C.A.R.S. Activities 2013

Consumer Financial Protection Bureau and U.S. Department of Justice Tackle auto dealer markups on auto loans
CARS President joins civil rights, consumer rights leaders on auto lending panel at CFPB
Richard Cordray, Director of the Consumer Financial Protection Bureau
Federal regulators, including the Consumer Financial Protection Bureau, have put auto lenders on notice they face a new level of scrutiny over their discriminatory auto lending practices, which result in minority car buyers being charged extra amounts in hidden excessive interest rates, despite having the same credit as non-minority borrowers.

According to CFPB Director Richard Cordray, "Some people end up paying more on their auto loans than their neighbors – with the difference being not their creditworthiness but their race or ethnicity. Such discrimination may result in millions of dollars in unjustified consumer harm every year in the auto lending industry."

Lenders such as Ally Bank have notified stockholders that they face the possibility of fines or other penalties linked to legal action over discriminatory auto lending. Ally Bank, formerly named the General Motors Acceptance Corporation, collapsed during the recession and was bailed out by taxpayers, to the tune of tens of billions of dollars. In 2004, GMAC settled similar litigation brought on behalf of African American and Latino borrowers who were charged higher dealer "markups" than their white counterparts who had similar credit.
Washington, DC (11/14/13): CARS President testifies at Consumer Financial Protection Bureau Auto Finance Forum regarding auto dealer markups on auto loans

New York Times: Scrutiny over disparity in loan fees at auto dealerships

CARS President Rosemary Shahan testified on a panel with Stuart Rossman from the National Consumer Law Center, Hilary Shelton from the National Association for the Advancement of Colored People (NAACP), and a representative of the Minority Auto Dealers Association. Rosemary stated that CARS opposes dealers being able to charge extra hidden fees that add to the interest rates consumers pay for auto financing. For many years, CARS has spearheaded efforts in California to reduce the risk of discriminatory auto lending and the costs car buyers pay for dealer markups. In 2004, CARS sought to cap dealer markups at $150 per transaction, via the Car Buyer Bill of Rights, a ballot initiative that statewide polling showed to be extremely popular. As the result of a watered-down legislative compromise, CA ended up with caps on dealer markups -- 2.5% for loans up to 60 months and 2% for longer loans. Except for Louisiana, California is the only state with a law that caps dealer markups.

On October 30, CARS filed the Car Buyers Protection Act, a new ballot initiative to make newer, cleaner, safer vehicles more affordable, including flat-out prohibiting dealer markups on auto financing. Among likely voters in 2014, that provision polls at an overwhelming 82% support.

Spokespersons testify before Consumer Financial Protection Bureau Auto Finance Forum. Panelists (from left): Rohit Chopra (CFPB), Damon Lester (National Association of Minority Automobile Dealers), Rosemary Shahan (CARS), Hilary Shelton (NAACP), Stuart Rossman (National Consumer Law Center)
Read more:

CFPB Director Richard Corday's remarks at the CFPB's Auto Finance Forum

Civil rights and consumer advocacy groups clash with auto dealers and lenders --
watch video of Consumer Financial Protection Forum on Auto Financing

Wall Street Journal: Banks press car dealers on loan practice

US Department of Justice files lawsuit alleging auto lending discrimination in Los Angeles

LA Times: "Car dealer, immigrants settle suit -- Chinese-speaking buyers were falsely told bad credit meant they must take high-interest loans, plaintiffs say. Financial award is undisclosed."

NY Times: GM nears settlement in lawsuit over lending


CARS files Car Buyers Protection Act Initiative
for the Nov. 2014 Ballot in California

Statewide polling shows overwhelming support among likely voters
88% favor safety recall provision

The Car Buyers Protection Act will:
  • Make it illegal for car dealers to sell, rent, lease, or loan used vehicles that are under a federal safety recall, unless the safety recall repairs have been performed
  • Improve protections for car buyers who are victims of ID theft at auto dealerships
  • Prohibit dealers from hiring people convicted of ID theft, forgery, or other fraud, for positions where they would have access to car buyers' personal financial information
  • Prohibit dealers from engaging in "bait and switch" financing (also known as yo-yo financing)
  • Prohibit dealer markups – hidden extra charges that raise the cost of financing car purchases and cost California car buyers over $2.6 billion in a single year
  • Require all dealers to provide at least a 30 day / 1,000 mile warranty (currently, only “buy here pay here” dealers are required to provide minimum warranties, so many other dealers continue to sell faulty vehicles “AS IS”)
  • Eliminate the New Motor Vehicle Board's authority to overrule the DMV when the agency disciplines an auto dealer or manufacturer for violating consumer protection laws
Read more:
News Release

California Statewide Polling Results

Car Buyers Protection Act -- Summary and background about each provision

TEXT of Car Buyers Protection Act filed with CA Attorney General


CARS is working to stop rental car companies from engaging in "Recalled, Unsafe Rental Car Roulette"

Working closely with Cally Houck, mother of Raechel and Jaqueline Houck, who were killed by an Enterprise rental car that was under a safety recall, CARS is leading the battle in Congress to stop rental car companies from renting unsafe vehicles that are being recalled, until they're fixed. Earlier this year, Senator Schumer, along with Senators Boxer, McCaskill, Blumenthal, Casey, Feinstein, Gillibrand, Murkowski, and Schatz have introduced the Raechel and Jacqueline Houck Rental Car Safety Act, S 921. The US Senate Commerce Committee voted unanimously for the bill, on a voice vote.

