Don't Get Screwed By Chrysler For $200

Illustration for article titled Don't Get Screwed By Chrysler For $200

Picture this: You’re buying a new car from a Chrysler dealer, and they say you can get another $200 available from the factory on your purchase. Then they ask you to sign a document which contains a binding arbitration clause.

In the last few months, I have had several lawsuits with Chrysler run into this snag: The attorney for Chrysler calls me to tell me that my client signed a binding arbitration form. My clients never remember doing any such thing, which is understandable. At the time of purchase they are buried under a flurry of paperwork, most of which is not explained or described in any meaningful way. Sign this, initial here, and so on.

So I ask opposing counsel to send me a copy of what my client signed and it is always this: “Chrysler Group LLC - Employee Advantage - Friends Program Pricing & Acknowledgment Form.” My clients are never employees of Chrysler, nor friends of any. Apparently they are just “friends” with the dealer. Or is it the salesperson?

Illustration for article titled Don't Get Screwed By Chrysler For $200

Underneath that heading is this sentence: “THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.” While that sentence is in ALL CAPS, it is in smaller font than the top part. In exchange for signing this form, the buyer gets the car for 1 percent below factory invoice. The deals I have seen these on are not hot cars. If this was a Hellcat, I’d understand. But on a Dodge Dart or a Chrysler 200?

Some clients were told that they were getting a really good deal because they were getting the car “for less than [the dealers] pay for it!”, as if the dealer was losing money on the deal.

That $200 is used as the bait to get the buyer’s signature, which costs the buyer their right to sue. Ominously, the contract warns the buyer that if they violate this contract—presumably by filing suit—then there will be dire consequences. They may be terminated from “the Program.” Yes, you will no longer be their friend.


There are two things to understand about this deal. First, anyone can get one of these cars for less than dealer invoice. As car buying guru Tom McParland points out:

One percent under invoice is a joke. Even if you forget about the crappy cars that Dodge has to give away like the Dart and the Journey and just focus on something that is actually popular like a Charger the average sale price according to TrueCar is about $3500 under invoice or about 10%. Of course TrueCar’s “estimated savings” isn’t always super accurate, but their “average paid” price relative to invoice for a specific vehicle in the national market is a good data point for comparison.


For the full explanation, see this. But rest assured - this isn’t a deal only available to employees and “friends.” And, for this sub-par deal, you sign away your rights to sue under the Lemon Law. You do get to arbitrate, but you will do that in a forum chosen by Chrysler using rules written by Chrysler.

We asked Chrysler about this and here’s what they told us:

The Friends and Family discount provides customers with a 1 percent discount below the dealer invoice; depending on the price of the vehicle this is a discount greater than $200.

By signing this form, consumers are informed that, while they may not sue the Company over the vehicle, they maintain the ability to resolve potential issues through either our customer assistance center or their dealer.


Can you solve your issues that way, or win the arbitration? Sure, but your outcome is less predictable and has none of the safeguards of the court system.

So, negotiate your best price. Read everything you are asked to sign at the time of the sale. And, if you see an arbitration clause, run away. It cannot help you and is not worth the pittance they are giving you in exchange for your signature.


Follow me on Twitter: @stevelehto

Hear my podcast on iTunes: Lehto’s Law

Steve Lehto has been practicing law for 23 years, almost exclusively in consumer protection and Michigan lemon law. He wrote The Lemon Law Bible and Chrysler’s Turbine Car: The Rise and Fall of Detroit’s Coolest Creation.


This website may supply general information about the law but it is for informational purposes only. This does not create an attorney-client relationship and is not meant to constitute legal advice, so the good news is we’re not billing you by the hour for reading this. The bad news is that you shouldn’t act upon any of the information without consulting a qualified professional attorney who will, probably, bill you by the hour.

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Picture this: You’re buying a new car from a Chrysler dealer

I’m struggling to picture this Steve.