Indiana Consumer Lawyer Blog

Within the last week, the Associated Press reported that a lady who won a car on the game show "The Price is Right" had filed a lawsuit against the game show, CBS Broadcasting and the dealer who sold her the car. Back in 2004, she won a new 2004 Pontiac GTO Coupe while appearing on the show. She had the car for approximately a year when she took it in for service and learned that it had been wrecked and repaired before it was delivered to her as a "new" car.

This lawsuit has garnered publicity simply because of the connection with "The Price is Right." Before I became a consumer lawyer, I would have read this article and thought what a freaky set of circumstances this was. A car dealer took a car that they knew had been wrecked, repaired it and passed it off to this contest winner, ripping her off for potentially thousands of dollars. Then the contest winner somehow finds out about it and sues. Wow. Sadly, these are not freaky circumstances. It happens every day all over the United States, and as I say that I don't believe I'm exaggerating.

You see, before I became a consumer lawyer I didn't realize how much money is involved in buying and selling cars in the U.S. Or how competitive the market is. Or how greedy dealers can be. Or how people who work in the industry, for whatever reason, get to a place where misleading consumers and taking advantage of them isn't seen as wrong but as a legitimate way to do business.

I receive numerous calls from Indiana consumers every week about all kinds of issues. A majority of those calls, though, are from Indiana consumers who believe they have been ripped off by car dealers. Often, they have. The misrepresentations abound: never been wrecked, one owner - woman driver, warranty, actual mileage and on and on. Plus, my favorite misrepresentation, typically made in a phone call twenty or thirty days after the sale: we couldn't get you financed so you need to bring the car back since there's no deal - and if you keep the car you've stolen it and you're a thief.

I used to be blissfully unaware of these things, but now I enjoy pursuing justice for victims of this kind of conduct. And, hopefully, somewhere along the way, I hope I can help some car dealers understand that, for dealers who make money off of Indiana consumers, The Price is Wrong.

I just read a letter to the editor of a Henderson County, North Carolina newspaper on the dangers of arbitration agreements. Having seen the impact of mandatory arbitration agreements, I couldn't agree more with the writer's comments. Here is a reprint of the letter in its entirety:

Published Friday, September 28, 2007

Protect your right to go to court

To The Editor: Today a local automotive dealership refused to sell me a car because I refused to forfeit my constitutional right to a jury trial. I refused to sign their arbitration agreement.

Consumers, if you have a dispute with the dealership and you have signed this document, you are required to use an arbitration organization of their choice. You relinquish all rights to a trial by jury, all rights to participate in a class action suit and have very limited access to discovery.

I have never participated in a lawsuit and hopefully never will. I support voluntary arbitration, but this is mandatory. Search online for car dealership arbitration agreements. You won't find one positive comment for this practice.

Question the integrity of a dealership requiring this. Ironically, manufacturers once required dealerships to sign these. Dealerships lobbied for a law (H.R. 534/S 1020) preventing it.

Proponents argued "It is unfair for the stronger party in a contract to insist that the weaker party forfeit the right to access the courts as a condition of doing business."

Ask a dealership in advance if they require arbitration agreements. If they do, walk away. Protect your rights.

Susan Holder

Mills River

The newspaper's online edition is found at BlueRidgeNow.com.

Importantly, Ms. Holder doesn't mention one of the main drawbacks of arbitration: it can cost consumers hundreds or thousands of dollars to protect rights that could be vindicated in the court system for a filing fee of $133.

Since most people don't really think about the possibility of having to file a lawsuit at the time they purchase a car, I seriously doubt many consumers will follow Ms. Holder's advice. But that doesn't make it any less wise. If you have any problems down the road, and you signed an arbitration agreement or your purchase order contained one, I can guarantee you will wish you had.

In the course of doing some research this week, I discovered that Indiana is one of only three states that does not require automobile dealer's to post a bond of some kind. See, look for yourself by clicking here.

Being in the minority isn't always a bad thing; sometimes Indiana is progressive. But I don't think that's what is going on here.

A bond, from my perspective, is a guarantee that my client who wins a lawsuit against the dealership will be able to collect at least some, if not all, of the judgment. Indiana consumers, unfortunately, have been left unprotected in this area. Unfortunately, I'm not sure why. Has it simply slipped through the cracks? Has the dealers' lobby been successful in stopping the legislation? I don't know.

It's the corner car lots, the ones that may not be able to pay your judgment, where having a bond could matter.

I think I'm going to try to find out why Indiana auto consumers are less protected than consumers in almost every other state.

CarFax is the nation's most popular way to research the history of used cars, and not just by consumers. Whether you live in Lebanon, Indianapolis, or West Lafayette, or anywhere else for that matter, chances are your local dealership has an account. More than 29,000 car dealers in the United States have one.

But the reliability of CarFax's reports has recently been questioned because of attention from the settlement of a nationwide class-action lawsuit. The lawsuit alleged that CarFax's reports were not as comprehensive as CarFax claimed. The settlement will give millions who purchased a CarFax report before October 27, 2006 the opportunity to choose one free or multiple discounted reports, or a 20 percent discount on a vehicle inspection. Big whoop. My guess is that the discounted inspection is coming a little late for most of the CarFax report purchasers.

Anyway, this publicity emphasizes what should really be common sense - that there's really no way a report like this could be 100% accurate. A vehicle history report can certainly be a tool to use in making a used car purchase, but it should never be the sole reason to make a buying decision.

