Find out how to increase your chances of success with used car dealer lawsuits
The principal self-protection device employed by used vehicle dealers is the “as is” designation in the written sales contract. The salesperson may praise a car to the sky, but when you read the contract, you will see it clearly stated that the seller takes absolutely no responsibility for the condition of the vehicle and that it is sold “as is.”
To successfully sue a used car dealer, you must be able to prove that:
- you suffered a financial loss (this is not hard if you had to pay for repairs), and
- the dealer is legally responsible for your damages.
This second point is often harder to prove. Almost surely, the used car dealer will testify that he or she had no way of knowing how long a ten-year-old Dodge would last and that, for this very reason, the car was sold “as is.” The dealer will then show the judge the written contract that not only contains the “as is” designation, but also “this written contract is the entire agreement between the parties and no oral statements or representations made by the dealer or any salesperson are part of the contract.”
How can you fight this sort of cynical semi-fraud? It’s difficult to do after the fact. The time for self-protection is before you buy a vehicle, when you have the opportunity to have it checked by an expert and to get a vehicle history report. There are a lot of online resources for checking a vehicle’s history, particularly if you have the Vehicle Identification Number (VIN). In addition, you have the opportunity to refuse to close the deal unless the salesperson’s claims about the great condition of the car are put in the contract. Of course, after the damage has been done, good advice such as this isn’t worth much. If you have just been cheated on a used car deal, you want to know what, if anything, you can do now. Here are some suggestions.
Your state’s lemon law may apply to used vehicles. In some states, the lemon law applies to used as well as new cars. Check to see if your situation is covered.
Argue fraud. If the car broke almost immediately after you took it out of the used car lot, you can file in small claims court and argue that you were defrauded. Your theory is that, no matter what the written contract said, there was a clear implication that you purchased a car, not a junk heap. When the dealer produces the “as is” contract you signed, argue that it is no defense to fraud.
Did the dealer make promises? If the dealer made any promises, either in writing or orally, about the good condition of the vehicle, he or she may be required to live up to them. Why? Because statements about a product that you rely on as part of deciding whether to purchase the product constitute an express warranty that the dealer breaches if the promise turns out to be a lie. This is true even if the seller had you sign a contract with an “as is” statement that disclaims all warranties, because an “as is” statement does not disclaim an express warranty if one is made. The key to winning this sort of case is to produce a witness to the dealer’s laudatory statements about the vehicle, copies of ads that state the car is in good shape, and anything else that will back up your story.
There also may be an implied warranty. There are two types of implied warranties. One type–the implied warranty of fitness–means that the vehicle is warranted to work for a particular purpose (say, consistency). The more common implied warranty is for merchantability. Here, you would argue that the car you bought was so defective that it didn’t meet the reasonable standards expected of even a used car.
A radical remedy: Give the car back and stop payment. You may consider having the car towed back to the lot and then refusing to make future payments. This option should be considered only in an extreme situation, but it does shift the burden of taking legal action to the other side, at which point you can defend on the basis of fraud (see above). If you take this approach, be sure you have excellent documentation that the car was below any reasonable expectations. And be sure to write a letter detailing the circumstances surrounding your extreme difficulties with the dealer, along with a convincing statement that, taken as a whole, the dealer’s conduct amounts to consumer fraud. Send copies to the dealer and the bank or finance company to whom you pay your loan. Of course, you will probably have already made a down payment, so even in this situation you may wish to initiate action in small claims court to try to recover it.
Your credit rating will suffer. If you stop making payments, it will appear as a default on your credit report and will affect your credit score significantly, so think very carefully before choosing this course of action.
How to find signs of fraud. If you really suspect that you have been defrauded, have your car checked by an experienced mechanic who will be willing to write a letter explaining the findings. If the mechanic can find affirmative evidence that you were cheated, you will greatly improve your small claims case. The mechanic might, for example, find that the speedometer had been tampered with in violation of state law, or that a heavy grade of truck oil had been put in the crankcase so that the car wouldn’t belch smoke. Also, this is the sort of case where subpoenaing documents might help. Specifically, you might wish to subpoena the car dealer’s records, including any that indicate the dealer’s purchase price and the condition of the car when it was purchased. It might also be helpful to learn the name of the car’s former owner, with the idea of contacting that person. You can also check the car’s history through an online service (search the Internet for “vehicle history”), which can tell you whether the car was stolen or salvaged, or was used as a rental or a taxi.
Consider other remedies besides small claims court. These can include checking with your state department of consumer affairs or the local department of motor vehicles to see if used car lots are regulated. In many states, the department of motor vehicles licenses used car dealers and can be very helpful in getting disputes resolved, particularly where your complaint is one of many against the same dealer for similar practices. Also, contact your district attorney’s office. Most now have a consumer fraud division, which can be of great help. If you can convince someone at the fraud division that what happened to you smells rotten, or if your complaint happens to be against someone they have already identified as a borderline criminal, they will likely call the used car dealer in for a chat. In theory, the D.A.’s only job is to bring a criminal action, which will be of no direct aid in getting your money back, but in practice, negotiations can often result in restitution. In plain words, this means that the car dealer may be told, “Look, you’re right on the edge of the law here (or maybe over the edge). If you clean up your act, which means taking care of all complaints against you and seeing that there are no more, we will close your file. If you don’t, I suggest you hire a good lawyer, because you are going to need one.”
by: Ralph Warner