Kia dealership breaks 'all-in pricing' law in secret shopper test
Erica Johnson, Kimberly Ivany | CBC News | Posted: February 6, 2023 9:00 AM | Last Updated: February 6, 2023
Alberta regulator issued less than $6K in penalties last year against dealerships violating 'all-in pricing'
Wil Brookins knows car dealerships don't have the greatest reputations, but says what happened at the Kia West Edmonton dealership where he worked for almost two years was downright illegal.
People who browsed the dealership's website and came in with a specific vehicle — and price — in mind were pressured to buy "extras," he says, such as exterior paint protection, VIN etching and tire and rim warranties.
They would add thousands of dollars to the price and, he says, customers were told the extras were mandatory.
"This is our bait and switch," said Brookins. "It's really to pad the pockets of the [dealership] owner."
Alberta has what's called "all-in pricing" legislation. (As do Saskatchewan, Manitoba, Ontario and Quebec. B.C. has similar legislation.)
When a dealership advertises a new or used car the price must include all fees and charges, except for taxes and any financing costs.
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"That's the price we have to honour," said Brookins. "Guess what? We don't."
He quit in frustration last month, but says until the day he left, the dealership was blatantly flouting the law, because the owner knew no one would crack down.
"We've been breaking rules since I've been there, and [the regulator's] not doing a thing about it," he said.
Regulators often say they don't have jurisdiction to crack down on dealership wrongdoing — as outlined in a recent Go Public investigation — though they have full power to investigate and take action on all-in pricing.
But according to consumer advocate Mohamed Bouchama, formerly with Car Help Canada and the Ontario Motor Vehicle Industry Council (OMVIC), stiff penalties are almost non-existent.
"The dealers know that," said Bouchama. "So they get away with a lot of stuff."
He said lax enforcement — coupled with months-long waits for new cars in the pandemic and high prices for used cars — has created a "perfect opportunity" for unscrupulous dealers.
Dealership owner Amedeo Palazzo declined an interview request.
In a statement to Go Public, general sales manager Jason Coueslan said the dealership follows rules spelled out by the provincial regulator, the Alberta Motor Vehicle Industry Council (AMVIC).
Secret shopper test
Go Public wanted to test what would happen if a customer went into that dealership and asked for a vehicle with "all-in pricing."
We first checked the dealership's website and chose a Kia Soul EX Premium, listed for $29,045.
We then sent a mystery shopper in, wearing a hidden microphone. He told a salesperson that he saw the Kia advertised on the website and, using the car's stock number, had located the exact vehicle on the lot.
WATCH | Price goes up for secret shopper:
After a test drive, the sales rep said the cost of the car will increase, but will include 3M paint protection, a "pro pack," security, tire and rim warranties, key fobs, a block heater and "some nice rubber mats."
The new price? $37,154.
The shopper pointed out the more than $8,000 difference and asked if any of the additional items could be removed. He was told the car came with a package of "legitimate adds."
"We sell at the [advertised price]," he said. "We conform to it. It just doesn't appear quite like that."
WATCH | Dealership breaks pricing law:
He also said this wasn't the only dealership adding products to the price of an advertised car.
"You're going to be faced with this everywhere that you go," said the salesperson. "Our theory here is you're getting something for the money you're spending. It's real value."
'It's illegal'
Bouchama said the dealership was clearly not following the all-in pricing law.
"It's not OK to force somebody to pay an extra $8,000," he said. "It's illegal, what they're doing. And unfortunately, the regulator doesn't do their job."
He says both AMVIC and OMVIC — he was on its board of directors for two years — are heavily influenced by the industry.
"They are pro-dealer," he said. "They are not motivated to help consumers."
After Go Public shared the results of the secret shopper test, AMVIC spokesperson Laura Meador said they would be sent to the regulator's inspections team.
She also wrote in an email that advertising compliance was the number one issue in all dealership inspections conducted in 2021-22, and that AMVIC is "currently in the midst of a major inspection project" in Edmonton and Calgary, focusing primarily on all-in pricing.
Meador says education is key and any dealerships still violating legislation when they're inspected again 12 to 18 months down the road will get a warning letter or potentially face an "enforcement action."
She said AMVIC supports "progressive enforcement" that could lead to compensating anyone who suffered a loss and paying a portion of AMVIC's investigation costs.
That said, a thorough check of AMVIC's case files reveals that in the current fiscal year, only two investigations were directly related to all-in pricing.
They required both dealerships to pay, in total, less than $4,000 to consumers who were out-of-pocket after all-in pricing breaches.
AMVIC also charged the two dealerships a total of $1,500 to recoup some of its investigation costs, but it appears it has otherwise not issued any all-in pricing penalties against those two dealerships, or any other dealer in the province.
- See AMVIC's all-in pricing case: Supreme Auto
- See AMVIC's all-in pricing case: Finance and Lease Auto
Brookins says he didn't feel good having to convince customers to cough up for mostly unnecessary and grossly over-priced extras
He says he and the sales team were coached to get a deposit from customers before they learned the full price of the vehicle with all the add-ons.
"The goal with that is to try and get as much money as you can from the customer," he said. "So if it's $1,000, $2,000, $5,000, we can hold their feet to what they signed."
He says after a customer got the full price, they'd often want to cancel the sale. If they did, he said, they could lose their deposit.
"We are trained to lie and deceive customers. We never give [prices] through email or text, so we don't leave a trace for anyone to call AMVIC," he said.
The dealership's general sales manager, Coueslan, says the allegations are not true and the dealership is considering legal recourse.
Go Public also shared the results of its secret shopper test with Kia Canada in Mississauga, Ont.
Spokesperson Susan Bernardo said in a statement Kia was "concerned" and has "engaged the dealer in question."
Bernardo wouldn't say whether the dealership would be fined, citing confidentiality.
The real accountability, Bouchama says, lays at the feet of provincial governments that should implement strong regulations, with robust enforcement and substantial penalties.
"Otherwise… dealerships will continue to violate the law," he said.
Asked to respond to criticism that AMVIC is not doing enough to penalize dealership wrongdoing, a spokesperson for Alberta's Ministry of Service, which oversees AMVIC, said "a good regulator uses a variety of tools" — ranging from education and prevention to stronger measures.
"Sometimes stronger enforcement is necessary to change bad behaviour," Andrew Hanon said in a statement.
He did not address criticisms that AMVIC rarely seems to use those "stronger enforcement" tools.
If you live in a province with all-in pricing laws, Bouchama recommends getting proof of an advertised price before going to the dealership.
And play the waiting game, he says, because the current car shortage is going to pass in six months to a year.
"Don't cough up thousands of dollars more because you want the car right now," he said.
After he quit, Brookins got hired at a competing dealership in Edmonton, Sherwood Kia. "It was just a circus," he said. "I'm so much happier at the new place."
Meanwhile, Kia West Edmonton appears to have figured out a way to avoid breaking all-in pricing legislation — at least for its new vehicles. The dealership has removed all pricing for those from its website.
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