AUTO FRAUD LITIGATION LA LAW LIBRARY – AUGUST 20, 2014 SPEAKER: PAULIANA LARA, ESQ. CONSUMER ACTION LAW GROUP OF PANZARELLA, GUREVICH & RODE, PC 3700 EAGLE ROCK BLVD., LOS ANGELES CA 90065 (818) 254-8413
TODAY’S DISCUSSION POINTS PRACTICAL TIPS FOR REPRESENTING CONSUMERS IN AUTO FRAUD CASES COMMON FACT PATTERNS – TOP THREE CAR DEALERSHIP SCAMS CAUSES OF ACTION BROUGHT ON BEHALF OF CONSUMERS
PRACTICAL PRACTICE TIPS REVIEWING THE CONTRACT AND OTHER DOCUMENT SEND DEMAND WITH COPY OF COMPLAINT AMENDING COMPLAINT AFTER 30 DAYS ATTORNEY FEES
COMMON FACT PATTERNS: TOP 3 DEALERSHIP SCAMS BAIT AND SWITCH UNDISCLOSED PRIOR ACCIDENTS OR FRAME DAMAGE ODOMETER FRAUD
BAIT AND SWITCH CAR DEALER ADVERTISES ONE PRICE FOR A SPECIFIC VEHICLE AND THEN ASKS ANOTHER AMOUNT ONCE CONSUMER IS READY TO MAKE THE PURCHASE TACTICS ARE NOT LEGAL AND ARE CONSIDERED “AUTO FRAUD” WHICH IS PUNISHABLE BY FINES AND DAMAGES
UNDISCLOSED PRIOR ACCIDENTS OR FRAME DAMAGE FRAME DAMAGE FROM AN ACCIDENT: Makes a car unsafe to drive and causes many other problems down the line Makes car more dangerous in an accident Costs owner thousands of dollars in repairs FRAME DAMAGE = SALVAGE TITLE Dealer MUST disclose this to buyers; often DO NOT
ODOMETER FRAUD CARFAX, AUTO CHECK, OTHER VEHICLE HISTORY REPORTS – REPORT MILEAGE USED TO BE HARD TO PROVIDE IF DEALER CHANGED THE MILEAGE READING NOW, CAN TRACK; HELP BUYERS DETERMINE WHETHER THE CAR THEY PURCHASED REALLY HAD THE NUMBER OF MILES THE ODOMETER SAYS IT DOES
CAUSES OF ACTION: CIVIL CODE § 1750 Violation of the Consumers Legal Remedies Act, Civil Code § 1750, et seq. SELLER violated the CLRA by: (1) Misrepresenting the quality and condition of the VEHICLE; (2) Misrepresenting the ownership history of the VEHICLE; and (3) Knowingly selling a defective VEHICLE. (For Merch only, add below according to the case) Selling the VEHICLE more than advertised price; Failing to disclose prior Rental VEHICLE; Failing to disclose prior Accident; Failing to disclose prior Frame damage;
CAUSES OF ACTION: CALIFORNIA VEHICLE CODE § 11713.1 Violation of California Vehicle Code § 11713.1 (BAIT & SWITCH) California Vehicle Code § 11713.1(d) specifically, it states in pertinent parts: Advertised vehicles shall be sold at or below the advertised total price, with statutorily permitted exclusions, regardless of whether the purchaser has knowledge of the advertised total price. In this case SELLER sold the VEHICLE more than advertised price Failure to Sell Car As Advertised in Violation of 16 C.F .R. 238.0
CAUSES OF ACTION: PRIOR RENTAL Failing to notify BUYERS that VEHICLE was prior rental During the purchase, BUYERS asked if the VEHICLE was a “Prior Rental” to which SELLER assured BUYERS that the VEHICLE was not a “Prior Rental”. The fact that SELLER did not disclose the VEHICLE as a “Prior Rental” constitutes: “Fraud and Deceit” pursuant to Civil Code §§ 1710, 3294; Violation of California VEHICLE Code §§ 11713(a); Violation of 13 C.C.R. 260.03 (“statement of VEHICLE condition must accurately reflect the known condition”).
CAUSES OF ACTION: PRIOR FRAME DAMAGE Failing to notify BUYERS that VEHICLE had Prior Frame Damage (use this if shows vehicle was announced frame at the auction) During the purchase, BUYERS asked if the VEHICLE had been involved in an accident, to which SELLER assured BUYERS that the VEHICLE was in good condition and free from mechanical and/or structural defects or damages. The Auto Check clearly indicates that Prior Frame Damage was announced at the Auction. SELLER had superior knowledge of the VEHICLE’s condition but, despite this knowledge, SELLER failed to inform and intentionally concealed such facts from BUYER. Frame Damage constitutes a material condition of the VEHICLE, impacting its safety, warrantability, and value. The fact that SELLER did not disclose the VEHICLE’s “Prior Frame Damage” constitutes “Fraud and Deceit” pursuant to: Civil Code §§ 1710, 3294; Violation of California VEHICLE Code §§ 11713(a); Violation of 13 C.C.R. 260.03 (“statement of VEHICLE condition must accurately reflect the known condition”).
CAUSES OF ACTION: PRIOR ACCIDENT Advertising failed to notify that vehicle had been involved in prior accident The fact that the dealership’s advertising stated “NO ACCIDENT” and the VEHICLE in fact had been involved in an accident, constitutes the classic “Bait and Switch” technique pursuant to 16 C.F .R. 238, 238.2. It also constitutes “Fraud and Deceit” pursuant to: Civil Code §§ 1710, 3294; Violation of California Vehicle Code §§11713(a); Violation of 13 C.C.R. 260.03 (“statement of vehicle condition must accurately reflect the known condition”)
CAUSES OF ACTION: WARRANTY VIOLATIONS Failing to honor SELLER’S warranty: Violation of the Song- Beverly Consumer Warranty Act, Civil Code § 1790, et seq. (use this if there is a warranty from seller) Violation of implied warranty of merchantability and fitness. (use this if there is no warranty or car sold AS-IS) The sale of the VEHICLE included an implied warranty of merchantability and an implied warranty of fitness, pursuant to Civil Code Section §§1792, 1792.2.
CAUSES OF ACTION: SINGLE DOCUMENT RULE Violation of single document rule §2981.9 The single document rule requires that “all of the agreements of the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle” be contained in a single document. Example of violation: SELLER had BUYERS signed two contracts. SELLER did not execute the “Acknowledgment of Rewritten Contract”.
CAUSES OF ACTION: DEFERRED DOWN PAYMENT Violation of Deferred down payment Civil Code §2982 Civil Code 2982 states pertinent part: If payment of all or a portion of the down payment is to be deferred, the deferred payment shall be reflected in the payment schedule disclosed pursuant to Regulation Z. Example: SELLER violated Civil Code §§ 2982 subdivision (7)(c) and (6)(d) by listing the down payment as $1,200 on Section 6 line G of the RISC. SELLER failed to itemize the $500 deferred down payment in the Contract including the amount and the due date.
CAUSES OF ACTION: VIOLATION OF REGULATION Z Violation of Regulation Z (12 C.F .R. § 226.22) (for backdating) Regulation Z states in pertinent part: The annual percentage rate is a measure of the cost of credit, expressed as a yearly rate, which relates the amount and timing of value received by the consumer to the amount and timing of payments made.
THANK YOU! QUESTIONS? SPEAKER: PAULIANA LARA, ESQ. CONSUMER ACTION LAW GROUP OF PANZARELLA, GUREVICH & RODE, PC 3700 EAGLE ROCK BLVD., LOS ANGELES CA 90065 (818) 254-8413
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