Auto Fraud Case Results

The following Fraud cases are some recent settlements that John Cole Gayle has obtained. The names of our clients have been withheld due to privacy laws.

Certified Pre-owned Scam

Two different plaintiffs had cases against the same franchise dealership in Richmond. Both vehicles were sold as “Certified Pre-Owned” vehicles. In one case, the certified vehicle was involved in a prior wreck, which was not disclosed to the plaintiff. In the second case, the certified vehicle was sold with a Salvage Title. In May 2007, these two cases together settled for approximately $200,000.00.

Yo-Yo or Spot Delivery Scam

This lawsuit is about an often fraudulent practice in the automobile sales industry called a "yo-yo sale" or a "spot delivery". Under this scheme, the auto dealer sells a car to the consumer "on the spot" without regard to whether any third party will agree to assignment of the car note. Typically, the consumer will sign all necessary paperwork at the behest of the dealer and will receive temporary or transferred tags, a set of keys, and possession of the automobile. The consumer leaves the dealership believing he or she owns the vehicle.

In this case, the dealer is unwilling to accept the terms that the various finance companies are willing to pay for an assignment of the car note; in other words, the dealer wants to make more money selling the loan. This is where the term "yo-yo sale" comes from. Because the car dealer cannot make enough money selling the paper, the dealer attempts to "undo" or cancel the sale, and yank it back from the buyer, telling the buyer that he or she must come in and sign a new loan on less favorable terms or merely illegally repossessing the vehicle, as in the instant case. The dealer also does not send the consumer any written notice of adverse action.

In June 2007, the matter was resolved by a cash payment with the agreement of all parties. The terms of the settlement are confidential

Used Vehicle Sold As New

In October 2004, the plaintiffs went to purchase a new 2004 vehicle. During negotiations for the vehicle, Plaintiffs discussed the vehicle with their salesman and asked specifically about the 1063 miles that were on the odometer. The salesman told them that the vehicle was new, that the mileage came from its use by the sales staff and from the mileage accumulated when it was driven to and from another car dealership from which this dealership purchased the vehicle. The salesman deliberately concealed from the Plaintiffs that the vehicle was a used vehicle, something he knew or should have known.

The vehicle was not purchased from another dealer but sold directly to this dealership by Ford Motor Company and ownership transferred to this dealership, which was discovered on the Certificate Of Origin. The mileage put on the vehicle, after it received the vehicle from Ford Motor Company was from its use during test drives, use as a demonstrator, and the personal or business of employees of this dealership; and the Plaintiffs were never told that the vehicle was a "used" vehicle.

Based on the rear end problems noted when they first purchased the car, and the apparent out of alignment of the body or frame and resulting shimmying that cannot be fixed, it is believed that the vehicle sustained some kind of rear end damage prior to the Plaintiffs’ purchase of it, possibly during the thousand plus miles the vehicle was driven while owned by this dealership. In August 2006, the plaintiffs discovered that the vehicle they purchased was not new but used. The plaintiffs would not have purchased the vehicle if they had known they were buying a used car, or one that had damage in the rear end and possible frame defects.

In July 2007, this case settled for approximately $60,000.00.

Prior Wrecked Vehicle

In March 2003, a dealer sold a previously wrecked vehicle to our clients. The dealership claimed that some touch-up paint work was done when asked if the vehicle had previously been damaged. When asked what was the touch-up paint was for, they were told "sh-t happens." In fact, the vehicle had been previously sold as salvage and repaired, all of which was known by the dealership since a prior owner they sold the vehicle to cancelled the sale due to the salvage history the prior owner discovered. The car dealer did refund all of the prior owner’s money plus some more, and then the dealer tried the sale again on our clients.

In December 2007, this case settled for less than $95,000.

Sale of Salvaged Vehicle Without Notice

A franchise dealership purchased a vehicle several days prior to its purchase by the Plaintiffs. Prior to the dealership purchasing the vehicle, it had been issued four different titles.

