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Payment Packing and Deal Packing Fraud

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Payment Packing and Deal Packing

Payment Packing or Deal Packing is another common type of California auto dealer fraud that occurs when an unsuspecting consumer agrees to a monthly lease or purchase payment that is higher than what a vehicle’s actual payment is, so the salesperson or finance manager dishonestly offers “free” or discounted products (add-ons) in an effort to retain the inflated profit. These add-ons usually include aftermarket items that are not covered by the vehicles warranty (and sometimes even void parts of it) and pre-delivery services that offer little to no value.

The most successful method for a dealership to pack payments is to get a buyer to focus on the monthly payment instead of the selling price of a vehicle. The salesman will often ask the buyer what kind of payment they can afford or present an inflated “Four-Square” that is supposed act as a negotiating worksheet. In both instances the salesperson hopes for the individual who will immediately agree to the first offer usually resulting in more profit than a dealership knows what to do with. Quite often the manager will grumble that they left money on the table and have the salesman offer high profit items that have little to no cost (or value) for free, or at a fictitiously discounted price in order to find a “home” for the additional profit. As dealerships become more computer savvy, inflated monthly vehicle payments become increasingly sophisticated and “Four-Squares” are being replaced with computer printouts that often generate 14-32 fictitious payment options (sometimes claimed to come from competing banks) along with undervalued trade-in quotes and an occasional over-sticker selling price. Even highly educated buyers fall victim to Payment Packing and Deal Packing in what appears to be a legitimate bank offering.

Deal Packing occurs when the sales department sends the inflated payment up to the finance department as a “leg” to sell additional services and aftermarket items such as paint or fabric protection, gap insurance, tire and wheel insurance, service contracts, warranties, theft deterrents such as LoJack or window etching and even security systems. The finance salesman or manager can the use the “leg” by applying the pre-purchased profit against the cost of additional items to make them seem like real bargains or values. When the finance department has “pre-sold profit” and the buyer refuses to purchase any additional items no matter how low they are discounted, then suddenly the customer may be given one or some of these items for free so that the dealership can retain whatever additional profit is left.

Every item that is sold to the customer must be clearly stated on the contract. If you are ever sold or given an item when purchasing a vehicle and that item is not listed on the contract, you have most likely fallen victim of Deal or Payment Packing. Another strong indication you are being defrauded is anytime you are offered a product or service for free. Many consumers are led to believe the dealer is their friend and offering them a service or product as a token of this friendship, when in fact the item was already pre-sold to them without disclosure.

If you suspect that you may be the victim of a Loan Packing or Deal Packing, or if were ever offered any item or service either for “free” or at unrealistically low price, then you give us a call at (888) 536-6628 or fill out our FREE Vehicle Evaluation Form and one of our CA Dealer Fraud Attorneys will review your case to discuss what legal options are available to you.