There can sometimes be a substantial lag time between damage to a vehicle and the time that information makes it into the CarFax database. And there are significant sources of relevant information that still are mostly not included in the database, such as insurance claims. With regard to insurance claims, though, that does seem to be changing recently.

CarFax itself has stated that they have never implied that a report was the only tool a buyer needed, stating "we've always encouraged people to get an inspection by a mechanic." And that really is the bottom line. If you aren't a mechanic or a person with significant automobile knowledge, the smartest thing you can possibly do in purchasing a used car is have it inspected by a mechanic. It will be worth every penny.

After all, you wouldn't want to purchase one of these vehicles unknowingly, would you?

And no, I have no idea how that happened or even could have happenedI

As an interesting aside, guess who owns AutoCheck, CarFax's chief competitor? None other than Experian, of credit reporting fame.

This blog post is going to be short, because there's really no discussion necessary.

When you purchase a car at a dealership, HAVE YOUR FINANCING LINED UP BEFORE YOU VISIT THE DEALERSHIP. Period. It's that simple.

This will help you avoid the possibility of being a victim of a host of possible scams, will assure you get the best rate possible, and will give you leverage in negotiating the purchase price of the vehicle. Don't finance through the dealership.

Revised provisions of the Indiana Deceptive Consumer Sales Act went into effect January 1, 2007. The revisions aren't significant, but this Act is. It is designed to protect consumers from "deceptive and unconscionable sales acts."

Some deceptive acts are specifically outlined in the Act, such as:

1. Falsely claiming that a consumer good:

A. has performance, characteristics, uses or benefits that it does not have;

B. meets a particular standard or has a quality, grade, or style that it does not have; or

C. is new when it is not;

D. needs repair or replacement when it does not.

2. Falsely claiming that a specific price advantage exists when it does not.

3. Falsely claiming that the seller is affiliated in a way that it is not.

4. Making false claims about a warranty.

5. Falsely stating that a consumer good can be delivered within a specific time.

6. Making repairs that exceeded the estimate by more than 10% and that also cost more than $750.

7. A necessary replacement or repair is made, and the repair shop disposes of the part repaired or replaced earlier than seventy-two (72) hours after both:
- the customer has been notified that the work has been completed; and
- the part repaired or replaced has been made available for examination upon the request of the customer.

8. Making unauthorized repairs.

9. Knowingly selling or reselling a consumer good to a consumer if the product has been recalled.

10. Advertising a consumer product that the advertiser has no intention of actually selling.

Acts done with an intent to defraud are automatic violations of the Act. Otherwise, the seller must be notified of the issue and given an opportunity to cure before the Act has been violated.

A consumer may file a lawsuit for any violation of the Act. Even where no damages were suffered, the consumer may collect $500 for the violation. A punitive award of no greater than $1,000 may be imposed for intentionally fraudulent acts. Interestingly, consumers over 65 years of age may recover treble damages for intentionally fraudulent acts. A prevailing plaintiff is entitled to an award of reasonable attorneys fees, so any reputable consumer lawyer will not charge consumers attorney's fees for bringing a lawsuit under the Act.

For curable acts, notice must be provided to the seller within the earlier of one year after the sales transaction, six months of discovery of the deceptive act or the term of any warranty (but not less than 30 days). Any lawsuit must be brought within two years of the date of the deceptive act.

This Act is the primary weapon consumers have against unethical automobile dealers, and, thankfully, it does actually have some teeth!

A Warsaw couple was recently charged with multiple counts of theft, odometer fraud and forgery arising out of the purchase and sale of luxury automobiles over the Internet. Police say that Chad and Karen Gottshalk would buy high mileage high-end cars off of E-Bay, replace or roll back the odometer, and sell the vehicles for $10-15,000 or more. Most of the vehicles were apparently sold to out-of-state Internet purchasers.

The couple attracted law enforcement attention a year ago because of paperwork submitted to the Indiana Bureau of Motor Vehicles. An investigation spanned the past year.

Interestingly, Chad Gottshalk was arrested several years ago for doing the same thing at a Warsaw dealership he owned.

The bottom line is that there is a lot of money in cars. As a result, there will always be a dishonest few who will cheat to make a profit. Be warned.

Automobile repair fraud consistently remains one of the top five consumer complaints in many states, according to the Consumer Federation of America. Older Americans are often targets of this illegal behavior because they are perceived as more wealthy and more concerned about safety and liability.

What can you do to avoid being a victim? Several things.

* Find someone you can trust before major repairs are needed. Shop around while having minor repair work or routine maintenance done on your vehicle. Hopefully you will find someone you can trust, and, even better, establish a relationship with.

* Protect yourself in writing. Always insist on being provided with a written repair estimate itemizing the repairs needed and the cost. Request that all replaced parts be returned. Then, make sure that you get a detailed invoice of all work done, with an itemized breakdown of all labor performed and parts purchased.

* For major repairs, don't hesitate to get a second or third opinion.

* Lastly, if you really want to protect yourself or are already suspicious of the repair facility, mark your parts. Take a permanent marker and discreetly mark parts that you've been told will need replaced or you believe will need to be replaced. If you don't find your mark on the returned parts following the repair, you know to check the part in your car.

Making sure that you don't become a victim of fraud can be extra work - no doubt about it. But believe me, when you realize you are a victim, you'll wish you would have taken the time.