In February 2003, the Plaintiffs began negotiations for the purchase of the van that the dealership said they owned. The two sides came to an agreement about the price of the vehicle. The Plaintiffs advised the dealership that they had a trade-in, and they would also need financing. The dealership would take care of DMV title and paperwork. The Plaintiffs were given 30-day Temporary tags and were advised to transfer the license plates from their trade-in vehicle to the vehicle bought at the dealership.

It is believed that the dealership’s employee suggested transferring tags from the other vehicle, rather than simply using 30-day paper tags indicated on the 30-day temporary registration, since she knew she could not get permanent registration for the vehicle within 30 days, and even though the 30-day registration would run out, at least the vehicle would have permanent plates on it.

The vehicle was sold and delivered to the Plaintiffs, yet the dealership had not secured a certificate of title for it, nor did it possess the certificate of title to the vehicle at that time, nor had the vehicle’s title been assigned to it at that time. At the time of sale of the vehicle to the Plaintiffs, the vehicle was owned and titled in the name of another person or company. At the time the dealership sold the vehicle to the Plaintiffs, the Defendants knew the dealership did not have possession of title to the vehicle, they knew that no title document for the vehicle had been assigned to the dealer and knew the dealer had not secured title to the vehicle in its' name. This was a clear violation of the Code of Virginia laws.

The title to the vehicle was not delivered or assigned to the dealership by the prior owner until over a year after the dealership sold the vehicle to the Plaintiffs, and was never provided to the creditor to whom the credit contract for the vehicle was assigned.

When the Plaintiffs’ temporary tags expired, they asked the dealership about the problem. They were informed, by the same employee, that she would go down to DMV herself and straighten out the problem. For several months, the same employee said that there was a problem at DMV and it was their fault. Several months went by without any response from the same employee.

About a year after the original sale of the vehicle, the Plaintiffs paid off the loan. At that point, they asked the finance company for the title to the vehicle. The finance company stated that it did not have a title, but that the dealership had it At this point an inquiry to DMV was made to find out on what car the license plates were registered to. The Plaintiffs discovered that the plates were not registered to any vehicle, after which they notified the dealer that they wanted to cancel the sale since the title was never put into the Plaintiffs’ name, and because they were driving in an vehicle which had never been registered with DMV, which was improperly licensed, and which they believed put them at risk with the police for breaking the law. The Plaintiffs then attempted to cancel the contract and returned the vehicle to the dealership.

Not until over fourteen months after the purchase, and after the vehicle had been returned to the dealership by the Plaintiffs, did the dealership cause an application for a duplicate title to be issued in the prior owner’s name, which it is believed that the dealership then assigned to the Plaintiffs without their authorization.

After returning the vehicle the Plaintiffs were forced to purchase another vehicle from another dealer to take the place of the vehicle from the first dealership. The Plaintiffs have been damaged because they fully paid for a vehicle that was never put in their name prior to them cancelling the contract and returning the vehicle and then never received a refund of their money once they cancelled the contract. Thus they are out not only the full purchase price plus the interest they paid on the loan, but also the vehicle, plus the cost of the substitute transportation, plus their inconvenience and embarrassment.

In January 2008, the matter was resolved by a cash payment with the agreement of all parties. The terms of the settlement are confidential.

SALE OF CAR, WRECKED TWICE BEFORE:

Prior to July 2005, a 1999 Volvo wagon was involved in at least two collisions, requiring extensive repairs, which included the front end and the frame. After the first collision, the dealer was advised by the prior owners that the vehicle had been in a collision and the vehicle was traded into Mooers Volvo in July 2002. The dealership, even though it knew about the prior collision, inspected the vehicle to determine if it could be sold as a "Certified" Volvo, and in August 2002 sold the vehicle for $23,900, as "Certified, to the next purchaser, concealing the wreck damage it knew about from her.

During the second owner’s ownership of the vehicle, it was in another serious collision, requiring extensive repairs, and the second owner advised the dealership of the wreck damage. In June 2005, the second owner traded the vehicle in to the dealership, which, after inspecting it, agreed to purchase it from her. Even though it was aware of the two prior collisions and repairs and after becoming aware that portions of the vehicle had been damaged and repainted, the dealership chose to put the vehicle on its car lot for retail sale for a third time.

