The Lemon Law Blog

Many self storage facilities advertise long term garage space. Beware: this is a risky business for consumers. Storage companies often buy up properties in marginal neighborhoods on freeway frontage or on the fringe of town, where warehouse space is dirt cheap - but not always safe and not always secure.

Advertisements tout security, safety and trust. That trust may be misplaced. At the time of the space rental, storage tenants are often told they need separate insurance for their goods. That should not mean you have to buy it from them, with no opportunity to negotiate. If you are tempted to buy insurance onsite, check with your usual insurance company first. If the vehicle is stored for an extended period of time, the car may qualify for reduced registration as a "non-opp". The Form for a non-operational vehicle can be downloaded from the Department of Motor Vehicles here While you should keep the car insured for theft, be aware that insurance for garaged vehicles not being driven is very low. Your usual carrier will probably give you a discount.

With summer just around the corner and masses of Californians – especially students – on the move, many car owners find they need long term storage for a car or truck. If you are in this category, think it through. Will storage costs of an old car exceed depreciation over the rental term? It might be best just to sell the car now, and buy another used car when you return. Do not expect to be able to just park it on the street. Whether you are in the city or suburbs, most communities have a local ordinance limiting parking to 24-72 hours or by permit only. The best thing, of course, is to find a friend with an empty carport or a three-car garage. Good luck with that! More commonly, you may have to find long-term vehicle storage for a price. The E-How website has some good advice for storing vehicles, including the selection of a dry facility, adding a fuel-stabilizing additive to the gas tank, jacking the body up to relieve weight on tires, washing and covering the car. Further details can be read here.

We also advise that you remove all valuables from the car, even though it is in a locked space. This includes all information concerning the vehicle, like the owner’s manual, purchase documents and warranty history. Never keep the title with the car. Remove even the registration and insurance papers you would normally keep with you when driving. And of course, do not leave a set of keys in the vehicle. Self storage units are notorious for their high burglary rate, and although you hope the car will be secure, don’t take any chances with things you can easily remove.

Today, President Obama urged passage of the financial reform legislation presently before Congress. "Unless your business model depends on bilking people, there is little to fear from these new rules," he declared in a speech at Cooper Union in New York City. The full text of his remarks is posted here

Why then, is the National Automotive Dealer’s Association urging its members to board their corporate jets and fly to Washington D.C. on Monday? Its website announcement reads: “The National Automobile Dealers Association (NADA) is organizing a Dealer Fly-in on April 26 to meet with Senators and urge support for the Brownback Amendment which would exempt auto dealers from the proposed Bureau of Consumer Financial Protection."

Consumers may not have the means to hop a commercial airline, much less a corporate jet, to meet in person with Congress before Senator Dodd brings the Bill (S. 3217) to the floor of the Senate next week. But that doesn’t mean that consumers can’t be heard. All you have to do is call toll free 1-866-544-7573. When you input your zip code at the prompt, you will be connected automatically to your U.S. Senator’s office. A senate staffer on the other end of the line will ask the purpose your call. You should be prepared to say something like this: “Please tell Senator________ [name] to vote to support financial reform that holds banks accountable and creates a strong, independent Consumer Financial Protection Agency. I am against the Brownback Amendment or anything else that excludes car dealers and automotive lenders from this important reform."

Numerous consumer organizations vehemently oppose such an amendment. These include The Military Coalition, Americans for Financial Reform and the National Association of Consumer Advocates, to name just a few. If the financial reform legislation currently under debate is intended to bridge the gap between Wall Street and Main Street, it can’t by-pass the local Auto Mall.

The Obama Administration issued a report today entitled A Look Back at GM, Chrysler and the American Auto Industry. Actually, it is a short look back through the last tumultuous twelve months, to announce the unexpectedly rapid progress that General Motors and Chrysler are making toward repayment of their federal bailout money. "GM’s early repayment of its $6.7 billion loan leaves the remaining U.S. government stake in the company at $2.1 billion in preferred stock and 60.8% of the common equity," the notice reports. And, while the announcement does not say Chrysler has fully repaid its government loan, the news that “Chrysler Financial has already fully repaid (with interest) the $1.5 billion TARP loan that it received to support auto financing” is encouraging.You can read the entire report here. While Chrysler's relatively rosy outlook and General Motors' early repayment of billions will come as good news to taxpayers, their corporate success is small comfort to consumers whose warranty rights were trampled in the messy restructuring of both companies. The car buying public remains cautious. Like the manufacturers themselves, consumers are eager to pay off debts before going on a spending spree. Whether these icons of American industry will recover market share once pent-up demand spills over and credit eases will depend on whether improvement in vehicle safety and design follows the companies' financial improvement.

