The Lemon Law Blog

California's Car Buyers Bill of Rights gives used car buyers the right to return the vehicle for any reason within two days, but only if the buyer agrees to pay a fee ranging from $75 to $400 depending on the price of the vehicle. The first problem is that many dealers are persuading buyers to waive this protection. A second problem is that some dealers are simply refusing to take vehicles back even when the buyers paid for the return option. Some refuse to take back vehicles without payment of unauthorized "restocking" fees.

On November 28, 2007, consumer groups held a press conference on the steps of the Capitol to highlight the defects in the law. Rosemary Shahan of the consumer group CARS pointed out there is no good reason a buyer should have to pay anything for the two day right of return. If the vehicle is returned, the law provides for reasonable "restocking" fees and that should be sufficient compensation for the inconvenience.

Rosemary presented KABOB client Oscar Marin Fuentes as someone who was not protected by the Car Buyers Bill of Rights. Fuentes purchased a used 2005 Chevy Silverado from Capital City Motors in Sacramento. The dealer had Fuentes, who does not speak fluent English, waived the two right of return. With a day or two after taking delivery, Fuentes noticed that door would not seal and air was coming in gaps in the cabin. Fuentes returned the truck to the dealer the next day asking for his $23,500 back, but the dealer refused. Investigation revealed the truck had been in two severe accidents, one a roll-over. The air bags had popped.

At the news conference, Fuentes showed the press the problems with the truck. ABC News' video on Fuentes discussing the problems with the truck is here.

Posted by Mark F. Anderson | Permalink | Email This Post

Posted In: Dealer Fraud

Bookmark:

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.

Posted by Nancy Barron | Permalink | Email This Post

Posted In: Buying Used Cars , Dealer Fraud

Bookmark:

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?

Posted by Nancy Barron | Permalink | Email This Post

Posted In: Dealer Fraud , Shopping for Car Loans

Bookmark:

A class action against Autowest Dodge and its parent AutoNation was certified as a class action last week in San Francisco Superior Court. We are the attorneys representing the class. The case involves the failure of the dealer to disclose the itemization of capitalized cost in the precise manner required by law. The class also claims the dealer altered the leases after the consumer signed it and left the dealership.

The unauthorized alteration of documents after they are signed is a kind of forgery. Leases are filled out at the dealership in triplicate, or even quadruplicate. The consumer of course thinks the forms are identical. What a shock it is for consumers to discover the bank got more information that they did.

Some consumers did not keep their leases or cannot find them to compare the documents to those produced by the dealer and/or the bank. While this case can be proved otherwise, consumers are well advised to keep all such documents as a routine matter, even after the lease has expired.

Posted by Nancy Barron | Permalink | Email This Post

Posted In: Dealer Fraud

Bookmark:

Under the new Car Buyers Bill of Rights, dealers cannot misrepresent the cost of after-market items, such as service contracts, surface protection, debt cancellation insurance (GAP protection), and theft protection products. Some dealers in the past falsely told buyers theft protection cost only, say, $3/month, when really the cost was $35/month. The dealer hid the true cost in what the dealer said would be the monthly payment on the loan. This practice is known as loan packing. To guard against loan packing, dealers have to set out specifically the cost of each after market item in writing, such as theft protection.

Posted by Mark F. Anderson | Permalink | Email This Post

Posted In: Buying Used Cars , Dealer Fraud , Lemon Law 101

Bookmark:

A new California law prohibits car dealers from selling used cars as "certified" if they had been wrecked or in a flood unless properly repaired or the odometer was rolled back. Certified cars may not be sold "as is."Under the new law, cars damaged in a wreck or flood and not properly repaired cannot be sold as certified. If the repairs did not make the car safe or if the accident or flood damage, in spite of the repairs, substantially impaired the use of the vehicle, it cannot be sold as certified. Previously, wrecked and poorly repaired cars were sometimes sold as "certified."

Posted by Mark F. Anderson | Permalink | Email This Post

Posted In: Buying Used Cars , Dealer Fraud

Bookmark: