It IS against the law for car dealers to sell used cars with unrepaired safety recalls

Posted on March 4, 2019 by admin

Contrary to the spin from unscrupulous car dealers, and erroneous reports in the news, it is illegal for car dealers to sell dangerous used cars with unrepaired safety recalls. Injured or misled consumers and their surviving family members who sue dealers that engage in such reckless practices usually win confidential settlements. The dealers insist on confidentiality to cover up their illegal activity.The legal settlements also are a telltale sign that the dealers know perfectly well what they are doing is illegal.

So if you discover that a crooked car dealer sold you an unrepaired recalled used car, you should get expert legal advice and fight back.

Here’s the scoop: There is a FEDERAL law against car dealers selling recalled NEW cars. There is a FEDERAL law against car dealers with fleets of 35 or more rental cars from renting, selling, or loaning recalled rental cars. But — while there is no FEDERAL law against car dealers selling recalled USED cars, if they do, they risk being held accountable under various STATE laws.

No less an authority than the U.S. Federal Trade Commission has noted:

“…state product safety, tort, and other consumer protection laws, provide important safeguards to consumers affected by defective cars.”

An attorney who advises auto dealers has also warned them that if they sell used recalled cars, they face serious sanctions under state laws. According to a report in Automotive News:

“There are theories of liability that plaintiff attorneys may attempt to attach to these vehicles, even if dealers are using good-faith efforts to identify potential open recalls,” says Shawn Mercer, a partner at Bass Sox Mercer, a Tallahassee, Fla., law firm that specializes in dealership franchise law. There is no federal law against selling a vehicle with an open recall. But “depending on the jurisdiction,” Mercer says, “potential liability can stem from violations of state laws or common law tort claims.” (Emphasis added)

The article also cautions car dealers:

“Selling a vehicle with an undisclosed safety problem makes for dissatisfied customers and can have legal repercussions, even if the dealership was unaware of the recall.” (Emphasis added)

One legal case that stands out, making the point that state law prohibits dealers and other businesses from failing to exercise due care, or acting with negligence, is Houck vs. Enterprise. Sisters Raechel and Jacqueline Houck were ages 20 and 24 when they visited their parents in Ojai, California. On their way back home to Santa Cruz, they were killed by an unrepaired recalled rental car — a Chrysler PT Cruiser that caught on fire, and also lost steering. They ended up colliding with an 18-wheeler semi-trailer truck.

Their parents sued Chrysler and Enterprise under state laws, for failing to exercise the common law duty of care, and for negligence, resulting in wrongful death. Eventually, on the eve of trial, Enterprise admitted 100% liability — under state laws. A jury awarded the Houcks $15 million in compensatory damages.

Years later, the President of the California New Car Dealers Association made the false claim that it wasn’t illegal for dealers to sell unrepaired recalled used cars. The Houcks’ attorneys wrote a scathing letter pointing out that violating state civil laws is illegal. The attorneys cited the unanimous jury decision in the Houcks’ favor, and also cited state laws against negligence and common law torts.

CARS worked closely with Cally Houck, Raechel and Jacqueline’s mother, to get a new federal law enacted to prohibit rental car companies or car dealers from renting, loaning, or selling unrepaired recalled cars. The battle lasted for years, with auto manufacturers and dealers actively opposing the bill, even after the rental car industry had dropped its opposition. But eventually we won.

That victory means that not only do rental car companies remain liable under state laws, but they also face enforcement by the National Highway Traffic Safety Administration (NHTSA), the nation’s premier auto safety agency.

Thanks to the passage of the Raechel and Jacqueline Houck Safe Rental Car Act, NHTSA now has the authority to issue fines or take other action if a rental car company with a fleet of 35 or more vehicles violates the law — even if no one is injured or killed as a result. Thus, the federal law works to help prevent more tragedies from happening.

CARS supports the ongoing efforts of Senators Blumenthal and Markey, and U.S. Representative Jan Schakowsky, to enact federal legislation to make it a violation of federal law, enforceable by NHTSA, for car dealers to sell unrepaired recalled used cars.

Meanwhile, victims of crooked dealers who play “recalled used car roulette” with their customers’ lives, should get legal advice and fight back, using existing state laws. It’s also important for state attorneys general to enforce the existing state laws against fraud, violations of express and implied warranties, and other provisions of law.

CARS applauds the District Attorney in Sedgwick County Kansas — one of the few law enforcement officials in the nation who is standing up to the powerful car dealer lobby in order to protect car buyers and others who share the roads.

Read More: The Wichita Eagle: Wichita car lot hit with $140,000 fine over business practices

Trump throws military under car dealer bus

Posted on August 17, 2018 by admin

What is “GAP” insurance, and why would the Trump Administration seek to allow car dealers to gouge our nation’s military heroes and their families when they buy cars, by selling them high-priced “GAP” insurance that is often worthless?

According to car dealers, the purpose of GAP, or “Guaranteed Asset Protection” insurance, is to cover you if your car is stolen or totaled before you pay off the loan. The “GAP” is the difference between the amount of the loan and the worth of the car.

