April 26, 2007

Prior Daily Rental Cars: Rip-Off on Resale

Hertz, Avis, Budget, Thrifty, Dollar and Enterprise are all household names for daily rental cars. The ease and convenience of pay-per-day driving is a blessing to the traveler, whether on business or for pleasure. On the other hand, we've all returned from a trip saying, "Nice place to visit, but I wouldn't want to live there." The same can be said of rental cars.


Despite what the car companies say, daily rental drivers just don’t treat those cars and trucks like their own. All too many otherwise responsible people don’t bother about running up over a curb, leaving gum in the cupholder, slamming on the brakes or stripping the gears. Day after day, someone unfamiliar with the vehicle is at the controls. Innumerable poor driving incidents will go unnoticed at the end of the day. We even heard about one fellow who drove off with the gas pump nozzle still connected to the fuel tank, ripping the fuel cap hinge off in the process. Although possibly invisible on return to Hertz or Avis, these small defects add up over the short eventful life of a Prior Daily Rental. And that’s not all. A predictably large percentage of PDRs (as Prior Daily Rentals are known in the trade) come out of service in two states: Florida and Hawaii. These two locales are great for a holiday, but the environment is tough on any car or truck. Rust and corrosion are common problems with Prior Daily Rentals. Most troublesome is the fact that many rental cars and trucks are in serious accidents involving body and frame damage that diminish the safety and overall life of the vehicle.

Did you ever stop to think what happens to all of those prior daily rental cars? After somewhere between 15,000 and 30,000 miles on the odometer, they are taken out of fleet service and shipped throughout the 50 states. They then re-enter the marketplace in a wide variety of used car markets. Some are resold at dealer-only auctions.

Consumer protection laws in California require that Prior Daily Rentals must be disclosed as such. It is a clear violation of law to knowingly fail to disclose a vehicle’s history as a PDR. Why? The public policy behind the law is clear: the fact is important to the decision to buy or not to buy a particular car or truck, and certainly material to the price someone would pay. Some experts say the difference in value is 20-25% -- but many consumers say they would not buy a PDR at any price. The risk of frame damage, invisible rust or corrosion, and just plain poor driving habits day-in and day-out over the vehicle history are deterrents about which most used car buyers really want to know. The failure to make the disclosure required by law at the time of sale is deceptive; and when a single dealer makes a pattern of this concealment, that can be a deceptive business practice.

Unfortunately, cars often change hands only to have the title sent later in the mail, or even worse, sent only to the bank as lienholder. Used car buyers should protect themselves against these deceptive practices by ordering a CarFax report when they buy a used car.Whether we handle a PDR non-disclosure case as an individual matter or a class action, a CarFax report is one step in our investigation.

If you bought a low-mileage used car that seems to suffer from a high level of driveability or suspension problems, rust or corrosion, small dents and dings – not to mention that dangling fuel cap hinge – give us a call.

April 24, 2007

Hybrid Cars – Green Lemons Waiting to Ripen?

Full disclosure here: A hybrid just might be my next car. The local parking lot’s “green preferred” spot is nearly always filled with a Prius; my octogenarian aunt just bought a Honda hybrid; and my trendsetting friend Cathy tools around in a Lexus RX. My consumer research has begun. So let me just say, I hope the answer to the title question is, "No."

The history of the Prius reads like a classic modern case study in production and marketing: from government funded R&D under Clinton, to concept car, to prototype, to production version, to withdrawal of government hybrid funding under Bush, then to Internet promotion, and finally to a full scale American marketing campaign.

In our law practice, we have seen very few complaints of hybrid lemons to date. At the same time, our 25+ years handling consumer car cases inform us that most new make and model vehicles need a few years to work out the glitches in design and developing technology. Far from being a detriment to advances in technology, critical consumer feedback can serve the R&D process in a positive way. Toyota, for example, has issued “voluntary” recalls of thousands of Prius vehicles for possible steering shaft assembly problems, in response to numerous complaints. There are other reports of limited service campaigns in 2004-2006 Prius cars, for a variety of problems, although not involving all vehicles. The loudest grumbling appears to be from the fact that owners can't seem to achieve the 50-60 miles per gallon hybrid makers advertise. Let’s hope that Toyota and other manufacturers remain pro-active, eager to replace defective parts with out charge, and otherwise live up to their promises. If you feel they have not done so, we'd like to hear from you.

