of his customers are happy, noting that the 242 lawsuits and complaints account for one-half of one percent of the 41,500 vehicles he sold or leased during the last four years at the four Detroit-area dealerships.

One-third of his customers are people with risky credit. 1 He said it's unfair to compare him with other large dealerships because they don't cater to high- risk customers. The reason, he said, is that many of those cus- tomers lie on credit applications, don't pay their bills and are quick to file lawsuits and regulatory complaints even when they've been treated fairly. Although some of the complaints resulted from honest Car-buying guides Go to bookstores for Consumer Reports and other guides. On the Web, go to www.edmunds.com or www.cars.com.

Guides also are available from the Better Business Bureau and Michigan Secretary of State's Office. For a fee, www.carfax.com will check the history of a specific car for problems. For car reviews, also go to www.auto.com. How much should you pay? First, figure out what you can afford. Focus on the overall price, not just the payments.

For a new car: www.edmunds.com or www.autobytel.com. For a used car: The Kelley Blue Book or the Official Used Car Guide of the National Automobile Dealers Association can help you figure the value of the car you are buying, or your trade-in. Both are on the Web at www.kbb.com or www.nada.com. Before you buy Test drive. Get a used car inspected by a certified mechanic or knowledgeable friend.

Make sure the paperwork has the correct terms and specifies the seller's promises before you sign. Read the title for the car's mileage and history. Get copies of everything. Getting help If you think you've been abused by a car dealer or mechanic, here's where to get help. Better Business Bureau of Detroit and Eastern Michigan: Members pledge to make a good-faith effort to resolve consumer complaints.

To file a complaint or obtain a car-buying guide, call 248-644-9100 anytime, or write the bureau at 30555 Southfield, Suite 200, Southfield 48076-7751. You also can get a buying guide on the Web at www.bbb.org To get a voice report about a dealer, call 248-644-9100 anytime. Better Business Bureau of Western Michigan: Call 616-774-8236, or write 40 Pearl NW, Suite 354, Grand Rapids 49503, or visit its Web site at www.grandrapids.bbb.org. To get a voice report about a dealer, call 616-774-8236 anytime. Bureau of Automotive Regulation, Michigan Department of State: Investigates car dealers, repair facilities and mechanics for alleged violations of state law.

Investigators can help resolve a dispute. To file a complaint, call 800-292-4204 anytime, or write the Bureau of Automotive Regulation, Michigan Department of State, Lansing 48917. You can obtain a complaint form by fax by calling 517-335-4329 anytime or by visiting its Web site at www.sos.state.mi.usbar. Consumer Protection Division, Michigan Attorney General's Office: Enforces the Michigan Consumer Protection Act. To file a complaint, call 51 7-373-1140 anytime, write Consumer Protection Division, Michigan Attorney General's Office, P.O.

Box 30213, Lansing 48909, or file on the Web at www.ag.state.mi.us. Financial Institutions Bureau, Michigan Department of Consumer and Industry Services: Regulates automotive installment sales, not leases. To file a complaint, call 51 7-373-3460 anytime, write to the Financial Institutions Bureau, Licensing and Enforcement Division, P.O. Box 30224, Lansing 48909, or file on the Web at www.cis.state.mi.usfib. Getting a lawyer To find a specialist in auto lawsuits, call the Macomb County Bar Association at 81 0-468-8300, weekdays; Oakland County Bar Association, 248-398-3937, 9-4 weekdays; the Detroit Metropolitan Bar Association, 313-961-3545, weekdays, or the State Bar of Michigan Lawyer Referral and Information Service, 800-968-0738, weekdays.

By David Ashenfefcer pi Mel Farr, at his Oak Park store, has mistakes and misunderstandings, Farr blamed the others on unreasonable, irresponsible and dishonest customers. A matter of responsibility Farr said many high-risk customers don't change the oil in their cars, drive them into the ground and he gets the blame. That's what he says happened with James-Cason. She sued him in federal court in Detroit after Farr's used-car dealership refused to replace her car engine a second time under warranty. James-Cason, a receptionist for a Detroit tax preparation firm, leased a 1993 Hyundai Sonata with 68,768 miles on Feb.

10, for $189 every two weeks, including interest about $15,150 over three years. Three months later, the engine overheated and her car stopped on a freeway. Farr replaced the engine under warranty and James-Cason paid a $100 deductible. But she had to wait a month to get her car back. A week later, the engine overheated again.

She said a tow truck driver fixed the cooling fan with a clothes hanger to get her through the weekend. A few days later, the engine overheated and died. Farr refused to replace the second engine under warranty, saying the fan repair was improper. He also said she put 11,000 miles on the car in seven months, increasing the chances of a breakdown. From July to October, when she quit paying, her car sat in Farr's parking lot because they couldn't agree on who would pay for the engine, Farr said.

Now she rides the bus. "It makes me so mad," James-Cason fumed. She said the tow truck driver who fixed her fan works for the towing service that Farr uses, so Farr should be responsible for the damage. Farr said he doesn't own the towing company and isn't responsible for the actions of its drivers. Farr said he's getting a bum rap from people such as James-Cason, one of 20 to 30 unhappy customers who called the Free Press for help after reading a report last summer about an unsuccessful effort by some customers to persuade a Wayne County Circuit Court'judge to allow a class-action lawsuit against Farr.

"Everybody that's calling you is not truthful," Farr said. He has a vision Farr is a man with a mission. "My job as an African-American businessman is to create as many middle-class black people as I can to expand the marketplace," Farr said. "You can't do that without transportation." He says he has lost $15 million trying to learn how to sell cars to risky customers and still make a profit. "I've asked myself a lot of times if it's worth it," Farr said.