Who's working to get the legislation enacted:
    CARS President Rosemary Shahan testifies for the Raechel and Jacqueline Houck Rental Car Safety Act, S 921, before U. S. Senate Commerce Subcommittee on Consumer Protection, Insurance, and Product Safety, Chaired by U.S. Senator Claire McCaskill (D-MO). Next to Ms. Shahan, testifying in opposition to the bill, are representatives of the Alliance of Auto Manufacturers and the National Auto Dealers Association
  • Cally Houck, Mother of Raechel and Jacqueline Houck
  • Consumers for Auto Reliability and Safety
  • Consumers Union
  • Consumer Federation of America
  • Consumer Action
  • Advocates for Highway and Auto Safety
  • Center for Auto Safety
  • Consumer Federation of California
  • National Association of Consumer Advocates
  • Trauma Foundation
  • Hertz Rental Car Company
  • Enterprise Holdings
  • Avis Rental Car Company
  • Dollar Thrifty
  • American Rental Car Association (ACRA)
  • American Automobile Association (AAA Auto Club)
  • State Farm Insurance Company
Who's trying to kill the rental car safety act?
  • Alliance of Auto Manufacturers, including GM, Ford, Chrysler, Toyota, Nissan, Mazda, Porsche, Mercedes, Jaguar, VW and Volvo Why? Apparently, they plan to produce lots of vehicles that will be subject to safety recalls. They said they object to having to cover any losses the rental car companies may incur if they can't rent their unsafe cars to the public, pending repairs for safety defects.
  • National Automobile Dealers Association
    Why?   They said that some of their members own rental car companies on the side, and they want to be able to continue renting them without fixing them first.
The President of CARS was invited by the US Senate Commerce Subcommittee on Consumer Protection, Insurance, and Product Safety to testify regarding S 921. She appeared on a panel with representatives from the rental car industry, who also testified in support of the bill. The opponents, the auto manufacturers and car dealers, testified against the bill at the same time.

Testimony of Rosemary Shahan, urging Congress to enact the Raechel and Jacqueline Houck Rental Car Safety Act:  PDF

Video of the Senate Subcommittee hearing, including Cally Houck's moving testimony and heated exchanges between Sen. Boxer and the opponents of the Act:  US Senate website

Read the latest news about this ongoing battle

Senator Hannah Beth Jackson
California State Senator Hannah-Beth Jackson (D-Santa Barbara), author of SB 686, is working with CARS and other safety organizations to stop auto dealers from selling unsafe, recalled used cars to consumers
CARS is working to stop auto dealers from engaging in "Unsafe Recalled Used Car Roulette"

CARS is leading the fight to stop California car dealers from selling, renting, or loaning unsafe recalled used cars to consumers, putting their safety at risk.

CARS is working closely with victims of recalled used cars and California State Senator Hannah-Beth Jackson (D-Santa Barbara), to prohibit auto dealers from selling, renting, or loaning unsafe recalled used cars to consumers -- unless the safety defects have been fixed. Sen. Jackson is the author of SB 686, which would simply give used car buyers the same protection from unsafe recalled used cars that new car buyer have enjoyed for decades.

Read the latest news about this ongoing battle


CARS is working to scrap old, gross polluter vehicles in California and replace them with newer, cleaner, safer vehicles

CARS has been working closely with Senator Fran Pavley (D-Augoura Hills) and her staff, as well as leading
Credit: Creative Commons
environmental and public health groups, for enactment of SB 459, authored by Sen. Pavley. This legislation will help beef up California's antiquated, puny program for scrapping gross-polluter vehicles owned by low-income consumers, and replacing them with cars that pollute less and also have more lifesaving safety features, including side air bags and electronic stability control. Since the average age of the nation's vehicle fleet is now hovering around 12 years old, while climate change reaches a tipping point, asthma rates soar and people's health suffers, this is a desperately needed measure.

SB 459 has passed in both houses of the Legislature and is now headed to Governor Brown's desk.

Read more:  CARS' letter of support for SB 459, when it was up for a vote before the Assembly Transportation Committee

See latest version of SB 459

CARS is working to curb predatory car title lending practices -- that result in vehicle loss and lost jobs

CARS is on the forefront in California, in advocating for protecting struggling low-income vehicle owners from predatory car title lending practices. Typically, car title lenders charge triple-digit interest rates, often driving their victims into defaulting on their loans. Then the lenders repossess their cars -- usually their only means of transportation to get to work, school, and medical appointments. They then charge exorbitant repossession, repair, and storage fees, making it even harder for borrowers to reclaim their cars.