Anyway, that’s the shtick. But in reality, the main purpose of “GAP” — when it is sold at car dealerships, and added into the price of a car loan — is to line the pockets of greedy car dealers. You can actually get a much better deal if you simply buy GAP protection from your own insurance company. Regular insurers usually charge as little as $20 or $30 to add GAP coverage to your existing policy.

However, car dealers often charge $1,000 or more. Plus when it is added into your loan, it can cost you far more than that, in added interest that goes to the lender, for the entire life of the loan. Making matters worse, some dealers pocket the money for GAP and never even activate the policies. So if your car is stolen or totaled, you could be in for a rude awakening. Some dealers have scammed many customers this way, then left the state and declared bankruptcy, evading any legal liability.

It’s bad enough when car dealers cheat civilians this way. But according to National Public Radio (NPR), as reported by VOX,

“the Trump administration has also proposed changes that could open up service members to predatory practices when they buy cars. The administration has proposed easing restrictions on “gap insurance,” an add-on to car insurance that covers the difference between the amount a car owner owes on the car and the car’s actual cash value.

Gap insurance is typically available from regular insurance companies for a very low price, as little as $20 to $30 a year, but car dealers often mark it up by hundreds of dollars. Current rules effectively block auto dealers from tacking on overpriced gap insurance to military service members, but the administration has sent a proposal to the Defense Department looking to revise the rules. (If the proposal does eventually make it out of the Defense Department, it will ultimately require the approval of the Office of Management and Budget, which [Trump appointee Mick] Mulvaney also heads.”

As Americans, we all have a stake in protecting our military Servicemembers from scams like this. Among other reasons — when they are cheated in this way, it increases the risk they may lose their security clearance, and their ability to perform their vitally important mission, of protecting our nation from enemies foreign and domestic.

Especially at a time when our nation faces unprecedented threats from enemies abroad and cyber-attacks from enemies who have penetrated our power grid and are messing with our elections, we cannot afford to lose the services of highly-trained military personnel, who are desperately needed to protect our nation.

Our nation’s military should not have to fight on this front, simply to preserve the protections they already have. They deserve a Commander in Chief who has their back, not one who is stabbing them in the back.

This is an update of a prior post, “Avoid GAP insurance rip-offs”

Pennsylvania passes Car Dealer “License to Kill” Law

Posted on June 11, 2018 by admin

Life in Pennsylvania just got a lot more dangerous. Caving in to unscrupulous car dealers, Governor Tom Wolf signed a bill that was opposed by the nation’s leading auto safety organizations, that will make Pennsylvania into a dumping ground for unsafe recalled cars.

The new PA law in Pennsylvania allows car dealers to get away with selling defective recalled used cars, without getting the safety recall defects repaired first — no matter how hazardous the defects are.

Similar car dealer bills have failed to pass in other states, including New Jersey, California, New York, Maryland, and Virginia. The only other state to pass such a law is Tennessee, where dealers got legislators to sneak their bill through under the radar, on the last day of session, with no public discussion or debate.

The Pennsylvania legislation was opposed by the nation’s leading consumer / auto safety organizations, and by Ralph Nader and Alexander Brangman, whose daughter Jewel was killed by an exploding Takata airbag in a recalled Honda Civic.

Their letters of opposition:

Alexander Brangman, father of Jewel Brangman

Ralph Nader

Consumer Federation of America, The Safety Institute, the National Association of Consumer Advocates, Consumer Action, and Consumers for Auto Reliability and Safety

Center for Auto Safety

Advocates for Highway and Auto Safety

Here’s what can happen when someone is sold an unrepaired recalled car:

“Dad dies saving daughter from icy pond. Car had been recalled for brake problem.”

Republican Rep. James R. Santora carried HB 1898 at the behest of the car dealers like CarMax, which recently lost a major appellate court decision in a case brought by a customer in Bakersfield, California, Tammy Gutierrez. That decision may set a good precedent for other consumers who have been sold dangerous recalled used cars.

Pennsylvania’s new law allows car dealers to fatten their profits by low-balling consumers who trade in cars with unrepaired safety recall defects, then turn around and sell them at top dollar to other consumers — without getting them fixed. All they have to do to comply with the new law is to slip a copy of the safety recall notice in a stack of papers — instead of making sure the cars are actually safe to drive.

In fact, the law actually is worse than that, because it says if the dealer fails to even provide this sham type of “disclosure” to an unlimited number of consumers, all of those violations of the law count only as a single offense, punishable by a mere $1000.

It’s a violation of federal law for car dealers to sell recalled cars as NEW cars. While there isn’t a similar specific federal law to protect used car buyers, many state consumer protection laws exist to prohibit such practices.

Currently, state laws in PA and the other 49 states prohibit violations of the common law duty of care, or prohibit engaging in unfair or deceptive acts and practices, acting with negligence, or causing a wrongful death. Such laws – which apply to all businesses, including car dealers — carry potentially extremely serious sanctions.

But under the new law, car dealers won’t have to worry about being held liable if someone is injured or killed.

