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DISCLAIMER

 

Use of this web page is not intended to and does not establish any attorney-client relationship between the user and the Law Offices of Steven C. Shane. Do not send any confidential documents to the firm without first obtaining permission to do so from one of the firm's personnel. We are trying to provide information helpful to consumers, including legal information. However, you cannot rely on this information as legal advice.

 

This is general information; not advertising, solicitation, or legal advice. If you have a legal question, please contact a lawyer in your state to protect yourself. Do not rely on anything you read here, especially in lieu of contacting a lawyer directly. Every case is different, and every case turns on its own individual facts.

AUTO FRAUD

 

Anyone who has ever visited a car dealership to buy or lease knows what an banditunpleasant experience it can be. I compare it with going into a jungle; only a hunter is, at least, armed with a rifle, compared to a consumer who has little or no protection but his wits. Even the most sophisticated consumers fall prey to the dealership's time-tested organized and systematic approach geared to wear-down and beat up all who venture onto the car lot.

 

Does the following sound familiar?

 

The ordeal begins when you drive-up to the lot, get-out and begin to look for a car. Barely before you get out-of your car and begin to look you are approached by a salesman (called the meet and greet). You may decide on a car and if you're lucky it is a car that you select and not one selected by the salesman. You decide to go for a test drive. At that point you may want to take a long look at your own car because it may be the last time you ever see it. When you get back from your drive don't count on getting them to quote you a price even if you ask for one. More than likely, you will be asked "what monthly payments you can afford." This is their preferred approach to negotiating financial terms. The salesman will generally disappear to meet with the sales manager who will car lotalmost always tell the salesman to get more money down or raise the price. Any price that you agree to and sign for is binding on you but not on them. After many hours when you are sufficiently exhausted and your resistance is waning, you are ushered into a smaller area where the light is not as bright and you find yourself sitting across from an F&I (finance and insurance) person who is in the process of printing out numerous documents for you to sign. He is in a hurry. If you haven't already been offered a soft drink before you meet the finance person, you will be at that point. While you don't have to pay for it, this could turn-out to be the most expensive soft drink you ever drank. If you are a couple you can count on a large plant or object placed between the two of you to discourage communication and observation.

 

It may surprise you...

 

...but dealers make very little profit from the sale of a car. Most of their profit comes from the interest rate, sale of insurance and other products such as credit life and disability insurance, service contracts or extended warranties and GAP insurance. Although these products are optional, you may be told that you have to buy one or more of them to obtain credit, and are added to the price upon which the finance charge is calculated. The paperwork is presented with the instruction to sign here and sign there with little opportunity to read it, and no opportunity to understand it.

 

By this time you would sign anything to leave and that's exactly what they're counting-on. When you get home and finally review all the paperwork you, may find it differs car lot 2from what you were promised. Unfortunately, when people discover they’ve been victimized they are too embarrassed to take action. The important thing is not to be ashamed because there is nothing to be ashamed about. Everything a predatory dealership does is designed to deceive you. The problem with

most consumers is that they assume they are dealing with seemingly honest people whose word has some meaning and value to them. Not true. A predatory dealership is built on fraud and deception. While you are despairing your salesman is sitting around with his buddies laughing about how he knocked your head off (an expression actually used by sales people). It doesn’t matter that the buyer has a physical or mental disability which prevented him or her from being able to protect themselves. The engine that runs this business is profit. Fraudulent profit.

 

Do not despair

 

Fortunately, our lawmakers don't live in caves. They know what goes on and have enacted laws which protect consumers after the fact. The most common question I am asked by consumers is whether there is a three day right of cancellation. Unfortunately, there isn't. However, all states allow you to sue under common law (non-statutory claims) for fraud where victims can obtain punitive or exemplary damages if the fraud is serious enough. The dealer's attorney will often argue that the written contract will take priority over any false verbal representations made to you by the sales representative. This argument is incorrect because fraud, being a tort and not a contract claim, will survive independently of any contract claim. Because fraud may sometimes be difficult to prove all states have consumer protection laws which provide you the relief you need if you are patient. In Ohio the Consumer Sales Practices Act allows you to prevail as long as there is a misrepresentation of fact. Unlike fraud, the consumer doesn’t have to prove that the person who made the false statement knew that it was false. As a remedy it allows you to choose between canceling the deal and keeping it and obtaining monetary damages. In both instances you are entitled to recover your attorney fees. The Ohio Attorney General has even expressly enacted rules and regulations which govern the sale and advertisement of motor vehicles which provide that if any of these rules are broken a consumer can sue for triple his or her damages.

 

 

SPOT DELIVERY OR YO-YO SCAM

 

 

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There are too many dealer scams to list in this short summary. One that we see most often is the Spot Delivery or "Yo-Yo" Sale. In this common scenario a dealer enters into a retail installment sales contract with the customer and becomes the actual creditor-seller. It then delivers the vehicle to the customer. At some point thereafter the dealer attempts to sell or assign that contract to a third party finance source. If it is unable to sell or assign the deal it will contact the customer and demand that the customer return the vehicle and, therefore, lying to the customer that it was unable to obtain financing. In fact, it already agreed to finance the deal (hence Yo-Yo). The theory behind this is that if the customer has had the vehicle in his possession for some time where he has shown it to his friends and family he will likely "fall in love" with it and will do anything to keep it. Knowing this, the dealer may also use the spot delivery scam to extort additional sums from the customer either in the form of a larger down payment or in raising the monthly payment terms from those it agreed to earlier.

If you are ever the victim of this scam we would suggest that you hold your ground when you receive that call from the dealer demanding the return of the vehicle. When you hear that lie you might politely explain that you intend to make your payments directly to the dealer pursuant to the already executed contract. DO NOT  VOLUNTARILY RETURN THE VEHICLE.  The dealer may then try and take your vehicle and if it does, in addition to any other claims you might have, you can add unlawful repossesion. 

 

 

 

 

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Steven C. Shane
Attorney-at-Law
606 East Ninth Street, Newport, Kentucky 41071
Mail:
Steven C. Shane
P.O. Box 73067
Bellevue, Kentucky 41073
Telephone
Local: (859) 431-7800
Toll Free: (800) 573-4387
FAX: (859) 431-3100