California Lemon Law Blog

The Consumer Federation of America (CFA), the National Association of Consumer Agency Administrators (NACAA), and the North American Consumer Protection Investigators (NACPI) collectively looked at more than a half million complaints in 18 different states, in a 2010 complaint survey conducted by them. Auto-related complaints were quoted as the top issue by consumers and consumer protection agencies for the second year in a row, in this 2010 complaint survey conducted by these three government agencies. These auto-related complaints include misrepresentations in advertising or sales of new and used cars, lemon buy backs and used cars with faulty repairs. These auto-related complaints also include misrepresentations regarding the leasing and towing disputes of the used cars.

Some of the top scams of auto sales last year which rode to the top of the list of complaints are as the following:

Hiking the actual price advertised in a purchase agreement

It is illegal if a dealership sells a vehicle for more than the price advertised, even if the customer is not aware of the price advertised. When a dealership inflates the price of a vehicle given in the window stickers or other media ads for his profit by including other items, it directly affects taxes, fees for licenses and registration and the loan.

Creating a language barrier – Violating the Civil Code §1632

The Civil Code §1632 states that if a lease or sale of a vehicle is negotiated in Spanish, Chinese, Vietnamese, Tagalog or Korean, a translation of the purchase contract in respective language must be provided to the customer much before signing the contract in English.
If the translation of the contract in his native language is not provided to a customer, he has a right to rescind the deal.

A used car dealership also violates the law if he misrepresents the truth about a used car.

A used car dealership is required to disclose the material facts he knows about a used vehicle on sale, as the following:

• If it had been involved in a serious accident
• If it had been a rental vehicle
• If it had been a lemon law buy back
• If its Odometer had been rolled back
• If it had been in an accident

It is illegal for a dealership to misrepresent the following used cars as ‘new’:

• Vehicles used as “demo” or demonstrator vehicles
• Vehicles already sold once but returned due to reasons which may include a failure to get a loan

Certified Pre-owned cars

If a used vehicle passes certain standards it is sold as a “Certified Pre-owned car”. A Certified Pre-owned car is supposed to perform as guaranteed and must be free from major structural damage from any previous accident. Often, many of these so called Certified Pre-owned cars do not qualify the tag. Many of the customers often found themselves saddled with used vehicles with serious frame damage from previous accidents.

Krohn & Moss, Consumer Law Center is a leading California lemon law firm specializing in auto fraud. The law firm of Krohn & Moss, Consumer Law Center®, was founded in 1995 by attorneys Adam Krohn and Greg Moss, to provide legal representation to consumers with defective vehicles and products. If you suspect that you have been the victim of a California auto fraud, you can get rid of your problem car by pursuing your California lemon law claim. Submit the case details for a Free* Case Review under the California lemon laws.

In a recent complaint survey conducted by various government agencies like the Consumer Federation of America (CFA), the National Association of Consumer Agency Administrators (NACAA), and the North American Consumer Protection Investigators (NACPI), auto-related complaints were named as the top issue by consumers and consumer protection agencies for the second year in a row.

Auto-related complaints include misrepresentations in advertising or sales of:

• New and used cars
• Lemon buy backs
• Used cars with faulty repairs

Auto-related complaints also include misrepresentations regarding the leasing and towing disputes of the used cars.

Some of the top frauds of auto sales last year which rode to the top of the list of consumer complaints are as the following:

Negative equity on trade-In overestimation: Negative equity on trade-In overestimation occurs when more is owed on the trade-in vehicle than the cash value of the vehicle in a transaction when a trade-in is involved. Instead of valuing the trade-in vehicle at the same amount as what is owed on a newer purchase, a dealership creates an inflated difference. He then adds the difference to the cash price of the new vehicle or the capitalization costs, if it is a leased vehicle. This kind of deal is illegal as the customer is made to pay more in sales tax and registration.

Inflating the price advertised: A dealership may not sell a vehicle for more than the price he had advertised. If he does, he is violating the related laws. Even if the dealer informs the consumer of the final price after inflating the price it does not bring down the severity of the illegitimacy of the practice.

Inflating monthly installments: Here a dealer quotes an inflated monthly installment which he does by adding the price of accessories that are optional. Some of these accessories are alarms, service contracts, GAP insurance, paint/fabric protection, window etching, low jack, etc. The customer is not informed of the choice he has to refuse the accessories.

Rewriting a contract with a backdate: In order to qualify for financing a consumer may be required to increase a down payment and higher APR to qualify for a loan. The dealership cleverly gets the customer to sign a second contract with different terms. The second contract bears the date of the first contract which is a gross violation of finance disclosure laws. The customer is made to pay interest for a period of time even without the contract having gone into effect. This kind of contract is tantamount to material misrepresentation of the new contract and a violation of the single document rule.

As a car consumer you must bear in mind that:

• A dealership only has 10 days to inform the consumer of the required changes to the contract
• After the 10 days time the dealership cannot change the deal
• A customer also has a choice to cancel the contract and return the new vehicle and get refunded
• If a customer is not informed of the changes in the deal it is a violation of the single document rule

One Document rule:

Often, dealerships violate the One document rule by getting the customers sign more than one document, such as:

• Trade-in forms that bind the consumer to pay the difference of the value between the trade in and the new car
• Agreement for attorney fees, if any
• A purchase agreement for payments the dealership agrees to make on a trade-in vehicle
• A “hold check agreement” by the customer for extra future payment towards the down payment with dates, in case the customer fails to make the entire down payment
• Agreement for additional provisions for bounced checks

This is illegal because these obligations are not included in the single document purchase agreement and the One Document rule requires that all the above agreements by both the parties must be in the same document.

Krohn & Moss, Consumer Law Center is a leading California law firm specializing in auto fraud. The law firm of Krohn & Moss, Consumer Law Center®, was founded in 1995 by attorneys Adam Krohn and Greg Moss, to provide legal representation to consumers with defective vehicles and products. If you suspect that you have been a victim of auto fraud, you can get rid of your problem vehicle by pursuing your California lemon law claim. Submit the case details for a Free* Case Review under the California lemon laws.