The biggest beneficiary under the new law will be CarMax, the nation’s largest retailer of used cars. Research performed by the CARS Foundation, MASSPIRG Education Fund and the Frontier Group found that over 25% of vehicles CarMax offered for sale in 6 locations across the nation had at least one unrepaired safety recall. Many had multiple safety recall defects. One pickup truck CarMax advertised for sale in Massachusetts had 6 unrepaired safety recalls, including two for catching on fire.

News report by Consumer Affairs:

“Pennsylvania passes law that will make it easier for car dealers to sell lemons, safety groups say”

Why can’t you buy a new car without going to a car dealership?

Posted on May 31, 2018 by admin

Car dealers and corrupt politicians conspire to keep consumers captive, forcing them to go to greedy car dealerships to purchase a new car. This outrageous monopoly costs American car buyers billions of extra dollars each year. Plus it often ruins lives when dealers engage in fraud, deception, or sell cars with killer safety defects.

truTV’s Adam Conover, famous for his riffs on “Adam Ruins Everything,” explains “The REAL Reason Why Car Dealerships are the Worst”

What can you do to break free from the car dealer monopoly? Well, if you are buying a USED car, you don’t have to go there. You can usually get a much better deal on a nice, safe used car without having to spend 4 – 6 hours being tormented by a greedy car dealer. This is how some of the nation’s leading consumer advocates buy a car — without the hassles and risks that come with buying from a professional crook:

12 Tips for how to get a good deal on a nice, safe used car

Why don’t consumers get unsafe recalled cars fixed?

Posted on July 5, 2017 by admin

GM, Fiat Chrysler, Honda, the National Safety Council, the National Highway Traffic Safety Administration, mayors and other elected officials, are investing millions in an attempt to reach owners of older recalled cars and persuade them to take their vehicles to car dealers for recall repairs. They’re using advertisements, social media, even private investigators who track people and find out who owns vehicles that have repeatedly changed hands.

They are trying to impress on the owners that their safety is at stake, and driving without repairing the safety recalls is too risky. The biggest challenge: the millions of older vehicles with Takata airbags that are prone to exploding with excessive force, spewing shrapnel into the faces, necks, and chests of drivers and passengers, causing victims to bleed to death.

But the messages that consumers are getting from the auto industry are extremely mixed. The former Chairman of the National Automobile Dealers Association, Jeff Carlson, a Colorado car dealer, claims that “only 6 percent of recalls are ‘hazardous.'” Carlson and the NADA have been opposing federal legislation that would require dealers to fix all safety recall defects on used cars, prior to sale — in addition to the existing protections under state laws in all 50 states.

He claimed that “Such a move would ground millions of cars unnecessarily and diminish vehicle trade-in values.” That attitude is dangerous, reckless, and irresponsible, but it’s all too common in the car dealer world. By that nutty calculus, none of the following safety defects would be considered “hazardous” — brakes that fail, steering loss, sticking accelerator pedals, catching on fire, wheels that fall off, seat belts that fail in a crash, or a myriad of other safety defects that have claimed hundreds of lives and maimed thousands of people.

No wonder consumers are confused about whether it’s worth taking time off from work to take their car to a dealership that may be over 100 miles away, and where they may not get a loaner car, while their car sits waiting for repairs. Meanwhile, many consumers would be without their only means of transportation to get to work, and get their kids to school, or get to medical appointments.

Car dealers across the country have also been urging state legislatures to allow them to get away with selling unsafe, unrepaired recalled cars without repairing them first. What message does that send to the public about the importance of getting safety recall repairs? If the cars are so unsafe, they should be repaired first, right? Shouldn’t the car dealers, who are the professionals, set the right example? Of course they should.

It appears that the car dealers’ double standard is aimed more at forcing consumers to go to car dealerships for repairs, than at ensuring their safety. Once there, consumers are often subject to high-pressure tactics to sell their car and purchase a new one. Among the scams common at many car dealerships — refusing to return the car keys unless the consumer buys another car.

Recent complaints about car dealers posted on Quora: “I had my car keys taken at the dealership and was almost forced to purchase a car (refused to let me leave).”

Automotive News: Carlson vows to press NADA’s fight against regulation

Bottom line: Consumers should take safety recalls seriously. So should auto dealers. Car dealers need to do the right thing, comply with state laws, and stop selling unrepaired, defective recalled used cars — shifting the burden onto consumers. Auto manufacturers should offer roving repairs to consumers with unrepaired recalled cars where they work or at their homes. And the National Automobile Dealers Association should acknowledge publicly that of course all the cars with Takata airbags and other safety recall repairs are unsafe, and should be repaired immediately.

Buying a car from a dealer in California may get even more hazardous to your financial health

Posted on March 21, 2017 by admin

When you buy a car at an auto dealership, you should be able to get all the terms in writing BEFORE you sign anything — right? Right. But for California car buyers, that may change. Why? Because car dealers are aggressively lobbying to get rid of the consumer protection laws in California that currently prohibit them from using “e-contracting.”

