Honda fined 24 Million

[JHZR2]

Originally Posted By: Hokiefyd
It's hard for me to go along with a tale that their entire network of dealers, who were allowed to mark up rates, routinely and consistently turned the screws on some racial profiles vs. others. For one thing, I don't think that any organization could pull that off without someone singing (disgruntled employee, etc). Second, I'm not sure what they have to gain from it from a business perspective.


I agree with this logic. Though they did settle, these days the "Lawyers' Monopoly" has set up the stakes such that they price themselves out of meaningful litigation and bringing forth the facts, so manny entities settle on cost.

 

[SteveSRT8]

Point number one, IMO is that ALL dealership transactions are cash to the dealer. They get a check. All a loan does is give them an extra opportunity to fleece you, and the bank involved greases their palm.

Point two is my Family was actually looking at a Honda Accord in the late 70's, don't recall the exact year but the car was grossly over priced. The added dealer mark up was like a grand or so...

 

[VNTS]

When your marketing and people who allocate cars for the corporation are prosecuted, you know [censored] well someone is doing something unethical and they got nailed.

Originally Posted By: HTSS_TR
Originally Posted By: VNTS
on the news, guess they got bagged for corruption on financing, overcharging 200-250$ per customer with racial profiling.

http://money.cnn.com/2015/07/14/news/companies/honda-lending-discrimination/index.html

Honda seems to do these illegal practices, in the 90's their VP of marketing and NE dealerships were convicted of illegal kickbacks for allocations, basically dealers were giving kickbacks to US Honda to get cars and passing the costs to suckers stupid enough to pay the illegal mark ups.

Honda company didn't do these illegal things. Some of the Honda executives took bribes from dealers to allocate more hot selling cars in the 80's and 90's.

Those executives had millions dollars kickback hidden in attic, Honda as company didn't get a penny from those kickbacks.

Dealers are independent business, they can mark up any products by any amount and it is allowed by Federal and States laws. Remember, MSRP is "Manufacture Suggest Retail Price". Actually, manufacture is not allowed to demand dealers to not add markup(s) on any product, be it a vehicle or part.

 

[VNTS]

You can bet if it was GM or Ford doing that the elite media would plastering it all over the front pages.

and yes you have a good memory, it was certain Honda dealers in NE and the corp Honda who decided allocation who were doing the kickbacks, until a couple of franchises found out and when corp Honda tried to cover it up, these guys took them to court and won.


Automotive News
October 2, 1995 - 12:01 am ET
As Honda fights back a rising tide of lawsuits over past management kickbacks, some of its biggest dealers are being drawn into the fray.
New lawsuits filed in California and North Carolina name as a defendant one of the country's biggest retailers, Rick Hendrick, along with his various holding companies and even his children's trust fund.

The California suit also draws in as defendants the California dealerships owned by the New York-based retail chain DCH Inc. and three of its top executives, President Shau-Wai Lam, Executive Vice president Al Sheng and Jamie Sheng. DCH's Gardena Honda is Honda's second largest store in the country.

Also named is Norm Reeves Honda Superstore of Cerritos, Calif., the largest selling Honda store in the country, its co-owner Dave Conant, and Goudy Honda of Alhambra, Calif., Honda's fourth largest dealership.

Honda now faces 35 lawsuits by current and former dealers.Most of them allege that the company sat by in the 1980s and early 1990s while its executives accepted bribes and kickbacks from dealers in return for preferential car allocations and new franchises.

The new lawsuits seek damages from Honda and from dealers whom the plaintiffs allege benefited from corrupt practices.

'When somebody bribes the factory for more cars, then everybody else is going to get less,' said David Bryan, co-owner of Bryan Pontiac-Cadillac and Bryan Honda in Fayetteville, N.C., who filed suit against Honda and Hendrick last week. 'To that extent, we believe Mr. Hendrick is blameworthy.'

Originally Posted By: NHGUY
What is it with Honda and underhanded dealings? Remember it was Rick Hendrick who got in a boodle of trouble by trying to keep a NH Acura dealer away from inventory to sell. Yet Honda is one of the best loved carmakers ever.Goes to show that doing the "wrong thing" has nothing to do with customer satisfaction.What they don't know...wont hurt them...

 

[Win]

Originally Posted By: SteveSRT8


Point two is my Family was actually looking at a Honda Accord in the late 70's, don't recall the exact year but the car was grossly over priced. The added dealer mark up was like a grand or so...


1979, I think, the second oil shock. That's when I made the worst automotive mitake of my life, although I only had to pay msrp to do it.

 

[Hokiefyd]

Originally Posted By: VNTS
'When somebody bribes the factory for more cars, then everybody else is going to get less,' said David Bryan, co-owner of Bryan Pontiac-Cadillac and Bryan Honda in Fayetteville, N.C., who filed suit against Honda and Hendrick last week. 'To that extent, we believe Mr. Hendrick is blameworthy.'