The President of CARS has been repeatedly invited to testify before the California Assembly Banking Committee, when the Committee held oversight hearings that delved into car title lending practices. At the oversight hearing earlier this year, CARS called for a flat-out prohibition on car title lending in California. Most other states do not allow car title lending, because the impact on consumers is so devastating when they lose their only asset -- their car.

CARS is actively advocating for legislation to at least cap the interest rates on car title loans at 36% and require responsible underwriting practices, such as taking the borrower's ability to repay the loan into account. Last year, CARS testified for legislation to curb car title lending, authored by Assemblymember Roger Dickinson (D-Sacramento), who is now the Chair of the Assembly Banking Committee. However, under heavy lobbying by high-powered car title lender lobbyists, and the car title loan industry's trade association, the bill stalled.

California law caps interest on short-term loans below $2500. But for a loan of $2500.01 or more, the sky's the limit. As a result, consumers are often tricked into getting bigger loans than they need or want. Someone seeking an emergency loan for $600 to fix a leaking roof may be told that the loan company is not allowed to give them a loan for less than $2600, and that they qualify for the larger loan. The loans have interest rates of 100%, 300% or more. They may also include balloon payments or other traps that result in consumers losing their vehicles, even after they have paid all the interest charges and the principal.

Major reports about car title lending, spurred by CARS:
'Car Title Loans' a Road to Deep Debt
By Carolyn Said
San Francisco Chronicle -- front page
May 3, 2013

Read more:  San Francisco Chronicle: "'Car Title Loans' a Road to Deep Debt"

Personal Finance: High-Rate Loans Get Scrutiny
By Claudia Buck
Sacramento Bee
August 25, 2013

Read more:  "Sacramento Bee report: High-Rate Loans Get Scrutiny"

CARS is working to expose shady car dealer practices, including contributing to major news reports about car dealers selling grossly unsafe Hurricane Sandy Flood cars

Flood cars from Hurricane Sandy Show up on Used Car Lots
flood vehicle
Hurricane Sandy flood car.  Credit: ABC News
ABC's "The Lookout"
July 31, 2013

CARS contributed to this major investigative report

"When superstorm Sandy pummeled the Northeast last October the damage was widespread. Nearly 300 people lost their lives, and thousands more lost their homes. Then there were the cars. According to the National Insurance Crime Bureau, an estimated 250,000 cars were submerged for days in corrosive saltwater....In a five month investigation, "ABC's The Lookout" found these cars turning up on used car lots across the country."

CARS is working to expose shady car dealer lending practices
flood vehicle
 Credit: ABC News

Critics: Car Dealer "Yo-Yo" Practices Affect "Most Vulnerable" Buyers
ABC News -- Good Morning America
August 28, 2013

CARS contributed to this major investigative report

Read more: "ABC Good Morning America" exposes car dealer "bait and switch" financing scam

CARS is working to raise public awareness about the perils of one-sided contracts that leave victims of illegal practices powerless to fight back on their own behalf.

CARS' YouTube video about one consumer's plight has now attracted more than 1,290,000 views.

Read more:  usedcarnightmare.org

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C.A.R.S. Mission
CARS is a national, award-winning,
non-profit auto safety and consumer
advocacy organization working to
save lives, prevent injuries, and
protect consumers from
auto-related fraud and abuse.

to everyone who has supported CARS' work, including the more than 589,000 people who have contributed financially
to CARS, and signed or shared CARS' petitions. YOU are helping save precious lives!!

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Read more at American Prospect:
"What's Up With Twitter's Content Moderation Policies?"  

CarMax sells cars with
deadly safety recall defects.
ABC's 20/20 went undercover and caught
CarMax up to their sneaky tricks.
More than 730,000 viewers have watched this video clip on CARS' YouTube channel
Help save lives -- share the link!

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Buyer Beware! Auto dealers use
forced arbitration
to get away with cheating customers
Even when car dealers flagrantly violate consumer protection laws, you may not be able to get justice. That's because almost 100% of car dealers stick "forced arbitration" clauses into their contracts. If they cheat you, and you try to take them to court, they can just laugh at you. That's because they can get your case kicked into arbitration -- a secret, rigged process that favors big, corrupt lawbreakers. The dealer often gets to choose the arbitration firm, and even the arbitrator who hears your case. Unlike judges, arbitrators are perfectly free to ignore the law.

Dealers claim that arbitration is quick. But Jon Perz in San Diego had to wait over 8 years in "arbitration limbo" before he finally got justice, after Mossy Toyota sold him an unsafe car. CARS produced a short video exposing what happened. More than 1.3 million people have watched our video on YouTube:
See the billboard CARS displayed
right next to Mossy Toyota's car lot,
and read more about how Jon finally won.

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