The California New Car Dealers Association and Enterprise Holdings (one of the largest sellers of used cars) are pushing for passage of AB 380, authored by Assemblymember Matt Dababneh (D-Van Nuys), powerful chair of the California Assembly Committee on Banking.

But pro-consumer groups including Consumers for Auto Reliability and Safety, CALPIRG, the Consumer Federation of California, Consumer Action, Public Counsel, the California Reinvestment Coalition, the Center for Responsible Lending, and Public Good are fighting back, to preserve protections for California car buyers.

Who would benefit the most if AB 380 passes?

One of the biggest winners would be Credit Acceptance Corp. What’s their business model?

Mother Jones: “They Had Created this Remarkable System for Taking Every Last Dime from Their Customers: Welcome to the Lucrative, Predatory World of Subprime Auto Loans”

Here’s why groups that work on behalf of consumers and against powerful, crooked special interests are opposing AB 380:

Large coalition of pro-consumer, pro-economic justice organizations opposes AB 380

Consumers for Auto Reliability and Safety opposes AB 380 (Dababneh)

Consumer Federation of California

CALPIRG

What’s wrong with e-contracting in car transactions?

Unscrupulous car dealers and shady lenders LOVE “e-contracting.” A LOT. That’s because the combination of high-pressure sales tactics at the car dealership — aimed at consumers who are often tired and feeling rushed after hours of haggling and test-driving cars — and all-electronic transactions make it much easier for dealers and crooked lenders to get away with fraud, forgery, and other illicit (but oh-so profitable!) flim-flam.

Among crooked car dealers’ favorite e-contracting scams: selling cars in excess of the agreed-upon price, “packing” loans with thousands of dollars in unwanted, high-profit, worthless add-ons, overcharging for license fees and pocketing the difference, selling cars that fail to pass smog, charging bogus “government” fees, and engaging in other types of fraud.

Unlike with home purchases, where there are strict, built-in protections, auto sales transactions fail to require the seller to provide you with a written, good faith estimate of all the costs three days in advance, before you sign. Buying a car is much riskier. It’s also riskier than credit card transactions, where there are limits on your liability in the event of identity theft or fraud.

You have a lot to lose

Under the federal Truth in Lending Act, you are entitled to get all the disclosures about an auto loan in writing. BEFORE you sign anything. Like: What will the monthly payments be? How much will you have to pay in interest? How long will the loan last? Up front. In your own hands. Then if you wish, you can leave the dealership and take that document with you and shop around, to see if you can find another dealer or lender who will beat that offer. You have that important right, thanks to federal law.

California law also prohibits dealers from using e-contracts. That means when you buy a car in California, the dealer should hand you a paper document, with everything in writing, all nicely filled in. You can look at the entire document at one time, or zero in on any part of it. You get to review the whole contract before you decide whether you want to agree to anything. You can tell that “friendly” F & I manager to stop hovering over you, while you read it. You can take it with you while you sip a cup of coffee in a quiet spot. You can show it to your spouse, or friends, or an attorney, or anyone you wish, BEFORE you sign.

But if the dealers and lenders have their way, and gut California’s law against e-contracting in auto sales, dealers will be able to get away with concealing vital terms on a computer screen that you may not even be able to read. You certainly cannot take the computer or e-pad with you and shop around. It won’t be in your control. Instead, it will be in the dealership’s control.

If AB 380 passes, car dealers can lure consumers into signing in advance that they agreed to let the dealer use e-contracting, to buy a car. They can make it sound like it’s no big deal. Then they can use that against car buyers, if there are any disagreements over what they agreed upon. Making matters worse, “signing” can be done by anyone who has access to the computer — with the click of a mouse. It would become virtually impossible to prove your signature was forged. Your “signature” could be added with a click. By anyone.

And — you won’t get anything in writing, on paper, until AFTER the documents have already been “signed.” By then, it’s too late, and you may be held legally obligated to pay, even if you are the victim of a scam.

Consumers fight back

Some dealers in California have jumped the gun and are already acting as if it were legal for them to use e-contracts. With unfortunate but predictable results. Consumers are starting to complain they didn’t get to see the screen, and dealers are adding thousands of dollars extra, above the purchase price that was negotiated; giving the consumers thousands less than the agreed-upon value of their trade-ins; and adding in worthless, expensive service contracts — even when the consumers rejected them, during negotiations. One dealer added over $4000 in multiple unwanted, worthless extra service contracts onto the purchase of a new car, plus “surface protection” costing over $1200 and “Lo Jack” costing $695 — extremely high-profit items for car dealers.

In some cases, consumers have won the right take these dealers to court, because the judges agreed that the contracts were not binding, citing the existing law that prohibits e-contracting. Otherwise, the consumers could be forced into arbitration, basically being compelled to surrender their Constitutional right to fight back in a court of law.

If the predatory dealers and lenders win, and AB 380 passes, consumers would be likely to lose those court challenges they are winning now, and could be forced to give up their ability to hold unscrupulous dealers accountable.