In July 2005, our client began negotiations with a salesman for the purchase of the vehicle. During the negotiations for the vehicle, the Plaintiff asked the salesman for a safe reliable car, and asked whether the vehicle had ever been in an accident. He replied, "No", and stated that, in fact, the dealership knew the repair history of the vehicle since the dealership had serviced it from "day one", and he showed her what was purported to be the vehicle’s service records. He said the vehicle had been a "one owner" car, that it had been driven by an elderly lady, but they only had one key since the elderly lady’s daughter had the other one. In reliance on the warranties, representations, and promises of the dealership, in July 2005, the Plaintiff purchased the vehicle from the dealership for $9,142.

After numerous problems with the vehicle, the Plaintiff decided to trade it in, and in September 2006 went to CarMax to see what she could get for the vehicle. After an inspection, CarMax reported that the vehicle had extensive body repairs and possible frame damage, and that it would only offer her $3000 for the vehicle. This was when the plaintiff discovered the dealership’s fraud.

In February 2008, the matter was settled for $80,000.00.

"Rebuilt" Vehicles

Two different plaintiffs had auto fraud cases against a major insurance company. In both cases, the vehicles purchased were involved in a prior collision. As a result of the collisions, the vehicles were treated as a salvage or total loss by the insurance company, but this information was never reported to the state’s DMV The insurance company never obtained a salvage or branded title, or a "rebuilt" title on either vehicle. Both vehicles were the subject of inadequate, improper, incomplete and/or potentially dangerous repair work and/or that while repaired wreck damage is generally undetectable by consumers, these repairs are obvious to persons in the business of buying and selling used vehicles as such. To make matters worse, this is just two cases of thousands of times the insurance company did this with other vehicles. Any vehicle purchased with a "salvage" or "rebuilt" Certificate of Title is worth a small fraction of the retail value of an non-branded, non-wrecked similar vehicle.

In December 2007, the matter was resolved by a cash payment acceptable to all parties. The terms of the settlement are confidential.

Prior Wrecked Vehicle - Settled for $52,000

In October 2006, a 2005 Toyota Corolla, while operated by a previous owner, was involved in a collision requiring repairs to almost the entire right side of the vehicle, resulting in body panels that are poorly aligned with obvious gaps and possible structural damage. According to Carfax, the vehicle collided with another vehicle in New Jersey in October 2006. It was repaired and sold at an auction to Nationwide Imports in April 2007, then at another auction it was sold to Koons Tysons Toyota in May 2007.

In May of 2007, our client began negotiations with a salesman for the purchase of a vehicle and specifically asked if the vehicle had ever been damaged, wrecked, or repaired. He claimed that he was told by the salesman that it had not been damaged or repaired in an accident, that it was a "Certified" used Toyota Corolla, that it was in excellent condition, and he explained that it had been rigorously inspected by Koons and its vehicle history was reviewed via Carfax to determine that the vehicle was qualified to be sold as a Toyota "Certified" Used car. He was also sold an extended warranty or service contract for the car that he purchased. Relying on the warranties and representations, the remainder of the factory warranty, the service contract, the vehicle history, its "Toyota Certified Used Vehicle" status, and representations about the vehicle’s condition from Koons, our client agreed to purchase the vehicle. At no time during the negotiations for the vehicle was our client advised by Koons that the certification of the vehicle would cost him an additional $995.00, since he had been told it was already certified, which the dealership charged him to certify the vehicle, misrepresenting it as a "We Owe" charge on the Buyer’s Order.

In July 2007, the plaintiff took the vehicle to have it appraised at CarMax in Dulles, Virginia for possible resale and at this appraisal he learned that the vehicle had been wrecked, that it had extensive body repairs, that there was possible structural or frame damage, and that CarMax would purchase the vehicle for $8,500.00, about $11,000.00 less than what he paid for it less than two months earlier.