The National Consumer Law Center has just published a new report on the shocking state of repossession abuse throughout the country. The short but thorough "REPO MADNESS - How Automobile Repossessions Endanger Owners, Agents and the Public," by NCLC staff attorney John van Alst and investigative reporter Rick Jurgens, is a riveting must-read for anyone who is planning to buy a car on credit. It can be read online or downloaded here.

A midnight visit from the repo man is one of those things no one ever thinks could happen "to me." Yet, in 2009 alone nearly 2 million vehicles were repossessed. That's 2,000,000 cars and trucks! While some people got themselves into cars they just couldn't afford, many other people may have missed a single payment or been told by the lender not to worry while a late check was in the mail. Based on what our clients tell us, lenders and debt collectors are increasingly aggressive.

Most alarming is a map of the United States showing the location of violent acts associated with repossessions - assaults, battery, use of weapons, kidnapping, impersonation of law enforcement and even fatalities. The authors argue that, because repossessions are one of the only self-help enforcement mechanisms allowed by law, there is in fact a kind of lawlessness in the process. The term "self-help" in this context means that lenders can send out the tow truck by simply alleging that the owner of the car is behind in payments, without any proof or court judgment to back up the claim. "With most repossessions occurring without the involvement of law enforcement, parties often assert their rights in a sort of vigilante justice," the report explains.

This sort of vigilante justice invites a lot of mistakes. Sometimes the tow truck takes the wrong car. That's grand theft. Sometimes the tow truck driver is in such a hurry, he doesn't notice children napping in rear car seats. That's kidnapping. Scroll down through the Consumer Alerts section of our firm website to read "Repossess My Car But Not My Kids". With plenty of evidence and examples to back up their statement that "auto repossession remains a crude, unregulated
and naked exercise of force and guile," Van Alst and Jurgens offer a good case for nationwide reform.

While self-help repossession is still allowed, California has some powerful consumer protection laws to help combat abuses. Read the NCLC Report. And, if you have been a victim of repo-madness, do not wait to give us a call.

We are bombarded daily with advertisements for new cars, used cars, leased cars, rental cars, sales, auctions and swaps. When you can’t tell the “no-down” from the “low-down,” I say it’s time to slow down. Do the math. Don’t cringe! The fact is things cost money. And money is all about numbers.

Any time you are not paying cash, you need a calculator or a clear head for something called “credit math.” You are buying two separate things: (1) the wheels and steel you will drive off the lot and (2) the money you need to pay for it. Each of these two things makes a profit for someone, and their profit comes out of your pocket. Subtraction and addition, in other words. Throw in some multiplication and division, fractions and percents. Those are the basic functions of credit math.

The mathematical relationship between buyer, seller, lender and borrower is the very crux of our economy. And, at its most basic, a fundamental failure of that relationship is what set off the global economic crisis. Bankers and brokers took advantage of the fact that, in layer after layer of transactions, the person signing the documents had no clue what they meant but assumed that someone, somewhere did. Financial illiteracy got us into this mess.

Consumer literacy should be a matter of national security. All Americans should know how to ask - and get answers to - questions that affect financial health: Can I really afford this loan? What is the difference between credit and debit, or debit and debt? What is my interest rate? What’s an APR? When should I pay cash? Why do I owe this late fee? What factors go into a credit score? How do I protect against identity theft?

Finally, consumer literacy is getting some attention. An article in today's New York Times laments the dearth of financial skills training in standard curriculum. It will be a long time before budget-strapped high schools offer such courses, but there is some evidence that money matters are creeping into the classroom. The National Endowment for Financial Education has produced a number of programs for use in schools. One useful tool mentioned in the NYT piece can be accessed online here While it is billed as “40 Money Management Tips Every College Student Should Know,” there is plenty of good advice for all of us.