Winners and Losers

If AB 380 passes, the biggest winners will be large auto dealership chains like AutoNation, which took in over $19 billion in gross revenue in 2014. They are publicly traded on Wall Street. Their biggest investor? Bill Gates.

The biggest losers will be California’s new and used car buyers who can ill-afford to give away thousands of their hard-earned dollars to mega-dealers and big banks for the privilege of being ripped off.

What can you do to help stop AB 380, the crooked car dealers and fraudulent lenders’ favorite bill?

Call your Assemblymember and tell them to vote NO on AB 380. Buying a car from a car dealer in California is already dangerous enough. Here’s where to find out who your Assemblymember in Sacramento is: Find Your Legislator

Thank you! Every call helps make a difference!

Large coalition of pro-consumer, pro-economic justice organizations opposes AB 380

Consumers for Auto Reliability and Safety opposes AB 380 (Dababneh)

More pro-consumer organizations are also opposing AB 380:

Consumer Federation of California

CALPIRG

Public Counsel

Attorney David Valdez, who represents many victims of unscrupulous auto dealers and lenders

So what auto safety regulations will we lose?

Posted on January 25, 2017 by admin

President Trump has reportedly declared that he plans to get rid of 75% of federal regulations. This is verrry scary stuff. Especially since states are prohibited from being able to act, to require auto manufacturers to build safety into their cars. The states’ hands are tied. That means if we lose safety regulations in DC, nothing can be enacted in their place. No matter how bad the carnage gets.

So — which lifesaving auto safety regulations will Trump roll back? The one that requires seat belts to work in a crash? The one for fuel tank integrity, that requires cars to withstand a rear-end collision without exploding into flames? The one that requires your car to offer a minimum level of side-impact protection for your head and torso if you are T-boned by a huge SUV that blows through an intersection, against the red light? The one that keeps SUVs from tipping over, killing drivers and passengers?

You have to wonder whether he, or anyone around him, has thought this through. What will happen to public confidence in the auto market when people realize that the cars they own now are actually safer than the newer ones, built under the anti-regulatory Trump regime?

What’s next? Autonomous cars a teenager can hack, or that could be controlled by Isis, Putin, or Kim Jong Un?

This is reminiscent of when GM, Chrysler, and Ford were so cocky about having the entire U.S. market to themselves. They sold huge numbers of atrocious lemon cars. They were lemons despite the fact the workers were doing their best. They were lemons by design. Worst of all, the auto manufacturers refused to stand behind them. They dismissed consumer complaints and stonewalled frustrated car owners.

The end result: car buyers revolted, all 50 states enacted lemon laws, and the auto import market was born, eventually overtaking the domestics by a mile, especially in markets like California.

GM, a former powerhouse, now has only a puny 9% of the California market. Its market share nationally has shrunken to just 17%. People don’t forget easily, or quickly, when they have been sold a car that fails to meet reasonable expectations. Let alone one that kills.

Message to President Trump and the auto lobbyists: Don’t delude yourselves. It can happen again. Markets can shift, and they can shrink. It’s entirely possible that Obama will be known for saving the American auto industry, and Trump for destroying it. Ultimately, it all depends on what millions of individual consumers, who value their lives and their families’ safety, decide.

Can’t get your car registered? Stopped by Police? You are not alone.

Posted on July 10, 2016 by admin

According to the Associated Press, Minnesotan Philando Castile, who was shot and killed during an otherwise “routine” traffic stop, had been pulled over at least 52 times in recent years, in and around the Twin Cities, and cited for minor offenses. He had been assessed over $6500 in fines and fees, although many violations had been dismissed in court.

His tragic death is a stark and heartrending reminder of what can go horribly wrong when car drivers are pulled over by police. It should also raise serious, urgent questions about why some people are being pulled over at all.

Consumer and civil rights groups are raising alarms about a new law that was just enacted in California that will lead to many innocent people being pulled over by police, ticketed, having their cars impounded, and facing severe criminal sanctions. Why? Because car dealers failed to provide them with permanent license plates within the 90-day deadline for displaying permanent plates.

Governor Jerry Brown just signed the bill, AB 516, into law in the nation’s largest, most diverse state. It is now on track to take effect in January, 2019. So there is still time to change it before more innocent car buyers are harmed.

According to the Lawyers Committee for Civil Rights of the Bay Area, “LCCR recently published, in collaboration with other groups, a report entitled Not Just a Ferguson Problem: How Traffic Courts Drive Inequality in California, which shows the many ways that low-income California drivers, and particularly communities of color, are impacted by unfair laws that result in license suspensions and hefty fines, and that lead people into an endless cycle of debt and court involvement from which they cannot extricate themselves. Rather than reverse this trend, AB 516 would contribute to it.”

Here’s why this obvious injustice keeps happening, and how AB 516 would make it worse:

Under California’s current law, car buyers who purchase new or used cars without permanent metal license plates, at a car dealership, pay the dealer $29 for an “electronic vehicle registration or transfer charge” plus an $80 “document processing charge” to handle the registration. Sometimes they pay an additional $100 or more for a “registration /transfer/titling fee.” Then they drive off the car lot with a document that is folded up and taped in the back window that shows the date of sale and other relevant information. The dealer is supposed to handle the registration, and send them the permanent plates, either directly or by hiring a company approved by the DMV.

