D+AS MAGAZINE

FEATURES — New Dealer Survey: Reveals Widespread Unethical Practicess

© 2002 Door & Access Systems
Publish Date: Summer 2002
Author: Tom Wadsworth
Pages 26-28


New Dealer Survey
Reveals Widespread Unethical Practices
By Tom Wadsworth


In April at Expo 2002 in Nashville, I conducted an informal poll among the 100 participants who attended my Media Crisis workshop. My question: “How many of you believe that door dealers in your area are engaging in unethical business practices?” At least 60 percent of the hands shot up.

Stunned, I wondered if I had skewed the results by asking the question in a certain way. So, in mid-May, we drafted a carefully worded survey and faxed the survey to 186 established dealers throughout the U.S. and Canada. Within a couple of days, 86 dealers (46 percent) completed the survey and faxed it back.

The survey asked three simple questions.

1. Do you have a door dealer(s) in your market area who, in your opinion, is using unethical business practices?

Respondents to this first question had the opportunity to select from three answers:

  • “Yes, definitely.”
  • “It’s hard to prove, but I think so.”
  • “I’m not aware of any unethical activity in my market area.”

We added the word “definitely” in an attempt to weed out those who simply assume that their competitors are being unethical. After all, competitors in any business (or sport) often believe that “the other guy is cheating.”

59% Said “Yes, Definitely.”

Nonetheless, we were surprised that 59 percent of the respondents checked the “Yes, definitely” box. Only 19 percent said they were “not aware of any unethical activity” in their area. The other 22 percent checked the middle box, saying that they “think” others are engaging in unethical activities, but feel “it’s hard to prove.”

Adding the responses to the first two options, a remarkable 81 percent of dealers believe that unethical practices are either definitely or probably being practiced in their area.

Don’t misread these results. The survey does NOT say that “59 percent of all dealers are engaging in unethical practices.” It says that 59 percent of our respondents believe that at least one of their competitors is being unethical.

Note: It’s possible that our survey attracted more responses from dealers who are upset about their competitors’ practices. Of the 100 dealers who didn’t respond, it’s possible that they didn’t have an ethics problem in their area and were thus less motivated to complete the survey.

However, most pollsters would be thrilled to get 46 percent of all fax surveys returned. It’s likely that our respondents represent a good representative sample of door dealers in North America.

Our survey was sent to almost every U.S. state and every Canadian province and was generally not sent to two dealers in the same market area. Consequently, a more reasonable conclusion is that 59 percent of all market areas have a perceived problem of unethical activity by door dealers.

Identifying Unethical Practices

Being curious about the exact nature of these “unethical business practices,” our second question asked …

2. In your market area, which of the following activities are currently being practiced by a door dealer(s)?

We didn’t want to know about the past or about problems that they heard about in some other area, so we asked about activities that are “currently” being practiced “in your market area.”

The survey offered five options, and the respondent could check “all that apply.” Specifically, the options were:

  • Grossly overcharging for parts, products, or service.
  • Installing cheaper products than those specified by the customer.
  • Publishing false information in advertisements (newspaper, Yellow Pages, etc.).
  • Other: _____________.
  • None.

Grossly Overcharging

We intentionally added the word “grossly” because “overcharging” alone is not specific enough. If your competitor charged 10 percent more for a service call, you might be inclined to call that “overcharging.” “Grossly overcharging” caused the respondent to think twice before checking that box.

Still, nearly half of all respondents (47 percent) said they were aware of a competitor “grossly overcharging” customers for parts, products, or service.

At face value, this practice may not seem problematic. After all, it’s easy for a reputable dealer to look good when compared to a gouging competitor. However, that gouging competitor has the potential to harm the reputation of all honest dealers in an area.

Installing Cheaper Products

In this response, we were looking for incidents where the dealer tricked the customer by installing a product that was less than what the customer expected. The practice may occur on commercial jobs where the specifications call for a certain product, or on residential jobs where the dealer pulls a similar “bait and switch” scam.

Example: A dealer installs a 26-gauge steel door when a 24-gauge steel door was specified or ordered by the customer. Most novice customers, commercial or residential, would not be able to tell the difference, and the dealer pads his pocket with the extra profit made on the sale.

This unethical practice was the number one response in our survey, as 50 percent (43 of the 86 respondents) felt that this practice was currently active in their area. A Wyoming dealer, for example, commented that his competitor is “misleading” the customer to believe that “products are equal in specs.”

An Ontario respondent reported that a competitor is “selling used equipment as new,” while a Texas dealer specifically mentioned the practice of “installing used torsion springs as new.” In a related incident, a dealer in a southern coastal area reported that his competitor is “selling non-wind-rated doors.”

A gleeful Ohio dealer, after checking the “Installing cheaper products” box, wrote, “This guy just got caught on a commercial job!”

Publishing False Information in Ads

In drafting this response, we deliberately avoided the phrase “misleading information.” We wanted dealers to report only the hard-core unethical practice of publishing outright false information. We hoped to minimize responses from competitors who might have a petty quarrel over ambiguous advertising lines such as “best service” or “great prices.”