The car repossession business is merciless, leaving consumers stranded without transportation. The idea that the repo man visits only deadbeats is a myth. We have heard nightmare stories of a car taken in the night after one late payment or a glitch in the way a dealer set up an electronic account. Many consumer advocates complain that desperate lenders engage in deceptive practices. We at Kemnitzer Barron & Krieg are doing something about it. Along with co-counsel, we have recently settled a number of significant class actions involving defective post-repossession notices.

Most consumers think that if they can’t meet their monthly payments, their car will be towed away and that is the end of it. Something like home foreclosure. However, that is not how it works. After the vehicle is repossessed, it will be resold at a discount auction for far less than the amount owing; and the lender then attempts to collect the deficiency from the original owner. At that point the consumer has no car, mangled credit and a mound of debt.

The best thing a consumer can do in a repossession situation is to try to reinstate the contract and get the car back. The lender must send the consumer a notice of how to do so - including where to send payment, to whom, and exactly how much. This notice is called an NOI.

Kemnitzer Barron & Krieg challenge NOIs that do not give the borrower sufficient information to reinstate or redeem their contract and recover their car or truck before it is sold at auction. California law provides that, if the post-repossession notices do not comply with the Rees Levering Automotive Sales Finance Act, the lender may not collect a deficiency after the vehicle is re-sold.

The approximate amounts of the deficiency balances defendants have agreed to erase, or otherwise not collect, are summarized in this list of cases that we have settled in the last few months.

• McCoy and Castro v Alliant Credit Union (Alameda County Superior Court Case No. RG 09-444283) $7,370,853.

• Meza and Pelkey v ACC Consumer Finance LLC (Alameda County Superior Court Case Action No. RG09458893) $15,319,729.

• Friedrichs v BMW Financial Services (U.S. District Court,N.D. Cal., San Francisco Case No. C08-04486 PJH) $35,000,000.

• Stephens v Bay Federal Credit Union (San Francisco Superior Court Case No. CGC08478197) $5,159,515.

• Ford Motor Credit Company v O’Neal (San Diego Superior Court Case No. 37-2007-00077225-CL-CL-SC) $110,810,774.

• Lobel Financial Auto Cases (Sacramento County Superior Court JCCP Case No. 4563, coordinated actions) $43,808,147.

In addition to waiver of the deficiency balances, class members entitled to refunds will get a cash return of all or most of the amount they paid. In each case, the terms and procedures involved in the distribution of refunds is included in the class notices that were mailed to each class member. For more information, including the contentions of the parties, settlement terms and identity of co-counsel, click here

The curtain closes this week on an iconic scene in American industrial history, when the last Tacoma truck and Toyota Corolla roll off the NUMMI assembly line in Fremont, California. Thus ends the last act of a drama in which 4,700 workers lost their jobs and the only major automotive factory west of the Rockies closed its doors.

The New United Motor Manufacturing Inc. plant, fondly referred to as NUMMI, opened in 1984 and continued for roughly 25 years. In that time it produced about 7.7 million cars and trucks at the massive 5.3 million sq.ft. complex.

In the beginning, NUMMI was hailed as a bold experiment, in which a unionized American manufacturing force melded with Japanese management. NUMMI was a joint venture between General Motors and Toyota, which skeptics dismissed as strange bedfellows. But the relationship turned out to benefit both. Toyota got a “Made in USA” gloss to its products and GM got Japanese manufacturing expertise. The UAW workers were introduced to “kaizan,” the Japanese concept of continuous improvement. The NUMMI marriage lasted amicably for a quarter century of production. But when GM hit the skids last year and pulled out of their venture, Toyota just couldn’t hold on to NUMMI alone.

Despite months of warning and generous severance packages, the union workers express disappointment and devastation. A pall of disbelief hangs in the Bay Area air. A remarkable number of employees are quoted as saying that the atmosphere at the plant was like a family. Many express personal and professional pride in the factory’s well-known record for quality. While Toyota, like every car manufacturer, is occasionally plagued with design defects, NUMMI had a reputation for rarely letting a mechanical defect roll out the door.

The NUMMI plant was often referred to as a “great American success story.” That hopeful phrase now rings as hollow as an echo through NUMMI’s cavernous and empty assembly halls. For more information click here