Since most hybrids are still under factory warranty today, their ultimate longevity remains to be seen. For example, the Prius has a 3 yr/36,000 basic warranty, and a 5 yr/60,000 mile powertrain warranty. The Honda Insight, which billed itself as the “original hybrid” is no longer sold as new, having been superceded by the Accord Hybrid and the Civic Hybrid. Honda advertises the same warranties as Toyota, while noting that the battery has an 8 year, 80,000 mile warranty. That is, frankly, a remarkable promise.

We are keeping our fingers crossed that this new technology will prove effective in reducing defective vehicles while reducing greenhouse gas emissions. And we hope that the new hybrids are not green lemons waiting to ripen. Meanwhile, there are many things all consumers can do to be more environmentally conscious, whether or not we drive hybrid cars and trucks.

The State of Michigan , which has a lot at stake here, offers the following “20 tips for Energy Efficient Driving” :

1. Combine trips for shopping and errands.
2. Avoid unnecessary trips. Use the telephone or e-mail to communicate.
3. For short trips, walk or ride a bike.
4. Join a carpool or use public transit to and from work or school.
5. Don’t idle the car for more than one minute
6. Drive the speed limit, or below, for better mileage.
7. Overdrive gears improve the fuel economy of your car during highway driving.
8. Avoid sudden bursts of speed, tailgating and pumping the accelerator pedal...
9. Out on the open highway, keep windows rolled up to reduce drag.
10. Using a vehicle’s air conditioner on a hot summer day can decrease mileage...
11. Travel during off-peak hours when possible.
12. Take the shortest route with the best roads.
13. Use the cruise control -- it can save fuel by maintaining a steady speed.
14. Keep tires at the recommended air pressure.
15. Keep your car engine properly tuned.
16. Remove bicycle and ski racks when not in use.
17. Excess weight uses more fuel. Remove unnecessary items...
18. Use the lowest octane gasoline recommended by the manufacturer.
19. When buying a new car, make fuel efficiency a priority.
20. Don’t buy a bigger engine than you need.

April 12, 2007

Lemon Law Support: Technical Service Bulletins


Car defects are less of a mystery than they used to be. The National Highway Traffic Safety Administration (NHTSA) provides a source of information useful to investigation of Lemon Law complaints that was not readily available to consumers before the Internet Age. This includes Technical Service Bulletins.

The California Lemon Law requires every auto manufacturer to have authorized repair shops in this state, to carry out the terms of its warranties. In the absence of exclusive authorized dealers, a manufacturer can designate independent dealers to satisfy this requirement of the Lemon Law. As a further measure of consumer protection, the law requires that auto manufacturers have to make replacement parts available and they have to make service literature available to instruct their dealers how to make repairs.

Thus Ford, GM, Chrysler, Toyota, BMW and all other car manufacturers maintain written instructions with regard to known defects, nonconformities and conditions likely to be the subject of requested repairs. These are called TSB’s, or Technical Service Bulletins. When we started representing consumers in the 1980s, it was very difficult to obtain these internal records. Even after lawsuits were filed, the car companies refused to give these up without court orders, making the litigation unnecessarily expensive. Now however, the Internet makes an enormous amount of information readily available through government and other sources. It is important to realize that these sources are often incomplete, and discovery in the course of litigation is still needed to supplement these investigative tools. Still, it is useful to see what is publicly available in the early stages of investigating a Lemon Law claim.

A single TSB may not give enough information to know whether a particular vehicle is a lemon or not; but information contained in service bulletins may provide useful for experts inspecting a vehicle; likewise, it may clarify, confirm or call into question a service manager’s claim as to whether a particular condition is known to exist.

You can find TSB's on the website of the Office of Defects Investigation division of NHTSA . Have your car or truck's year, make and model information handy. It is sometimes useful to have the actual VIN (vehicle idenitifcation number) as well. The NHTSA website also provides recall and other useful consumer information.

April 12, 2007

Is My Car a Lemon?

Is my car a Lemon?” This is a question we hear many times every week. The answer is determined car by car, case by case, r/o by r/o. What is an r/o? Those are the repair orders you get from the service department, and they provide the paper trail of your frustration. Repair orders, along with purchase and warranty documents, are important evidence in every Lemon Law case, and often hold the answer to a consumer's last exasperated gasp: How much is enough?