Car buyers must install permanent plates as soon as they receive them, or within 90 days. There are no exceptions. The law says they have to put them on the car before the 91st day — even if they have not received them, through no fault of their own. No plates? Tough. Hapless car buyers still face being pulled over, ticketed, and having their car impounded.

The kicker: There is NO requirement for dealers to ensure that car buyers receive their permanent plates within the 90 days. Some dealers take advantage of this major loophole in the law to abuse the system and increase their profits. As a result, this scenario plays out all too often:

You pay good money to buy a car from a car dealer. You drive it home. You paid cash, or if you got a car loan, you are making the payments, in full and on time. Life is good. Until….

You are pulled over by the police. Why? Because the temporary registration has expired, and you have not received the permanent plates. Why not? Because the dealer failed to submit the registration documents to the Department of Motor Vehicles.

As in, the dealer went out of business without paying the taxes he collected, or submitting documents to the DMV — some dealers do this to hundreds of people, then go belly up. OR —

The dealer entered the wrong Vehicle ID Number (VIN) into the system.
The dealer fired the person who handles vehicle registrations and hasn’t gotten around to hiring a replacement.
The dealer sold you a car that is registered in another state, which can take months to straighten out.
The dealer sold you a car with an unpaid lien, and the lender is demanding payment (which can run thousands of dollars) before it will release the title.
The dealer had the permanent plates sent to him, and not to you, so he can demand that you pay more, under threat of being pulled over again and again, and having your car impounded.
The DMV has a backlog in issuing permanent plates.
The DMV entered the wrong VIN.
Or — one of a myriad of other scenarios that are beyond your control.

None of that is your fault. You paid the fees for the dealer to properly register the car, when you bought it. It’s the dealer or the DMV who messed up. But who gets penalized? YOU.

According to consumer attorney Steven Simons, on July 19, 2014, Matthew Smith and his brother Luke bought a 2003 Acura for about $6900 (plus financing) from a dealership in Van Nuys, CA. They paid the dealer the usual fees to handle the registration. But the dealer failed to follow through and do his job. Despite repeated attempts by the Smiths to get their car properly registered, and their fruitless attempts to get the DMV to assist them, to this day their Acura has not been properly registered, and they have not received their permanent plates. Meanwhile, police officers in several jurisdictions have repeatedly pulled Matthew over, including at gunpoint, and detained him for hours, searching him and his car.

Think this is wrong? We agree! Unfortunately, it’s going to get a lot worse, when AB 516 takes effect.

The author of AB 516 is Bay Area Assemblymember Kevin Mullin (D-San Mateo). The most avid backers are toll authorities, who want temporary tags to be mandated, so they will rake in more revenue. Currently, they lose money when people who don’t have readily traceable plates drive through unattended toll booths without paying.

The other major backers are the car dealers. They keep pushing aggressively to shorten the amount of time car buyers have to install permanent plates, or face criminal penalties. California car buyers used to have 6 months to install permanent plates. Then in 2011, car dealers persuaded legislators to cut the time in half, to 90 days. Recently, car dealers tried to get lawmakers to slice the deadline in half again, to just 45 days. That bill has temporarily stalled, pending enactment of AB 516. But dealers are expected to bring it back.

The author claims that the first ticket you would get is supposedly just a “fix-it” ticket. So what’s the big deal? Here’s the catch: you cannot fix it. Typically, people caught in this trap call the dealer and the DMV over and over again, file complaints, and even go in person and spend hours at the DMV and dealership waiting around, and pleading with them. What they discover is that getting the registration completed, so they can drive legally, is out of their hands. It is an exercise in extreme frustration.

Sometimes it takes over a year to get things straightened out. By then, many people are pulled over repeatedly and ticketed, and their cars are impounded. Even if they pay all the tickets and the hefty impound fees, they cannot get their cars back because they are not the registered owners.

What happens to many hard-working consumers when their cars are impounded? They often lose their only means of transportation to work, and their jobs. Then they default on the car loan. Guess who swoops in to take back the car? The dealer. Then he turns around and resells the same car, over and over again, making a profit each time. You, on the other hand, get stuck with no car, a repossession that harms your credit for at least 7 years, harassing phone calls from the lender demanding immediate payment of the remaining car loan, and no job.

The bottom line: the bill will play right into the hands of unscrupulous car dealers, who want customers to give up and default on car loans, because they can make bigger profits from reselling the cars, and trashing people’s lives. According to a major series of reports by Ken Bensinger at the Los Angeles Times, some dealers in California engage in the practice of “churning” cars — reselling the same car over and over again — as a regular business practice.