This, coming from a dealership (Bryan Honda) with a solid reputation in Fayetteville of fleecing Service Members who come in with combat pay in their back pockets looking for a new ride. Few people who are actually from Fayetteville buy a car in Fayetteville, Bryan Honda included.

Funny how the principle of "supply and demand" apparently only applies when a dealer is selling a car. When it comes time for them to buy them, then everybody has to play fair. Right.

I drive by Bryan Honda on a daily basis. I wouldn't buy a car from them on a bet.

 

[stephen9666]

$25 million can buy a lot of lawyer time. If Honda wanted to fight this -if they thought it was wrong- they could have done so. Even spending more than $25 mil in lawyer fees could be seen as worth it to protect the name of a large company if they truly thought they were being wrongly accused.

My feeling is there is something to these allegations or Honda wouldn't have settled and added the limitations on dealer loan shenanigans.

I recently went to a Honda dealer in a nice, middle-class community with my mom when I was helping her shop for a car. It was the most stereotypical sheyster dealer I've ever visited. I'm sure not every Honda dealer is this way.

Interesting part of this. Honda has agreed to limit how much their dealers can tack onto the loan rates to cut down on shady dealer practices:
Quote:
. Specifically, Honda has agreed to change the way it prices its loans by limiting dealer markup to 125 basis points (or 1.25 percentage points) for loans of 60 months or less, and to 100 basis points (or 1 percentage point) for loans greater than 60 months. The settlement also provides $24 million in compensation for alleged victims of past discrimination by the nation’s ninth largest auto lender.


Originally Posted By: VNTS
You can bet if it was GM or Ford doing that the elite media would plastering it all over the front pages.

I've seen it on several different media sources, so it's getting a lot of coverage.

Also, on another forum someone claimed this was part of a larger investigation and we could see other automakers settling in the future. I don't know if that's accurate or not.

Originally Posted By: fisher83
I think this has much more to do with credit than it does with discrimination. Dealers attempt to mark up interest rates on every deal they can. The customers with better credit tend to also be better negotiators. The buyers with poor credit are more focused on whether or not they can get approved for a loan and do not focus as much on the terms of the loan. At least that seemed to be the case a few years ago when I was in the car business.

According to the DOJ, that's not the issue here:
Quote:
The settlement resolves claims by the department and the CFPB that Honda discriminated by charging thousands of African-American, Hispanic and Asian/Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Honda charged borrowers higher interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $250 more during the term of the loan because of discrimination, the average Hispanic victim was obligated to pay over $200 more during the term of the loan because of discrimination and the average Asian/Pacific Islander victim was obligated to pay over $150 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Honda’s settlement with the Justice Department, which is subject to court approval, was filed today in the U.S. District Court of the Central District of California in conjunction with the Justice Department’s complaint. Honda resolved the CFPB’s claims by entering into a public administrative settlement.

 

[SatinSilver]

A local Honda dealer here was doing yo-yo financing. I found the article:

http://www.clevescene.com/cleveland/strings-attached/Content?oid=1493617

 

[HTSS_TR]

Originally Posted By: VNTS
When your marketing and people who allocate cars for the corporation are prosecuted, you know [censored] well someone is doing something unethical and they got nailed.

Originally Posted By: HTSS_TR
Originally Posted By: VNTS
on the news, guess they got bagged for corruption on financing, overcharging 200-250$ per customer with racial profiling.

http://money.cnn.com/2015/07/14/news/companies/honda-lending-discrimination/index.html

Honda seems to do these illegal practices, in the 90's their VP of marketing and NE dealerships were convicted of illegal kickbacks for allocations, basically dealers were giving kickbacks to US Honda to get cars and passing the costs to suckers stupid enough to pay the illegal mark ups.

Honda company didn't do these illegal things. Some of the Honda executives took bribes from dealers to allocate more hot selling cars in the 80's and 90's.

Those executives had millions dollars kickback hidden in attic, Honda as company didn't get a penny from those kickbacks.

Dealers are independent business, they can mark up any products by any amount and it is allowed by Federal and States laws. Remember, MSRP is "Manufacture Suggest Retail Price". Actually, manufacture is not allowed to demand dealers to not add markup(s) on any product, be it a vehicle or part.

Honda didn't benefit in any illegal activity from its employees. All the executives took bribes and found guilty didn't give Honda any penny. The one should be responsible and should be fired for those took bribes was the president of American Honda.

What you said was: Honda seems to do these illegal practices and dealers were giving kickbacks to US Honda. This is not correct, IMO.

 

[VNTS]

Honda dealers were giving kickbacks to Honda Corp employees, another article

Automotive News
March 21, 1994 - 12:01 am ET
AN pag 34
The federal indictments claim that former Honda managers engaged in the following schemes:

Cash for franchise points: Dealers paid Honda managers up to $750,000 in cash for new Honda franchises. In some cases, the franchise changed hands, and Honda managers got kickbacks.