The California Lemon Law is basically a rule of reason. Before you can claim a refund or replacement, you must give the manufacturer a reasonable opportunity to repair the car or truck. The manufacturer’s opportunity to repair includes all authorized service dealers in this state, thanks to a landmark case we handled many years ago called Ibrahim v Ford Motor Company. But what is reasonable? Or rather, what is unreasonable? Just how much is enough? The answer depends on many factors: how many days the car or truck has been in the repair shop, how many times it was taken in for repairs, what the odometer reading was at each repair attempt, how many miles the car has been driven in all, what the terms of the express warranty are, and in particular, what seems to be the problem.

It makes sense that the California Lemon Law recognizes a difference between defective brakes and poor radio reception. If the defect is likely to cause death or serious bodily injury, even two repair attempts is presumed to be a reasonable opportunity to repair, if certain other conditions are met. Other substantial defects prompt a finding of unreasonableness after four repairs. General poor quality of a vehicle can also trigger the Lemon Law, such as when the car is in for 30 days or more for a variety of defects within the first year and a half, or 18,000 miles of use.

You can start answering the question “How much is enough?” yourself by digging out your complete set of r/o’s. If you think even one is missing, return to the servicing dealer and ask for a printout of the complete warranty history. Years ago, these were hard to get, but now the complete history should be readily available on a single computer printout. It is important to save every repair order, and it is equally important to get them written up in the first place. If you are taking your car in over and over again for the same repair, don’t let the dealer get away with refusing to write up an r/o. Get some documentation of your complaint every time you take the car in for service of any kind.

Once you have a complete set of repair documents, put them in chronological order. We can help you list the dates you took the car in and count the number of days before you picked it up; along with the date, we list the odometer reading; we list every condition or concern you mentioned and what was worked on, even if these things do not seem connected at first. This repair chronology will begin to provide an objective picture of your experience with the car. Ask yourself whether the defects make you feel less safe in the vehicle, and whether you feel they have substantially impaired the car’s use or value to you. After 25 years of handling Lemon Law claims, we investigate each case on its own particular facts, and these are questions we will be asking when you visit our law office to ask: “How much is enough?”

April 10, 2007

Test Drive the Car Financing

Car dealers sell you two separate things whenever you buy a car or truck, unless you pay cash for the full purchase price. They sell you (1) the vehicle itself and (2) the means to pay for it. You probably test drove the car. But did you “test drive” the financing? If you merely looked at the monthly payment, it is as though you kicked the tires, but failed to look under the hood.

It is important to remember that you pay one amount for the “wheels and steel” and you pay another amount for the lease or loan. Unless you pay cash, each of these items is a separate profit center for the seller. Many consumers who come to see us are surprised to learn that, just as the cash price of the vehicle is negotiable, so are terms of the financing.

It’s a good idea to take a calculator and scribble pad to make your own notes. That way you have your own record of what was said. If you were responding to an ad, keep a copy of that ad. Once you decide on a car, have the terms of the window sticker right at hand. Decide before you go whether you want to lease or buy, and the total you want to pay over a set period of time. When you are in the midst of deciding between black or tan interior, you may not notice a bait and switch.

You might deal with the salesman on the lot and the “F&I guy” (finance & insurance) in the office. The F&I guy loves to speak in terms of “win-win” situations. That’s when things can start to get slippery. Here’s a checklist to help you “test drive” the financing:

1) Is your credit application accurate? Never sign it in blank.

2) Is the contract labeled Lease or Retail Installment Sales Contract (loan)?

3) What is the cash price of the vehicle?
How is that different from the total amount you will pay?

4) What was the highest and lowest interest spread the bank is willing to offer?

5) If there is a rebate, where is that stated on the contract?

6) Does the contract list the add-ons and accessories you are paying for?

Are these all things you wanted, at the price you negotiated to pay?
In a lease, these should be in a box labeled “Itemization of Gross Capitalized Cost”

7) If you have a trade-in, are you being given a credit or being charged a negative?

And how much? Is that what you negotiated?

8) Cross out any mandatory arbitration clause in the contract.

If it is a “take-it-or- leave-it” requirement, note that in writing or walk away.

9) Calculate not just the monthly payments, but the number of months.

Look at the total figure you are agreeing to pay.
Do you know enough about your job, family and future finances
to know you can still pay that monthly amount at the end of the term?

10) Is the VIN on the contract the same as the VIN on the car you actually test drove?