The bill would also make it easier for unscrupulous dealers to engage in an illegal practice known as “yo-yo” financing, which is very common, even among supposedly reputable car dealers. When dealers “yo-yo” a consumer, they sell them a car, hand them the keys, and encourage them drive it away. Weeks later, they reel them back in, telling them the “financing fell through.” Then threaten to have the consumer arrested for driving with an expired registration, or to report the vehicle as “stolen.” They exploit the fear of criminal sanctions to extract a larger down payment, higher interest rate, or other terms more favorable to the dealer. They refuse to return the down payment or the traded-in vehicle, leaving car buyers over a barrel.

If AB 516 is enacted, dealers will be required to install temporary tags. Good idea. We are in favor of law enforcement agencies being able to properly identify the car and the car buyer. But — the temporary tags will be highly visible, and will have an expiration date that is easy to spot — and easy for a scanning device to pinpoint. Suddenly, people with expired temporary tags will become ridiculously easy to target. Enforcement of that 90-day deadline, which tends to be relatively spotty now, will skyrocket.

Here’s what will happen, only a vastly larger scale: In a village on Long Island, New York, “Since the scanners went live Nov. 2, they have been triggering an average of 700 alarms a day, mainly about cars on the road with expired or suspended registration stickers. Officers have impounded 500 vehicles. They’ve written more than 2,000 court summonses, mostly for minor violations.”

Plus — AB 516 would make altering even just the expiration date on a temporary tag a wobbler/ felony offense, subjecting car buyers to a potential prison sentence of 2-3 years. Imagine: you keep being pulled over by the police because you have not received your permanent plates. If you are detained one more time, making you late for work, you will lose your job. In your desperation you take a magic marker and change the expiration date. For this “horrible crime,” you will be at risk of having to do hard time in prison. Even though you have not altered the number of the temporary tag, and toll agencies and law enforcement can readily identify the car, for toll collection or public safety purposes.

Consumer groups and the California Police Officers Association worked together and drafted amendments to AB 516 that would have addressed these serious problems with the bill, and presented those to the author’s staff, at an in-person meeting. The amendments would have changed the bill so that:

When law enforcement officials detect that your car has a temporary tag with an expired date, they would have to check an existing law enforcement database, that they can already access electronically, to find out whether you were issued permanent plates. In a matter of seconds, they can tell. If the plates have not been sent to your address, you would not be issued a citation.
It would be an infraction, not a wobbler / felony, to alter just the expiration date on the temporary tag, leaving the rest of the tag unaltered and readily traceable.

The California Police Officers Association, to its credit, expressed the sentiment that its members are not overly eager to pull over and detain people who are already frustrated because they cannot get their permanent plates, so long as they properly display the temporary tags, and the car is readily identifiable for public safety purposes.

However, Assemblymember Mullin refused to accept those amendments. Instead, he added a “fig leaf” to the bill that would require consumers who have not received their permanent plates to prove their own innocence by obtaining a form from the DMV and showing it, if they are detained. That may sound easy, but in reality, it’s just another Catch-22. The form cited in the bill requires that you sign, under penalty of perjury, that you are the “registered owner of record.” But that’s the problem. You are not the registered owner. That is why you didn’t receive your permanent plates. Gotcha.

Attacks on consumers mounting, over arbitration

Posted on May 18, 2016 by admin

In an amazingly lopsided editorial, the Albuquerque Journal published this hit piece, slamming the Consumer Financial Protection Bureau for its gutsy work to restore your ability to fight back in court, as a consumer, by joining forces with other consumers who have also been victimized by crooks who engage in illegal practices:

Albuquerque Journal editorial

Here’s the letter to the editor I sent them, in response. However, it won’t be too surprising if it doesn’t appear in print — for reasons you can readily guess:

Funny — this newspaper didn’t object when the car dealers got a special exemption from the Federal Arbitration Act, that allows them to sue anyone they please. Since then, they have sued auto manufacturers, the federal government, their customers, and each other, and somehow you are fine with that, but apparently think their customers do not deserve to have the same access to the courts.

When Congress restored the right to go to court, for car dealers, the National Automobile Dealers Association wrote to members of Congress and promised not to oppose restoring the same rights to car buyers. Then they turned around and killed a bill that would have done exactly that.

If consumers don’t win back our rights through the CFPB’s rulemaking, then it looks like we will have to resort to free market solutions, like not buying another car from a dealer until we have the same legal protections they do.

Here’s the letter the car dealers sent to Members of Congress

And — in case you haven’t already seen enough hypocrisy in this battle, here’s what Republican Senator Chuck Grassley of Iowa had to say, in favor of the legislation he authored, giving car dealers a special exemption from being forced to arbitrate their claims, in order to purchase a franchise to sell cars:

“While arbitration serves an important function as an efficient alternative to court, some trade-offs must be considered by both parties, such as limited judicial review and less formal procedures regarding discovery and rules of evidence. When mandatory binding arbitration is forced upon a party, for example when it is placed in a boiler-plate agreement, it deprives the weaker party the opportunity to elect another forum. As a proponent of arbitration I believe it is critical to ensure that the selection of arbitration is voluntary and fair…Unequal bargaining power exists in contracts between automobile and truck dealers and their manufacturers. The manufacturer drafts the contract and presents it to dealers with no opportunity to negotiate…The purpose of arbitration is to reduce costly, time-consuming litigation, not to force a party to an adhesion contract to waive access to judicial or administrative forums for the pursuit of rights under State law.”

