Vehicles represent a big expense for most drivers in California. Vehicles may also be a necessity for many people in San Diego who need a car or truck to get to work, school, take kids to the doctor's office, and go shopping for food. Unfortunately, some auto dealers take advantage of someone's need for a car to commit fraud.
Car dealers have a reputation for ripping off consumers. Some people just accept the fraud as a risk of doing business but car dealer fraud is against the law. Vehicle buyers in California are protected by lemon laws, consumer protection laws, and car buyer's rights. If you have any questions about auto dealer fraud in San Diego, contact the Law Office of L. Paul Mankin for a free and confidential consultation.
Identifying Fraud From the Car Dealer
Many people are taken advantage of by vehicle dealers in California. Unfortunately, buyers may not realize the car dealer committed fraud. Instead, they just accept the misrepresentation as to the risk of buying a car. Instead of just accepting getting ripped off, you should hold the dealer accountable. Buyers and consumers in California have rights against auto dealer fraud.
How do you know the difference between a bad deal and fraud? Some car sales are just a bad deal but if the auto dealer did something to misrepresent the vehicle, then it may be fraud. The dealer may not think of it as fraud but it is more important what the law says about the dealer's actions. Some signs that the dealer may have committed fraud include:
- Misrepresenting the repair history of the vehicle
- Making false guarantees about satisfaction
- Misrepresenting accident history
- Selling a junk or salvage vehicle
- Odometer seems too low for the age and wear of the car
- Giving the wrong vehicle year
- Adding on suspicious fees and costs
- Contract is different than the agreement
- Running a credit check without permission
- Offering vehicles in poor mechanical condition;
- Has the dealership called requesting the vehicle back or asking you to sign a new contract
- Failing to transfer title in time
- Failing to pay off your trade-in vehicle as agreed
- Selling a vehicle with flood or hurricane damage
- Selling a vehicle that was a lemon law buyback
- Selling a vehicle that was a prior rental vehicle
- Forcing you to purchase GAP insurance
- Did the dealership demand that your return the vehicle more than ten (10) days after purchase
- Change in finance terms, and
- Any other misrepresentation about the vehicle sale.
In many situations, identifying fraud starts with a feeling that something is not quite right. If you have any suspicion that the dealer committed fraud, you can contact your San Diego auto dealer fraud lawyer for a consultation. You may be surprised to learn that you have the right to return the car, get your money back, and even get money damages from the dealer.
California Lemon Laws for Car Sales
There are a number of state and federal laws that protect consumers from buying cars from dealers committing fraud. California has some of the strongest consumer protection laws, including lemon laws for car buyers. Some of the laws and regulations that provide recourse for ripped-off car buyers include:
- The Car Buyer's Bill of Rights
- The Consumer Legal Remedies Act
- The Song-Beverly Consumer Warranty Act, and
- The Business and Professions Code
Lemon laws generally cover new and used vehicle sales and leases in California, including vehicles purchased or leased for business use or personal use. California Lemon Law applies to vehicles that come with a manufacturer's vehicle warranty, including:
- Vans, and
These are some of the laws that apply specifically to auto dealers. However, common fraud claims may involve a breach of contract or fraud claim for intentional misrepresentation.
The Car Buyer's Bill of Rights
Under the California Car Buyer's Bill of Rights, licensed dealers are required to provide buyers with an itemized price list for financial items, including warranties and insurance. Dealers are required to provide the consumer with each credit score obtained by the dealer and an explanation of how the credit score will be used.
Dealers are also subject to a financing fee cap, where dealer compensation from the financing institution cannot receive more than 2% or 2 ½% of the purchase amount for contracts, depending on the term of the contract.
If the dealer is selling a used “certified car,” the dealer must perform a complete inspection and provide the consumer with a copy of the inspection report. Used vehicles are also subject to an optional contract cancellation. There are maximum fees for contract cancelation options and maximum restocking fees the dealer can charge if the vehicle is returned within a specified time.
California Consumer Legal Remedies Act
The California Consumer Legal Remedies Act (CLRA) is a general consumer protection law. The CLRA describes a number of unfair or deceptive practices and provides remedies for consumers who are deceived. Unlawful practices under the CLRA include:
- Passing off goods or services as those of another, like selling a used vehicle that was repaired with after-market parts but claiming the repairs were made with the manufacturer's parts
- Misrepresenting the source, sponsorship, approval, or certification of goods or services
- Representing that goods are original or new if they have deteriorated unreasonably or are altered, reconditioned, reclaimed, used, or secondhand, e.g., claiming parts to repair a used vehicle as new when they were refurbished or rebuilt
- Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model if they are of another
- Disparaging the goods, services, or business of another by false or misleading representation of fact
- Making false or misleading statements of fact concerning reasons for, existence of, or amounts of, price reductions
- Representing that a part, replacement, or repair service is needed when it is not
- Misrepresenting the authority of a salesperson, representative, or agent to negotiate the final terms of a transaction with a consumer, and
- Inserting an unconscionable provision in the contract.
Remedies for violations of the CLRA include actual damages, an order stopping the dealer from engaging in fraudulent practices, restitution, punitive damages, and any other relief the court deems proper.
