Unit Damage – Which Policy Is the Best Policy?


How much should you tell a potential customer about the condition of a vehicle in your lot?

Where do you draw the line between total honesty and doing what is best for your business?

First, let’s look at the legal requirements that pertain to this question.  States have their own requirements for unit damage disclosure before certain transactions can be completed.  Many states require disclosure for units of a certain age and some regardless of age. Damage also triggers a disclosure requirement which can vary by state. Local laws should be consulted for specific requirements on their unit damage disclosure statement laws.

A lot of states have an Unfair and Deceptive Acts and Practices (UDAP) regulation on the books. Typically, no specific disclosure practices are mentioned in these regulations, but a plaintiff’s attorney would love to find that you knew something detrimental about a unit that you failed to disclose to the customer.  A decision to not disclose this specific information could result in a very expensive liability if it can be proven in court.

 

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Beyond just the legal requirements, what are the moral obligations held to your company regarding unit damage disclosure?  What makes the most sense from a business standpoint?  The goal of every dealership is to have the customer make all payments and pay off the loan.  Since we know that “when the unit stops running, the customer stops paying” holds true, any issues with a unit that weren’t disclosed could turn out to be a poor decision from both a moral and business standpoint.

Being dishonest during a sale would normally result in the customer discovering the deception during the sale or at a later time.  After that realization, the customer is very unlikely to recommend your dealership and would actually speak out against it.  If you had been honest with the customer about certain problems with the unit, the customer is more likely to be grateful for your honesty and either be okay with the faults of the unit or asked to be shown a different one.  Trust is a very valuable asset worth more than one or two sales in the scope of your local reputation.

Failure to disclose known defects to potential customers can be damaging in a number of ways. It can create legal disputes that should be avoided at all costs.  It will certainly jeopardize the relationship between customers who feel deceived by your dealership. As the number of these disappointed customers grows, it will damage the reputation of your business. It’s been said many times and it is as true today as ever – honesty is the best policy.