Senator Grassley also said:

“This legislation will go a long way toward ensuring that parties will not be forced into binding arbitration and thereby lose important statutory rights. I am confident that given its many advantages arbitration will often be elected. But it is essential for public policy reasons and basic fairness that both parties to this type of contract have the freedom to make their own decisions based on the circumstances of the case.”

Couldn’t have said it better myself. So how come he and his colleagues in the House have changed their tune, when it comes to consumers?

Could it be that Sen. Grassley and the Republican Congress rely on campaign contributions from Wall Street crooks who pass on a tidy portion of the $$ they extract from consumers, via the Rip-off TAX? Hmmmmm….

National Automobile Dealers Association in denial about safety

Posted on April 10, 2016 by admin

The President of the National Automobile Dealers Association, Colorado car dealer Jeff Carlson, claims that only 6% of recalled vehicles are “hazardous.” That means he thinks that cars like this one, that killed a 17-year-old Texas teenager, are NOT “hazardous.”

ABC News report: 17-year-old killed by exploding Takata air bag

Try telling that to her family.

That also means that he doesn’t consider any of these defects, which have killed and maimed many car drivers and their passengers, to be “hazardous”:

Stalling in traffic
Catching on fire
Faulty brakes
Steering loss
Seat belts that fail in a crash
Axles that break
Hoods that fly up while you’re driving in traffic
Sticking accelerator pedals
GM ignition switches that turn off and eliminate power steering and braking, and cause air bags to fail to deploy

Automotive News report: Carlson vows to press NADA’s fight against regulation

Bottom line: Carlson and NADA cannot be trusted to decide whether a car is safe to sell. When it comes to safety, they are absolutely clueless. And a real danger to American society.

CA on track to have the worst auto safety recall law in the nation

Posted on May 12, 2015 by admin

Greedy, unscrupulous car dealers are high-fiving themselves, as Democratic and Republic legislators in California continue to vote unanimously to legalize dealers’ sales of unsafe, recalled used cars with lethal safety defects to consumers.

Testifying against the car dealers’ bill: Cally Houck, who lost her two daughters, Raechel and Jacqueline, ages 24 and 20, due to a recalled car. A steering hose leaked, causing an under-hood fire and a loss of steering control. The two sisters ended up colliding head-on with an 18-wheeler truck.

As their mother, Cally Houck, told legislators: AB 287, the car dealers bill, “would protect dealers, not consumers.” The bill is being authored by Assemblymember Richard Gordon, who has said that his father and grandfather were car dealers.

Also testifying against the bill: Mark Anderson, who testified on behalf of the National Association of Consumer Advocates. According to NACA, if the dealers win, California will become a dumping ground for unsafe, recalled cars that would be illegal for dealers to sell in other states. That would translate into more fatalities and injuries, and higher risk for everyone who shares the roads.

According to the car dealers’ bill, the defect that killed Raechel and Jacquie would not be considered “serious.”

Orange County Register: A record 64 million cars were recalled last year: Here’s what’s being done to make buying safer used cars

Ventura County Star: Capps introduces rental car bill named for Ojai sisters killed in crash

Car Dealers seek to legalize sales of unsafe recalled used cars

Posted on April 18, 2015 by admin

Faced with record numbers of recalled cars and lengthy shortages of repair parts, car dealers are pushing aggressively to weaken state laws that prohibit them from deceiving their customers into buying used cars with lethal safety defects.

Car dealers are eager to foist the unsafe cars off onto their customers, knowing that there is no way they will be able to get the serious safety defects repaired, for months on end. In one horrific case, a father, mother, 13-year-old daughter and brother-in-law were all killed within hours after the dealer handed them the keys to an unsafe car. The publicity surrounding that case led to Toyota’s issuing a massive safety recall, and eventually paying a record fine. However, the dealers do not seem capable of learning from that tragic incident and its aftermath.

Federal law prohibits car dealers from selling recalled NEW cars to consumers until they have been repaired. There is no similar, specific federal law that prohibits dealers from selling recalled USED cars to consumers. However, broader, more generic state laws in every state, and some federal laws, prohibit merchants, including car dealers, from engaging in fraud, false advertising, unfair and deceptive acts and practices, anti-competitive behavior, reckless endangerment, negligence, and other shady practices. In addition, a whole body of case law exists that prohibits such illicit conduct.

The National Highway Traffic Safety Administration has charged some dealers with violating the federal law against selling recalled new cars to consumers. What’s next? Dealers trying to make that legal too?

KPIX-TV, the CBS affiliate in San Francisco, broadcast this news report about the car dealers’ highly controversial, anti-consumer, anti-safety bill in California. Be sure to watch for the reaction at the end, by the news anchors:

KPIX-TV: Car dealers fight back over recall disclosures

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Category Archives: Car Dealers’ Politics