Bribes: Honda managers solicited and accepted expensive gifts from dealers in exchange for vehicle allocations or other preferential treatment. The gifts included cars, home furnishings, cash, Rolex wristwatches and thousand-dollar business suits.

Ad agency kickbacks: An unidentified ad agency charged Honda dealer ad groups at least $2.5 million for direct-mail marketing campaigns, then passed the money back to Honda officials.

Training seminar kickbacks: Dealers were instructed to send employees to sales motivation and training classes at $395 per person. American Honda paid $2.8 million for the program. The seminar vendor passed $165,000 back to three Honda executives.

Allocation kickbacks: Field managers received $1,000 cash kickbacks from dealers for allocating port-damaged cars to them.

Allocation interference: In one case, a Honda field manager threatened to reduce a Ohio dealer's vehicle allocation unless the dealer gave him furniture, stereo equipment, jewelry and cash.

Fraud: Honda executives maintained secret ownership positions in franchises they awarded.




What you said was: Honda seems to do these illegal practices and dealers were giving kickbacks to US Honda. This is not correct, IMO. [/quote]

 

[HTSS_TR]

Some Honda executives violated various laws and they found guilty under the court of law. Honda is partially responsible for its employees, but there wasn't any evidence that Honda company benefited from any illegal activity of its employees. Actually Honda as company suffered financially from those illegal activities.

As I said, the one that Honda should fire was President of the US division, he supposed to control/prevent these illegal activities.

 

[VNTS]

Originally Posted By: HTSS_TR
Some Honda executives violated various laws and they found guilty under the court of law. Honda is partially responsible for its employees, but there wasn't any evidence that Honda company benefited from any illegal activity of its employees. Actually Honda as company suffered financially from those illegal activities.

As I said, the one that Honda should fire was President of the US division, he supposed to control/prevent these illegal activities.


Splitting hairs, Honda looked the other way for 12 years.



4 Former Honda Employees Sentenced in Kickback Case
By JAMES BENNET
Published: August 26, 1995


While sentencing Honda executives in a $15 million bribery and kickback scheme, a Federal judge said yesterday that the company "could well be accused of being negligent," but not criminally culpable, for ignoring the scandal's warning signs.

The comments by the judge, Joseph A. DiClerico Jr. of the Federal District Court in Concord, N.H., could bolster the more than two dozen lawsuits brought against Honda by dealers around the country.

"Everybody had their eyes on money instead of a very simple and basic understanding of what is right and what is wrong," Judge DiClerico said.

Honda declined to comment on the judge's statements, saying only that the sentencing of its former executives "helps bring closure to a difficult period in our history."

Eighteen former officials of Honda,have pleaded guilty or have been convicted in the scheme, which lasted from the late 1970's to early 1992. Two dealers, a lawyer and an advertising executive have also pleaded guilty.

The executives solicited bribes from dealers, receiving swimming pools, cars, Rolex watches and manila envelopes with tens of thousands of dollars in cash in exchange for awarding franchises or larger allotments of hot-selling Accords and other cars.

At the time, Honda cars were so popular and in such short supply that dealers could sell them for thousands of dollars over sticker price.

Four former Honda employees were sentenced yesterday in Concord. They included Stanley James Cardiges, the highest-ranking Honda executive charged in the scheme. He was senior vice president in charge of Honda sales throughout the United States when he retired in 1992.

Mr. Cardiges was sentenced to five years in prison and fined $364,000 -- considerably more, his lawyer asserted, than his remaining assets. He had faced up to 35 years in prison and $1 million in fines, but prosecutors had sought only a four-year sentence because he had pleaded guilty and provided testimony that led to the conviction of other former executives.

In setting the sentence, Judge DiClerico accused Mr. Cardiges of being a ringleader, recruiting and corrupting other Honda employees.

 

[HTSS_TR]

Originally Posted By: VNTS
on the news, guess they got bagged for corruption on financing, overcharging 200-250$ per customer with racial profiling.

http://money.cnn.com/2015/07/14/news/companies/honda-lending-discrimination/index.html

Honda seems to do these illegal practices, in the 90's their VP of marketing and NE dealerships were convicted of illegal kickbacks for allocations, basically dealers were giving kickbacks to US honda to get cars and passing the costs to suckers stupid enough to pay the illegal mark ups.

Originally Posted By: VNTS
Splitting hairs, Honda looked the other way for 12 years.

While sentencing Honda executives in a $15 million bribery and kickback scheme, a Federal judge said yesterday that the company "could well be accused of being negligent," but not criminally culpable, for ignoring the scandal's warning signs.

The comments by the judge, Joseph A. DiClerico Jr. of the Federal District Court in Concord, N.H., could bolster the more than two dozen lawsuits brought against Honda by dealers around the country.

Splitting hairs ?

You clearly said "HONDA" as a company committed those crimes, while only some employees/executives did violated the laws.

Even the title is misleading, Honda didn't get fined for a penny, the $24 million was to reimburse the supposed overcharged customers.