Why, yes. They are.
This blog post didn’t start out focusing on Consumer Reports. I initially set out to get the low-down on TrueCar, the service that promises a “no-haggle” experience for car buying. The service is also a commercial partner of U.S. News & World Report. I found this information incredibly unsettling, which inspired me to learn more. With the help of my brother (my go-to expert on all things automotive), I discovered that TrueCar also partners with Consumer Reports. Mind blown.
You heard me right—a “legitimate” news source and a consumer protection publication both partner with a service that influences consumers to do business with their paying clients.
Before we move on, let’s talk about TrueCar for a moment. Edward (the brother I’m always referring to) says TrueCar’s service isn’t necessarily a bad thing. The problem is that the service can be confusing. Customers often think it’s a transparent way of discovering prices, when it’s actually a tool to serve up leads to dealers who pay to get them.
“Because TrueCar is a lead generation tool, it’s a bad deal if you’re not ready for that process,” Edward told me. “If you’re just shopping for a price, you’re probably in the early stages of shopping and not prepared to talk to sales people. With TrueCar, you might suddenly find yourself getting unwanted calls from dealers who pay for your information.”
Because TrueCar is a lead generation tool, it’s a bad deal if you’re not ready for that process.
We experimented with the lead form to see what information it would reveal. When we searched for a Nissan Altima in the London, Ky., area, we saw inventory for three Nissan dealers—the ones who pay to be on that site. The other 10 dealers within a 100 mile radius were invisible to us. In our area, that means three dealers will price their inventory against each other to provide you the best price among those three—not the entire local market. If they’re working their leads properly, they’ll all call you and compete for your business. Does that sound like “no-haggle” pricing to you?
Speaking of “no haggle” pricing, there’s currently a federal lawsuit pending against TrueCar. The New York Times reported recently that in 2015, 162 dealers across the nation joined forces claiming TrueCar’s “no haggle” pricing is false advertising. This article also sheds light on the company’s history.
Speaking of “no haggle” pricing, there’s currently a federal lawsuit pending against TrueCar.
According to the article, TrueCar’s business model has evolved since its beginning. Founder Scott Painter created it with the consumer’s best interest in mind. It fed customers info they needed to get the lowest price possible in the market, and then dealers paid TrueCar a fee to make the sale. But dealers rebelled, and the company started suffering. Dealers didn’t like paying for a service that depicted them as crooks. They also didn’t like paying the fee of $300 or to make a sale, when that same money could be used to give customers deeper discounts if they dealt direct. So TrueCar changed their business model to be a friend of the dealer. (For more info, check out what Forbes said about this move.) They turned themselves into a lead generation tool. The problem? They didn’t rebrand, and so customers had no idea.
Now, many consumers who engage and submit lead forms often feel duped because they thought TrueCar was an unbiased platform. (That New York Times article I mentioned earlier provides an excellent example of this.) The worst part, in my opinion, is trusted news and information sources appear to be complicit in this.
This brings me to Consumer Reports. Could it be that in light of the lawsuit and the fact that dealers are being more vigilant in exposing TrueCar for the lead generation tool that it is, the service is looking for disguises? And could it be that publications like Consumer Reports are willing to compromise their editorial integrity because subscriptions are scarce in the digital age, and review sites are filling a role they once controlled? Those are possibilities, but I’m merely speculating. Read on, and see if you agree.
Consumer Reports doesn’t have a way for businesses to advertise on its site or attempt to influence consumers in any way. Yet I visited the site and found this: On the homepage is an article comparing the Toyota Highlander to the Subaru Ascent. Without a subscription, you can’t read the entire article, but here’s what you can do. You can click on a hyperlink for either vehicle, and two clicks later, you’ll land on a TrueCar lead form connecting you to dealers who pay for the service. Is this not advertising? (Side note: When we pay agencies to send us leads, it comes out of our advertising budget.)
Consider this information from the Consumer Reports “About Us” section: They have several commercial partners, including TrueCar, but all partners are carefully screened, they say, and exist to help consumers “navigate a confusing marketplace.” Partners must be “transparent and trusted.” How transparent and trusted is TrueCar, in your opinion, based on what you know now? How transparent and trusted is Consumer Reports, based on what you know now? Could it be that Consumer Reports isn’t aware that TrueCar isn’t an unbiased platform? If that’s true, then Consumer Reports is either negligent or not good at serving its mission. Or maybe, as suggested earlier, it needs money and relevance and found a way to rationalize the partnership. At any rate, they obviously allow advertising on their site; their definition of what constitutes advertising is a just a little skewed, in my opinion.
If Legacy were to do business with TrueCar, we would be advertising on Consumer Reports. That’s the bottom line. They claim they have “no financial relationship with any dealer,” yet indirectly they do because TrueCar does. According to Consumer Reports, the fees they collect from TrueCar support their nonprofit mission. But should they allow it at the expense of your trust? Ad fees from dealers or manufacturers could be handled the exact same way, yet they don’t allow them for ethical reasons, I suspect. I wish it made sense.
U.S. News & World Report provides a very similar experience. Go to their homepage and visit the “Cars” tab at the top, which appears to be a legitimate news section. From there, you’ll be three clicks away from their “Best Price Program,” a.k.a. TrueCar. Yes, a lead form will greet you, and you’ll find yourself shopping for a product when your mission was to discover information.
Neither Consumer Reports nor U.S News draw clear lines between their editorial and marketing content, and I see that as a significant problem centered squarely around ethics. TrueCar also partners with Sam’s Club. I don’t have a problem with that because Sam’s Club is a retailer. Lead generation is normal and expected for retailers. But lead generation thinly disguised as news or part of information gathering is not OK. So should you trust these sources? Should you trust TrueCar?
If you understand what you’re dealing with, you’ll be streetwise, and your decisions will reflect that. I hope this straight-talk has helped.
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