What would you do?

A new service adviser accepts a third-party check from a used-car dealer, and it bounces …
… What would you do?

An ASA shop owner writes: “A new customer came in with a vehicle that would not pass emissions. After we performed the diagnostics, we determined that it needed a new catalytic converter at a cost of $1,374 for parts and labor.

“The customer had just purchased the vehicle from a used-car dealer. He called the dealer, and the dealer agreed to pay for it. The dealer brought us a check, and we installed the catalytic converter.

“A week or so later, we were notified by our bank that the check was no good and the account was closed. The phone number for the used-car dealer was disconnected, so I drove over to the business address and discovered they were gone. I’m guessing that they probably went bankrupt, making it useless to go after them.

“The customer has $1,374 worth of repairs, and I have nothing. I feel like the customer is responsible because the payment form the bank used didn’t go through. The customer is refusing to pay for the repairs he received. I’m thinking about suing the customer.” What would you do?

David Denmon
Dave’s Car Care
5102 W. Peoria Ave.
Glendale, Arizona
“I would realize that I just paid $1,374 for an education in the proper procedures for a new hire. Here’s what I learned:
“1. I did not take responsibility for getting a signed document relating to our payment policies and procedures.
“2. I would realize that when the service adviser made the decision to take a check from the third party, my consumer no longer had any obligation to pay because my company agreed to take payment in full from the dealer.
“3. How could I justify my time and the irritation to the consumer with a court procedure?
“4. I would revisit my new-hire packet to make sure all my policies and procedures were explained and understood.
“5. I would never become the third party between a consumer and a car dealer. The consumer should be responsible for making the payment and collecting reimbursement from the dealer.”

Chris Murphy
Chris Murphy’s Automotive
11228 Garland Rd.
Dallas, Texas
“Our company policy is that the vehicle owner, the person presenting the vehicle for repairs and maintenance, is the party who’s responsible for paying the charges that they authorized toward the repair of the vehicle. In this instance, I would have had the used-car dealer give the check to the vehicle owner and let him pay the shop.

“Repair disclaimers in the state of Texas allow the automotive shop to pick up the vehicle for nonpayment. This would let us pursue another course of action to prevent going to small claims court.”

What the shop owner did:

Since the car dealership had gone out of business, the shop owner thought it was a waste of time to go after a bankrupt business. So they filed a lawsuit against the customer in small claims court.

After filing, another shop owner suggested they file with the Oregon state attorney general’s Consumer Fraud Division. Apparently, in Oregon, it’s a serious crime for a business to write a check with insufficient funds. Within two weeks after filing the claim with the AG, the bankrupt car dealer contacted the business owner.

The dealer arranged to make two payments to cover the bounced check. Once the first payment was made, the shop owner dropped the small claims case against the customer.

T.J.’s thoughts:

“It sounds as if you already realize that your service adviser made a mistake by taking a check from the dealer. This is another great reason to have policies and procedures in place and to have your staff trained on them.

“I spoke with a friend who’s an attorney, and he informed me that there is a very strong legal precedence for this scenario. Basically, your customer received products and services that were not paid for. According to him, the law recognizes this and you would have a strong case going to court. However, I’m not an attorney, and this is should not be taken as legal advice.

“The question is whether it’s worth your time. Remember: Never take business issues personally. It’s business! It’s always good to go the extra mile, even when the customer is wrong. Your business decisions will always have long-term consequences. Make them wisely and not emotionally.

“If the bill was less than $500, it definitely would not be worth your time, especially when you consider the time it takes to file your case and go to court. There is also the fact that this might generate a pretty nasty online review. That being said, if you’ve got enough positive reviews, one bad one probably won’t affect your business. For an amount of more than $1,000, I would probably pursue going to court and letting a judge decide.”