"But when I get up in the morning, I say to myself, 'If I don't do it, who One guy with vision can make a difference." To achieve his goal, Farr created Triple Financing in 1986, which charges a maximum 25-percent annual interest, the state's legal limit. It has issued more than 12,000 loans. He also created a collection agency. In 1998, 'arr began requiring WILLIAM AHCHIEDetroit Free Press in Detroit and four other cities. Detroit MICHIGAN Lake Ens C.

CO OHIO Columbus 'J I 0 40, Mlllt A Detroit Free Press won't do business with them, he said. Making changes Since the controversy began last year, Farr said he has stopped delivering cars to high-risk customers before financing is finalized. He said he also has stopped delivering used cars to risky customers the same day they pick out the car because he doesn't want to be accused of pressuring them to buy. Other car dealers have mixed feelings about Farr's practices. Some said he deserves a medal for serving a difficult market.

Others said Farr's used cars are so old, they're unlikely to make it to the end of the lease. So, the people least able to afford big repair bills are leasing cars that are most likely to break down. Farr says he would lose money if he offered newer cars to such risky customers. The age of the vehicles and customers' failure to maintain their lease cars are why he offers free oil changes every two months to Triple customers. He said he's trying to acquire fleet cars that Ford Motor Co.

leases to large businesses because those cars are better maintained than trade-ins. Despite the complaints, Rodger James, director of the Bureau of Automotive Regulation, said Farr doesn't appear to be a predatory car dealer. James said most of the violation notices his agency issued against Farr were for minor infractions. But James said he thinks most of the complaints against Farr would disappear if he tried harder to please his customers. "If the dealer did a better job of taking care of dissatisfied customers, we wouldn't have to be involved," James said.

DAVID ASHENFELTER can be reached at 313-223-4490 or ashenfjifreepress.com. LEKAN OGUNTOYINBO can be reached at 313-223-4550 or oguntoyinbofreeLress.com. Triple customers to lease, rather than buy, used cars, so he could repossess the vehicles more quickly if customers stopped paying. He said leasing also results in lower payments. In June, he started equipping Triple customers' cars with On-Time devices, preprogrammed electronic gadgets that prevent customers from starting their cars if they miss a weekly payment.

When they pay, customers get an access code that lets them start the car. Two customers have sued, saying the devices shut off their cars in traffic which Farr said is impossible. He said the devices give risky customers the discipline to pay on time. Since installing the devices, Farr said, the 25-percent delinquency rate has dropped to nearly zero. To lease a used car from Farr, a high-risk customer needs a job and a down payment.

In return, Farr promises to provide a car that will start, run, move, steer and stop. Although the car is likely to be a few years older than used cars on other lots, Farr says he reconditions every vehicle to make sure it runs. Nonessential accessories, such as radios, are not fixed. If anything goes wrong with essential equipment within the first 30 days, Farr pledges to fix it for free if the customer hasn't abused the vehicle. And if the repair isn't covered by Farr's warranty, Farr promises to give customers a no-interest loan to pay for the repair if their payments are current.

Farr also promises that people who have improved their credit can upgrade to a newer car within one year if they haven't abused the car. Customers dispute Farr Customers say Farr has reneged on all of those promises. Banks, a Westland single mother, said her 1988 Daytona, with 110,000 miles, kept stalling on the way home from the Royal Oak Township dealership in February 1998. When she took the car back, she said the dealership refused to honor a salesman's pledge that she could return the car in 72 hours if she wasn't satisfied. She said the dealership refused to fix the car under the three-month, $511 extended warranty she purchased with the car.

Banks said she spent two days at the dealership begging for a replacement. Finally, she said, someone offered her the 1987 LeBaron with 115,525 miles, which she leased for about $7,400 plus interest for three years. The car was a cosmetic disaster, Banks said. Power windows didn't work, the driver's door wouldn't stay shut and the driver's seat belt was broken, causing her to nearly fall out of the car, she said. The tires were bald, there were holes in the trunk and floorboard, and the car contained multicolored parts from other LeBarons, Banks said.

Still, Banks said she was grateful to have the car until it started stalling, too. She said a $306 wiring harness that wasn't covered by the extended warranty didn't correct the stalling, so she rarely drove the car. When the engine finally quit in February -99, she said, she DEALERSHIP LOCATIONS stopped paying her lease and told the dealership to pick up the car. "There's no way I'm going to sign another contract with Mel Farr," Banks said. "I can't afford to be robbed again." She said her mother bought her a more reliable car elsewhere.

Farr produced a repair order showing that the dealership spent $1,229 reconditioning the LeBaron before leasing it to Banks. The work included a new water pump, battery, brakes, a new axle and repairs to the front seat belt. Mel Farr Jr. said the Royal Oak Township dealership leases about 200 used cars every month, and five to seven can be expected to break down, as Banks' first car did. "That's just the odds," he said.

But Banks' lawyer said his client was gouged. "Farr isn't helping any of these poor people," said John Dougherty of Detroit, who with partner Robin Kyle has filed more than a dozen lawsuits against Farr since August. "He's enslaving them and burying them under debt." Dougherty and Detroit lawyer Kenneth Hylton who is suing Farr on behalf of other unhappy customers, said Farr notified some of their clients in November that dealerships had shortchanged them, in some cases hundreds of dollars, on down payments on used car leases. The lawyers said that the problem never would have come to light but for the lawsuits, and they said it is further evidence of deception. Farr's vice president, Randall Secord, denied that.

He said the errors, which affected about 2,000 customers, was uncovered while making Y2K computer updates. Secord also denied that Farr is overcharging his customers on leases, noting that insurance companies and other businesses routinely make people with poor credit pay more for goods and services because they are high risks. That's wy other dealers i Waterford L. VONTIAC ROCHESTER I HILLS BloorifieM vj Hills i i TROY jnfcaHi -tJapark is I.