According to the Toyota web site for Toyota Certified Used vehicles, in order for a vehicle to achieve the status as a Toyota "Certified" Used vehicle, it must be "the best of the best", it must pass a "rigorous 160 point quality assurance inspection by factory-trained technicians" and get a Car Fax report to ensure it is worthy of the Toyota Certification process. Our client alleges that the prior accident history, damage, and repairs to the vehicle were known by Koons, or in the exercise of the reasonable diligence, should have been known, prior to the selling of the vehicle to our client, but were never disclosed to him prior to his purchase of the vehicle. He alleges that these repairs were obvious to anyone inspecting the vehicles in the auto purchase industry.

In August 2008, the matter was resolved by a cash payment with the agreement of all parties. This case settled for approximately $52,000.

Prior Wrecked and Repainted Vehicle Sold as New

The Plaintiff filed a claim against a dealership for selling him a new vehicle in September 2007, that had been in an accident, repaired, repainted, and then sold to him as a new vehicle, but the dealership concealed from him the prior accident damage and repairs.

The Plaintiff intended to purchase a new vehicle, not a new previously damaged, repaired, and repainted vehicle, but that is what the dealership sold him. Several paint experts inspected the vehicle and advised that parts had been repainted and there were noticeably different shade colors, there were two small dents in the roof, and there was over spray. Although the dealership offered to repaint the vehicle, the Plaintiff did not intend to purchase a repainted vehicle. Our expert indicated that the retail repair cost for the repairs to the damage, if properly done, would have been $2000.00. Our expert vehicle appraiser indicated that in view of the accident damage and repaint, the vehicle ‘s diminished value at the time of purchase was $10,000.00.

In February 2009, the matter was resolved by a cash payment with the agreement of all parties. The terms of the settlement are confidential.

Prior Wrecked Vehicle Sold as a "Certified Used Vehicle"

Prior to November 2006, a vehicle was involved in one or more collisions, requiring extensive repairs or replacement of various parts, which would be obvious to any experienced professional buyer. The vehicle was purchased by a dealership at an auction. It is believed that when deciding whether to purchase the vehicle at the auction, the dealership inspected it to determine whether to purchase it and how much to bid, and then after its purchase at the auction, put it through another 117 point inspection to determine whether it qualified as a Certified Used Vehicle. Because of this inspection, the dealership knew, or because of the obviousness of the damage and repairs should have known, that portions of the vehicle had been damaged and repaired. The dealership should have known the vehicle was in one or more collisions causing significant damage to the vehicle. The Defendant was aware of this when it sold the vehicle to the Plaintiffs as a Certified Used Vehicle.

In March 2009, the matter was resolved by a cash payment with the agreement of all parties. The terms of the settlement are confidential.

Local Franchise Dealership Knowingly Sells a Vehicle with Wreck Damage

Prior to March 2006, a 2004 vehicle was involved in one or more collisions with damage to the rear which required repainting of the entire car. In late February, 2006 the Plaintiffs began negotiations at a local franchise dealership for the purchase of the vehicle. During these negotiations the Plaintiffs specifically asked if the vehicle had ever been damaged, wrecked, or repaired. Moreover, the salesman called and said the vehicle had just come in and that it still needed to be inspected and go through the certification process to make sure it met the manufacturer’s certification standards and had never been in an accident. The Finance Manager explained to the Plaintiffs the exhaustive nature of the certification process, that the car goes through a 156 point inspection to make sure it meets the manufacturer’s standards and has never been damaged. He also said the car comes with a 100,000 mile warranty and a maintenance contract that comes with the price of the car. After its certification, the salesman called and said that this vehicle had been qualified as a "Certified Pre Owned Vehicle", that it was in excellent condition, had never been in an accident. The Plaintiffs agreed to purchase the vehicle.

The vehicle was purchased by a dealership at an auction. It is believed that when deciding whether to purchase the vehicle at the auction, the dealership inspected it to determine whether to purchase it and how much to bid, and then after its purchase at the auction, put it through another 156 point inspection to determine whether it qualified as a Certified Pre Owned Vehicle. Because of this inspection, the dealership knew, or because of the obviousness of the damage and repairs should have known, that portions of the vehicle had been damaged, repaired, and repainted, and that some of the damage was still not fixed, or was done in a shoddy manner. The dealership should have known the vehicle was in one or more collisions causing significant damage to the vehicle. The Defendant was aware of this when it sold the vehicle to the Plaintiffs as a Certified Pre Owned Vehicle.

