FUSEDMARC

Three former employees of a Florida Lincoln-Mercury dealer (from 1989-91) described a “payoff-packing”
scheme that was used to overcharge customers who had leased through Ford Motor Credit. They said that representatives from Ford Credit told them how to inflate customers’ early-payoff amounts, explaining that their Ford Credit branch would “participate” by refusing to give payoff amounts to customers who requested them. Instead, they were told that customers would be referred back to the dealer for payoff information, giving them “an opportunity to make additional profits” by overcharging their customers.
According to a former finance manager, Ford Credit would only reveal payoff amounts to managers who were “approved” by Ford. And dealers were instructed to keep a logbook to record payoff balances that were given to customers, so they wouldn’t be caught giving out differcnt numbers.
Two of the former employees said that Ford Credit representatives used this “payoff-packing opportunity” as a marketing tool to entice dealers to give Ford most (or all) of their leasing business.
Five years later, in California, the Sacramento County District Attorney’s office received a complaint of overcharging on a lease payoff by a local Ford dealer. Investigators discovered that Ford Credit had been concealing payoff information from their lease customers, so the investigation was expanded to include all early payoffs that occurred at that one dealer over a one-year period. It was discovered that 31 people had been overcharged.
That 1995 investigation of one Ford dealer quickly spread to include eight Ford dealers in that area. When it was over, five of the dealers were accused of overcharging their customers by inflating the early-payoff amounts on cars and trucks that were leased through Ford Motor Credit. (And the district attorney’s office said they found logbooks that were used to keep track of amounts that were quoted to customers.)
To settle the charges, all five dealers agreed to pay civil penalties (from $2,500 to $87,500 each) and make restitution to affected customers. A total of 111 people were entitled to restitution, with some receiving as much as $2,000. (The Sacramento investigation only covered payoffs that occurred during a 12-month period, which turned up 111 victims.) Similar investigations were then started by district attorneys in other areas.
“Payoff packing” is believed to have been a common practice at a number of Ford and Lincoln-Mercury dealers, since Ford Motor Credit was the only lender to withhold payoff information from its lease customers. (My sources estimate that this scheme was being used by as many as 65-70% of the Ford and Lincoln-Mercury dealers.)
The company stopped concealing lease payoffs in late 1995 after the investigations were started.