Articles Posted in Automobile Dealership Fraud


Indiana Consumer Law Group/The Law Office of Robert E. Duff announces a jury verdict in favor of the firm’s client, Heather N. Kesling.  Ms. Kesling purchased an inexpensive car for $2098 from Hubler Auto Outlet and subsequently found out that it was unsafe to drive.  The evidence at trial showed the vehicle had been driven less than 44 miles before it was permanently put in storage.

An expert testified for Ms. Kesling, and he told the jury that in his opinion the car was dangerous to drive because it could catch on fire, have a catastrophic loss of steering control or lose all power while driving on the interstate.  He also said these defects would have been obvious to any mechanic who looked at the car.  Another witness confirmed the dangerousness of the car’s defects.

I have previously posted about how I believe Carfax misleadingly promotes their product. Their recent “Carfox” commercials certainly lead you to believe a clean Carfax report virtually guarantees a good car. It just isn’t so. In fact, here’s what a Carfax Consumer Affairs Analyst said recently in an e-mail about their product:

The reporting of accident events through our service is based primarily on three main aspects:

1) Whether the event in question was reported to any data source capable of collecting electronic records (government agencies, etc.),

As you may be aware, the so-called Wall Street reform bill has now passed in the House and the Senate. The House version exempts automobile dealers from financial regulatory oversight, while the Senate version does not. I strongly believe that Indiana car dealers need the supervision that could, and hopefully would, come with their inclusion in this law. I recently wrote a letter as part of a successful effort by consumer groups, the U.S. military and others to defeat the Brownback amendment, which would have excluded dealers from the Senate’s version of the bill. Here is the text of that letter:

To whom it may concern:

My name is Robert Duff. I am a consumer law attorney in the State of Indiana. I am writing to express my opinion that the passage of the Brownback amendment would be a huge disservice to the citizens of this state. Here is why I hold this opinion:

My last blog entry, way too long ago, concerned Carfax and the unreliability of their reports. Well, Carfax has put themselves in the news again and I just couldn’t help but comment. I just read on a local news agency’s internet page that Carfax has put all the Cash for Clunker cars’ vehicle identification numbers (VINs) on its website and has set it up so those VINs can be searched for free. Cash for Clunker cars were supposed to be destroyed, at least the engine and transmission, and of course should not be showing up for sale. Carfax’s apparent press release noted these cars are going to start showing up here and there – a point on which I am in full agreement with Carfax.

The article I read didn’t have a link to it, so I went to the Carfax site. Not surprisingly, I spent about ten minutes searching for it and could not find it. It wouldn’t surprise me if Carfax is making it intentionally difficult to access so that frustrated consumers will just decide to buy a regular Carfax report on the car. I could be wrong. Maybe the website is set up so that no reports are sold on Cash for Clunker vehicles but instead when a person tries to buy a report on such a car a huge warning pops up. I hope so. But knowing what I know about Carfax, I have my suspicions.

Anyway, I found the link in another news article. The free search can be conducted here.

I was working today on one of my car dealership fraud cases when I came across a Carfax Vehicle History Report. Having seen Carfax’s recent television commercials, some of which are pretty funny (check this one out: Carfax Commercial), I thought another brief blog entry might be in order because I’m really bothered by how unreliable I have found Carfax reports to be. Now, I’m not saying they’re useless. In fact, I have recommended to family and friends that they purchase both a Carfax and Autocheck report on any vehicle they are considering purchasing. The primary reason is to see if anything shows up. If it does, I have found that it tends to be accurate. But if nothing shows up, it really doesn’t mean much. Carfax reports are very often incomplete and really shouldn’t give you the peace of mind the Carfax commericals imply you should receive from their report (“Get the truth about used cars.”). Sadly, some dealers love to find a car that sells for less at auction because of a defect but has a clean Carfax report (which the dealer will use to sell the vehicle to a consumer for more profit without disclosing the defect) .


Be warned: obtaining a Carfax report is not the end of your investigation into the purchase of a used car, but the beginning.

I would like to take a second to highlight a case recently decided by the Indiana Court of Appeals. It is important not because it made new law but simply because it is a good reminder of what the law is.

The case is captioned Brad Lawson v. Rodney Hale d/b/a R.H. Equipment. It was decided on February 26, 2009. Brad Lawson bought a used tractor from R.H. Equipment. At the time of purchase, Mr. Lawson inquired whether there were any problems with the tractor. Hale did not disclose any problems, despite the fact that he knew the engine had a cracked block that had been ineffectively repaired.

The case was tried to the Court without a jury and the judge found for the defendant. The Court of Appeals reversed and directed the trial court to enter judgment for the Plaintiff on the fraud claim, citing it as a “textbook case” of fraud. The lesson we are reminded of is summarized in two important sentences from the opinion: “[F]raud is not limited only to affirmative representations; the failure to disclose all material facts can also constitute actionable fraud. When a buyer makes inquiries about the condition, qualities or characteristics of property ‘it becomes incumbent upon the seller to fully declare any and all problems associated with the subject of the inquiry.

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 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

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.

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.