California Song-Beverly Consumer Warranty Act
The California Song-Beverly Consumer Warranty Act strengthened consumer protection for California buyers of consumer goods. Consumer goods, including motor vehicle sales, are covered by an implied warranty of fitness and merchantability. This means a vehicle sold is fit for the ordinary purpose for which the vehicle is to be used. These warranties apply to vehicles beyond any express warranties.
Under the Song-Beverly Act, there are provisions for new car sales, and what qualifies as a reasonable number of repair attempts to fix a problem. Car dealers have to be given a minimum of more than one chance to fix the nonconformity. However, each occasion where there is an opportunity for repairs counts as an attempt, even if no repairs are made.
After reasonable attempts to repair the vehicle are not successful, the manufacturer must generally replace the vehicle or offer a refund.
California Business and Professions Code
The California Business and Professions Code has special regulations for car dealers. Many of these regulations were created to address specific problems in the car dealer industry. Unfortunately, without knowing the codes and regulations, consumers may not know when the car dealer is violating the law.
For example, car dealers are required to post a notice that there is no “cooling off period” or cancelation policy for a vehicle lease or purchase contract. However, contracts can be canceled for cause, such as fraud.
Car dealers are also required to offer 2-day contract cancelation options for some used vehicle sales with a purchase price of less than $40,000. Without knowing the specific regulations, a car buyer may see the no-cancellation policy and think they have no recourse. However, the dealer may have never offered the required cancellation option when selling the vehicle.
Other California Consumer Protection Laws for Car Buyers
Under California Civil Code § 1796, a car dealer who installs new or used consumer goods has a duty to the buyer to install the parts in a good and workmanlike manner. A car dealer who provides service or repair also has a duty to perform those services in a good and workmanlike manner.
Advertisement Scams and Misrepresentations
Under California Vehicle Code § 11713, a licensed car dealer cannot advertise any untrue or misleading statements. Car dealers cannot represent a used vehicle as new, cannot advertise a vehicle the dealer does not have, and cannot misrepresent a vehicle's prior use or ownership history. Dealers cannot include additional costs for licensing or transfer of title not due to the state.
Certified Vehicle Fraud
Some car dealers sell a vehicle as “certified” or use other terms to imply the vehicle meets some vehicle certification quality. Unfortunately, a car buyer may not understand what the certification means or if certified applies to the vehicle they are purchasing. Under California Vehicle Code § 11713.18, dealers cannot advertise a used vehicle as certified if any of the following apply.
- The dealer knows or should have known that the odometer on the vehicle does not indicate actual mileage, has been rolled back or otherwise altered to show fewer miles, or replaced with an odometer showing fewer miles than actually driven.
- The dealer knows or should have known that the vehicle was reacquired by the vehicle's manufacturer or a dealer pursuant to state or federal warranty laws.
- The title to the vehicle has been inscribed with the notation “Lemon Law Buyback,” “manufacturer repurchase,” “salvage,” “junk,” “nonrepairable,” “flood,” or similar title designation required by this state or another state.
- The vehicle has sustained damage in an impact, fire, or flood, that after repair prior to sale substantially impairs the use or safety of the vehicle.
- The dealer knows or should have known that the vehicle has sustained frame damage.
- Prior to sale, the dealer fails to provide the buyer with a completed inspection report indicating all the components inspected.
- The dealer disclaims any warranties of merchantability on the vehicle.
- The vehicle is sold “AS IS.”
Car Dealer Fraud and Civil Claims in the Greater San Diego Metro Area
Car dealers in San Diego have been charged and convicted of criminal fraud. However, a criminal conviction may not help a defrauded buyer get their money back. Dealer fraud happens all the time in National City, Carlsbad, or anywhere else in San Diego. Unfortunately, the dealers get away with it most of the time because consumers don't take action.
Damages in a California Auto Dealer Fraud Lawsuit
A civil lawsuit will allow individuals who were ripped off by a fraudulent dealer to get damages for their loss, including being able to return the car, get a return of some or all of the money, get additional money damages, and even require the dealer to pay for the cost of filing the lawsuit.
Under California Civil Code 3294, a plaintiff in a civil lawsuit can get punitive damages. Punitive damages are money damages that are intended to punish the wrongdoer for their actions. Punitive damages, also called exemplary damages, also act to deter the defendant or others from doing something similar in the future.
Specifically, the plaintiff may be able to recover damages when the defendant has committed fraud. Fraud means “intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”
There is no cap on exemplary damages in California. In deciding whether to award punitive damages, the judge or jury can consider:
- Whether the conduct caused physical harm;
- Whether the dealer disregarded the health or safety of others;
- Whether the plaintiff was financially weak or vulnerable and the dealer took advantage of this vulnerability;
- Whether the car dealer's conduct was part of a pattern or practice; and
- Whether the dealer acted with trickery or deceit.
In many cases, when a dealer commits fraud against one buyer they are doing it to others. A class-action lawsuit may help many buyers who were similarly defrauded by the same car seller or vehicle dealer. Talk to your San Diego consumer protection lawyer about your rights and options after auto dealer fraud.
San Diego Auto Dealer Fraud Lawyer
If you want experienced, passionate, and result-oriented service, the Law Office of Paul Mankin is the right firm for you. We've successfully represented consumers and car buyers in Pacific Beach, San Diego, and across Southern California to make sure they don't get ripped off by the dealers. To learn more about how we can help you, contact us online or give us a call at 1-800-219-3577.