Recent Developments In The Area Of Consumer Law
We would like to keep you informed of newly enacted laws and recent case decisions which have or will have a significant impact on consumers in the specific areas mentioned on this site.
AUTOFRAUD-The failure to sell a vehicle at the advertised price
Connecticut consumer attorney Dan Blinn recently received a nice arbitration award in favor of a client who went to a dealership that displayed a large sign that said “0%APR: 100% approval”. The dealership did Buy Here Pay Here (BHPH) at 0% but it also had a relationship with a finance company, Credit Acceptance Company (CAC). The dealer wrote the deal at 19% APR for a cash price that was $600 higher than the price at which the vehicle was advertised via a mirror tag and also on its website. Total interest over the course of the loan was $4,900. We demanded arbitration and included CAC. CAC settled shortly before the hearing, leaving the dealership to defend. At the hearing, the dealer admitted to selling the car for more than the advertised price, denied that it was because of discount financing, and stated that they have a business practice of offering customers the choice of short term 0% financing or financing through CAC and that many customers choose CAC to help them establish credit. The client testified that she did not look over papers and trusted that she was going to get the price and interest rate that were advertised and that she didn’t learn that she was paying interest until she called for an account balance two years later and was shocked at the amount.
Sorchaga vs. Ride Auto, LLC.
Fraud Negates Any Agreement Concerning the “As Is” Condition of the Vehicle
Esmeralda Sorchaga purchased a pickup truck from Ride Auto located outside of Minneapolis, Minn. Ride purchased the truck earlier from a salvage yard for $6700 which had engine problems of which it was aware. Thereafter Ride made only cosmetic changes to the vehicle just so that it would look nice and be able to be driven for short distances without breaking down. When she arrived Ms. Sorchaga was allowed to take the vehicle for a test drive but couldn’t drive it very far because its tank was low on gas. During the test drive the check engine light came on and an excessive amount of smoke was emitted from its tailpipe. The salesman stated that the light came on only because of a faulty oxygen sensor which could be easily repaired and the excessive smoke was only the result of the engine warming up. The salesman made a number of other material misrepresentations upon which Ms. Sorchaga relied and she purchased the vehicle for $13,000. The contract she signed indicated that she was purchasing the vehicle “as is-no-warranty”. Almost immediately thereafter, Ms. Sorchaga experienced significant mechanical problems with the truck where it wouldn’t drive over 40 mph and continued to emit significant smoke, so much so, that she was stopped by the police. She took the truck back to Ride who refused to repair the vehicle reminding her that she bought the vehicle as is. She then took the vehicle to a mechanic who informed her that it needed a new engine which would cost her up to $20,000.
To make a long story short, in a suit by Ms. Sorchaga, the seller’s argument that it should be able to disclaim any warranty because the vehicle was sold “as is” was rejected by the trial court, the appellate court and finally by the Minnesota Supreme Court. Fraudulent representations made by a seller to a buyer concerning the condition of a vehicle will prevent that seller from enforcing its disclaimer made in any sales contract.
Claims were brought under the Connecticut UDAP statute which expressly makes it a violation for a dealership to fail to honor the terms of advertisements. It was successfully argued that dealer didn’t honor the advertised price or the advertised 0% APR. The Arbitrator awarded the amount that she was charged over the advertised price ($600) plus the interest that she will pay over the life of the loan ($4,900), plus punitive damages of $5,000. He also awarded attorney’s fees of $10,200.