FUSEDMARC

Ford Motor Credit witnessed outrageous acts of overcharging by its dealers and did nothing to stop them. In some cases, vehicle prices had been secretly increased by $5,000 (or more) over suggested retail and Ford Credit approved the leases, collected the money from customers, and paid the dealers their “share” of the profits. For example, Honda resident Carla Higginbotham leased a 1994 Ford Mustang through Ford Credit, making a cash down payment of $4,695. Since the price was not disclosed in the lease, the dealer was able to increase it to $25,692—a secret “bump” to $4,802 above MSRP. As the result of that “disappearing down payment” trick, her monthly payment was $441 when it should have been
$250.
(By the way, when Higginbotham was asked why she made such a large down payment on a lease, she said she thought it was a purchase, not a lease. A similar thing happened to W.E. Mulkey in Georgia, who leased a 1994 Ford Ranger through Ford Credit. He made a down payment of $6,319 which should have reduced his monthly payment to about $3 (yes, that’s right: only three dollars), but he was charged $251 per month for the whole term. The price of his vehicle had been secretly increased by $5,500 over MSRP. (Out of eight leases involved in one lawsuit against Ford over early termination, six of them had overcharges ranging from $1,175 to $5,500.)
Several attorneys general working on leasing investigations say that fraud is assumed to be involved any time a vehicle price is increased by more than 5% above retail. In those two examples, the increases were 22% above retail for Higginbotham, and 36% above retail for Mulkey. And Ford Credit has been well aware of outrageous overcharges such as those two, because they receive itemized reports from dealers that contain the information.
Dealers were required to complete a “dealer worksheet” for every lease that was turned in to Ford Credit, listing the actual selling price, the suggested retail price, and the exact amount of mark-up on the vehicle. Any price increases that occurred would have been immediately noticeable on the worksheets. For example, the dealer worksheet for the Higginbotham lease showed the $4,802 price increase, and listed the total mark-up as $6,388—on a car that retailed for $20,890. (The normal dealer markup on a car in that price range would be about $2,000.)
Ford even had a system set up to handle significant overcharges. In their Red Carpet Lease (RCL) dealer handbook, under “Excess Deferred Gross,” dealers were told that the company would withhold funds from the dealer on leases that had “excess mark-up.” At the end of the lease, Ford Credit would then pay the rest of the money to the dealer— but only if the car was purchased by the customer or dealer, not if it was turned in to Ford.
Apparently it was OK for dealers to take advantage of their customers, but cheating Ford would not be tolerated. The company’s dealer handbook said, “Ford Credit does not restrict the amount of profit the dealer may include in a lease, only how much is advanced to the dealer at lease inception”