Still, a quarter of our dealers (26 percent) felt that a competitor is guilty of publishing false information. To be specific, three different dealers commented that some dealers publish false information about being “insured,” “registered,” or “licensed.” A South Dakota respondent said his competitor is “giving customers false product information and warranties.”

A dealer in southern California noted that a competitor has an ad in the Yellow Pages that boasts, “Guaranteed Low Prices.” He wrote that this competitor appears to be the same firm from the Dallas area that was exposed on Dateline NBC for charging exorbitant fees.

“Other” Unethical Practices

One of every five respondents (20 percent) checked the “other” box. These dealers listed a variety of complaints, such as:

  • “Stating door cannot be repaired when it can be.” (Michigan)
  • “Paying kickbacks to purchasing agents.” (Hawaii)
  • “Replacing doors that should be repaired.” (Utah)

Surprisingly, only 13 percent of our respondents checked the “None” box. In other words, 87 percent reported some specific bothersome practice in their area.

This number (87 percent) is much larger than the 59 percent in question #1 who said “Yes” there are “definitely” unethical practices in their area. We suspect that, for question #2, some dealers reported annoying activities that may not be strictly considered as “unethical.”

Large Cities Prone to Abuse

Our third question simply sought to identify the size of the respondent’s community. Suspecting that unethical practices might be more likely in large cities, we asked:

3. What is the estimated population within a 10-mile radius of your central location?

Only three choices were given:

  • Town (Less than 100,000 people).
  • City (100,000 - 500,000 people).
  • Large City (more than 500,000 people).

The survey results confirmed our suspicion. Separating the results by population, we found that 72 percent of dealers in large cities said, “Yes, definitely,” a door dealer in their market area was using unethical business practices.

However, only 40 percent of dealers in towns (< 100,000 population) checked the “Yes, definitely” box. The middle category of “City” revealed that 64 percent “definitely” believed they had an ethics problem in their area.

Responses to the second question, seeking to identify specific practices, also revealed a similar pattern of questionable behavior in large cities. All (100 percent) of the large city respondents had a specific problematic activity to report; none of them checked the “None” box.

Big Problems in Big Cities

The most significant problem reported was “grossly overcharging,” where 76 percent of big-city dealers reported this activity in their area. That percentage varied greatly with the response from the “towns” where only 20 percent of the dealers reported it to be a problem.

Another obvious problem in large cities was “Installing cheaper products than those specified by the customer.” Nearly two-thirds (64 percent) of our big-city dealers felt this practice was currently underway in their area.

The problem of unethical practices in large cities may not be surprising. If you engage in unethical business practices in a smaller community, bad news will travel quickly, it’s harder to hide, and you will soon find yourself out of business.

Whereas, in large cities, one wronged consumer has less ability to harm the reputation of an unethical dealer. A pebble tossed in a puddle makes waves in the entire puddle. A pebble tossed in a lake is not even noticed.


Editor’s Note: If you have a comment on this story, please send your remarks to: daseditor@dasma.com or fax to 815-285-2543. To participate in future DAS surveys, send us your fax and/or E-mail address.



Respondents by Population
Town (<100,000) 25 (29%)
City (100,000 - 500,000)

36 (42%)

Large City (500,000+)

25 (29%)

Total Respondents

86 (100%)

Question: What is the estimated population within a 10-mile radius of your central location?

Unethical Business Practices?

Yes, definitely 59%
I think so.

22%

I’m not aware of any.

19%

Question: Do you have a door dealer(s) in your market area who, in your opinion, is using unethical business practices?

Unethical Business Practices?

Answering “Yes, definitely.”
By size of market area

Town

40%

City

64%

Large City

72%

Dealers in large cities were much more likely to answer “Yes, definitely” to our question about unethical business practices in their area. While 72 percent of dealers in large cities reported unethical activities, only 40 percent of dealers in smaller towns reported the same.

Activities Currently Practiced

Gross Overcharging 47%

Sell and Switch

50%

False Advertising

26%

Other

20%

None 13%

Actual Choices: Grossly overcharging for parts, products, or services; Selling cheaper products than those specified by the customer; Publishing false information in advertisements (newspaper, Yellow Pages, etc.); Other; and None.

Dealers in Towns (pop. <100,000)

Activities Currently Practiced

Gross Overcharging

20%

Sell and Switch

48%

False Advertising

12%

Other

24%
None 20%

For dealers in lower population areas, the biggest problem is a competitor who is “selling cheaper products than those specified by the customer.”

Dealers in Cities (pop. 100,000 - 500,000)

Activities Currently Practiced

Gross Overcharging

44%

Sell and Switch

42%

False Advertising

33%

Other 17%
None 17%

For dealers in mid-size city areas, a third (33 percent) say that a competitor is “publishing false information in advertisements.”

Dealers in Large Cities (pop. 500,000+)

Activities Currently Practiced

Gross Overcharging

76%

Sell and Switch

64%

False Advertising

28%

Other 20%
None 0%

Three-fourths (76 percent) dealers in large cities report of a competitor who is “grossly overcharging for parts, products, or services.”