on the original cost of the car. This in turn is supposed to refer to a chart showing the cost of financing such a car for a given number of months, which chart is likewise supposed to carry the same alphabetical symbol. This is Shreveport, La.'s, Commercial Credit chart. I don't mean to single that company out. It is the only one we are able to get the book on. I am sure it is closely allied to some of the other charts. Now, a 1956 Buick automobile, model 48-D, the Special 2-door sedan, carries insurance symbol "J." In the complex booklet we have, it says to figure out the dollars of finance refer to chart No. J. Not one of those charts has a printed figure J. Every one has a longhand pencil figure "J" and there are four of them. One J chart calls for 12 payments of $100.05, or $200.60 for the 12 months' use of a thousand dollars. Another chart shows 12 payments of $101.84; another chart shows 12 payments of $101.90; and the final one has $103.70, for a total of $1,244.40; apparently dealer's choice for $43.80. SHREVEPORT 4 J⭑CHARTS +1000 FOR 12 MOS. J' 12 PAYMENTS 1000-12000 hhhh OF ་ " 08 +101+-+122205 101-122280 103-1244.40 (DEALERS CHOICE FOR 43.80 Now, in another book here, there is the same kind of thing, and there are some differentials. It says if you feel the customer is entitled to a more favorable insurance rate than class II, or he drives in the rural area so he doesn't run so many risks of collision, or he is this kind of risk, or that kind of risk, deduct these amounts from these charts, $25 a year, or $2 a month, or whatever it is, but note the charts are figured on the highest rate, and only if the dealer decides he wants to deduct, or remembers to deduct, or is extremely careful about it, need he deduct these other things, and, of course, eventually they may get into a problem like they are now. But the customer isn't given much of a break. It is entirely in the hands of the dealer at that point. Senator MONRONEY. Was that book you were quoting from there, or this, for Commercial Credit or Associates Discount? Mr. O'BRIEN. That is Commercial Credit. Associates is from another State, New York. Commercial Credit is right here. Senator MONRONEY. But both types of charts give you the differential. Mr. O'BRIEN. Oh, yes; that is a rather complete thing and, as I say, rather hard to come by. This is for new cars, used cars, very used cars, and so on down. Likewise, this thing has become so terribly complex in the last 15 years, because of the multiplicity of insurance rates and the multiplicity of models of cars, and the risks of drivers, that most automobile salesmen aren't really trained to figure out all of the things on this chart any more than the customer is. He says, "Well, let's let the folks in the office do it." Fifteen years ago in Cleveland we had all of the finance companies and auto dealers file with us, voluntarily, copies of all of their rate charts. One company, and I believe it was an associate, filed 11 different rate charts, but they had no worries about complex insurance at that time. You just bought insurance and that was all there was to it. But with this thing here you have to be really quite a student of financial transactions and formulas to understand how to work this book, and I think the companies make it in as plain language as they can. But, nevertheless, in the hands of an uninformed salesman or a careless dealer, or an avaricious dealer, it becomes an instrument of torture of the customer's pocketbook. Mr. BUSBY. Let me ask one question. They have built into these rates class II insurance; is that correct? Mr. O'BRIEN. I think it is. The highest possible rate is in these "J" charts, the highest rate I noticed in the book. Then it says in the forepart of the book here, differential deduction chart, to be used only for those purchasers entitled to class I, class I-F, class II-D, class II-DF, or class III rates. Then there is all of this business that you have to figure out what your customer is entitled to. Are you a farmer, are you a farmer's son, do you have a teen-age daughter in the house? All of those things must be considered when you buy a car on time. Mr. BUSBY. In other words, the charts are figured on the high rate of insurance, even though most people are in the lower rate, according to statistics that your people brought forth yesterday, and you must make a deduction, a subtraction, from these rates in order to get the proper insurance classification; is that correct? Mr. O'BRIEN. That is right. That places the burden on the dealer's conscience; in case of doubt, let's give the sucker the high rate. Senator MONRONEY. Even if a dealer writes that, the practice as now has been instituted and was in effect at the time that some of these companies did overcharge, what few companies who did not, was that statistical part of whether this man was entitled to a lower rate was sent to the insurance company and if he was entitled to it, he was given that by some of these companies? Mr. O'BRIEN. That is right. Senator MONRONEY. In other words, it didn't necessarily follow because a dealer might have a complex book that he did not-that the insurance company still was not responsible for properly classifying that insurance risk? Mr. O'BRIEN. I think it was demonstrated in Mr. Barnard's and Mr. Backman's testimony yesterday that in several outstanding instances of auto-finance companies, they were meticulously careful in rechecking such items as this with their dealers. If this information didn't show, or if statistically it started to show a curve beyond the normal, they questioned the dealer to, in each instance, obtain the information as to what insurance status this car purchaser belonged in. Now, I believe there has never been any serious question with reference to the independent insurance companies who simply wrote insurance. But this is one of the companies which found itself careless in rechecking those statistics and, as a result of that, is in the situation which was reviewed yesterday, sir. I believe the practice now is to check those things, and yet it is my understanding that this book is in current use, so there is a substantial burden on the dealer, an additional burden on the finance company and its insurance company to recheck back with the customer, if there has been any possible carelessness in this computation. In Savannah, Ga., auto finance gouging seems to be even more primitive, as our better business bureau there has sent us five different rate charts prepared by a commercial printing firm in Atlanta. I photographed three of these charts. They are prepared by a commercial printing firm which prepares charts of any kind you like, and they are distributed throughout the country, not just Georgia. I think the onus is not upon this company. They are just a printing company. 91018-57-pt. 1— -8 |