Bundling? Really?

Bundling is suddenly a hot subject for F&I consultants. Bundling is the practice of packaging F&I and after sale products. This strategy may lead, overall, to more sales than á la carte offerings. But it may also generate more problems.

It may be difficult for a consumer to determine the true costs and impact on the monthly payment of each element of the package without individual disclosures. This may spark regulatory interest, and may even lead to lawsuits.

What kind of lawsuit, you ask? A packing claim for a start. We all know that packing is the failure to itemize the base payment and the F&I and after sale product payments but instead quoting “a single payment”. A bundling lawsuit would be a variation in which a customer would charge that the dealer engaged in packing by hiding the price impact of each of the products sold when the customer may have truly wanted only one or two of the products. Lawsuits for failure to adequately disclose the cost of credit under the federal Truth in Lending Act, for failure to adequately disclose obligations under state installment sales laws, and for alleged violations of state unfair and deceptive acts and practices laws are potential variations of those claims.

Or you may face a claim by a customer who didn’t buy a product that he or she later needs (an extended service contract for example to pay for a transmission replacement) because of the misimpression that it could only be purchased with a maintenance contract and dent repair that the customer did not want.

There is nothing new about “bundling”. Dealers have been offering packages on F&I menus for years. There is nothing wrong with the concept of bundling provided that the menu also discloses the availability of products, and the price of each, on an á la carte basis. Offering each product separately on your menu, as an alternative to one or more packages that are also offered, can disarm potential plaintiffs.