In March 2009, the matter was resolved by a cash payment with the agreement of all parties. The terms of the settlement are confidential.

Prior Wrecked Vehicle - Settled for $12,000

Prior to February 2009, a 1996 Isuzu Rodeo was involved in at least one collision involving extensive damage to its front end and frame. After this accident the vehicle was purchased by Universal Auto Sales, LLC. When deciding whether to purchase the vehicle, Universal inspected it and the defendants thereby knew or should have known that portions of the vehicle had been damaged and repaired. After its purchase of the vehicle, and after becoming aware that portions of the vehicle had been damaged and repainted, the defendants decided to put the vehicle on Universal’s lot for retail sale. On or about February 21, 2009, the Plaintiffs began negotiations with an officer and salesman for Universal, for the purchase of a the vehicle. During the negotiations for the vehicle, the Plaintiffs asked about any prior accident damage. The salesman told them that the vehicle had not been in any accidents, as is proved by the Carfax that came with the vehicle, that it had passed inspection, that it had new brakes all the way around, and that he would guarantee that it would pass inspection when the current sticker expires in a few months. The salesman added that if it did not pass, to come back and the mechanic who had inspected it and passed it originally would put another sticker on it. In reliance on the warranties, representations, and promises of the defendants, the Plaintiffs purchased the vehicle from Universal for their personal use. About a week after purchase, the Plaintiffs discovered the vehicle had been in one or more wrecks since they discovered serious frame damage to the vehicle. Subsequently, the Plaintiffs took the vehicle to a body shop in Richmond, Virginia, Collision One, Inc., for an inspection to see what wreck damage existed. Collision One’s inspection revealed a seriously damaged and unsafe vehicle, with significant frame damage leaving the vehicle unsafe to drive.

Prior to October 2007, a "certified" vehicle was involved in a severe collision requiring over $8,000 in repairs. The repairs of that damage are obvious to any professional buyer or inspector, the repairs were shoddily done, and left this "certified" vehicle with severe unibody damage, poor and faulty welds, and unsafe to drive. The dealer fraudulently induced the Plaintiff to purchase this prior wrecked vehicle by representing it as never having been in an accident. The dealer said that the vehicle was a "Certified Pre-Owned" vehicle. The dealer knew or should have known that the vehicle had been wrecked.

In June 2009, the matter was resolved by a cash payment with the agreement of all parties. The terms of the settlement are confidential.

Used Vehicle, Sold as New

Prior to the sale of the vehicle to the Plaintiff, in 2008 it was sold to someone else. The vehicle had sustained significant acid rain damage prior to her purchase of it, but this was not disclosed to her. She drove it for several days and put several hundred miles on it, but when she discovered the paint damage, she returned it to the dealership because of the acid rain damage, and eventually "forced" the dealer to accept return of the vehicle and put her into another one. In the summer of 2008 the Plaintiff began to look for a family vehicle with all the safety features. On October 31, 2008, along with another witness, he negotiated for the vehicle with a salesman. During the negotiations, the Plaintiff asked about the vehicle and if there was anything wrong with it. The salesman responded, "No, there is nothing wrong, it’s brand new." When the Plaintiff asked where the mileage came from, he was told that it was from test drives and employees using it. Both the Plaintiff and his other witness heard these descriptions. Relying the statements of fact and the assumption that the vehicle had no damage and was new, the Plaintiff purchased the vehicle. After the purchase, the Plaintiff discovered the extensive acid rain damage to his vehicle and learned that it had been previously sold and mileage accumulated by the other owner during her use of it. According to the Plaintiff’s expert, the vehicle’s value was $3,000 less that the purchase price due the paint damage, and the fact that the vehicle was used reduces the vehicle’s value even more.

In May 2009, the matter was resolved by a cash payment with the agreement of all parties. The terms of the settlement are confidential.