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Auto Fraud

• J. Smith v. Casey Chevrolet, Circuit Court of Newport News, Virginia:
  Jul 21, 2005

  Virginia has a statute called the “3% Rule,” which permits car dealers to sell vehicles that have been damaged and repaired, without having to disclose the damage and repair, if the retail cost of repair is less than 3% of the vehicle’s MSRP (Manufacturer’s Suggested Retail Price). In this case, in which Mr. Gayle is co-counsel for the Plaintiff, the Plaintiff bought a new Corvette, which he later discovered had been damaged prior to sale. When the Plaintiff confronted the dealer, Casey, it said the repairs were from “lot” damage, that they were minor, and that it did not have to tell him about them. Casey said the repairs cost less than $1,500, but the Plaintiff’s expert said the cost to repair the car properly would be over $5,000.00. The court has ruled that the 3% Rule was not meant to allow car dealers to conceal any type of damage, such as “lot” damage, but only applies to pre-delivery factory damage or in-transit damage. Thus, Casey Chevrolet can not use the 3% Rule as a defense in this case unless the damage was from pre-delivery factory damage or in-transit damage. Car dealers in Virginia, and in other states that have similar rules, have been using this rule to conceal any damage done to new vehicles, whether from accidents in transit or on the lot. As is alleged in this case, sometimes a car dealer will make sure that the repairs it makes are half measures, keeping the cost under 3% of the “MSRP,” and then not mentioning anything to the new car buyer. - 11 - 20

• Charlie Falk Auto Wholesale, Inc. Pays Judgments
  Apr 08, 2005

  Serna Laury v. Charlie Falk Auto Wholesale, Inc.; Stephanie Cruz v. Charlie Falk Auto Wholesale, Inc. In these cases, John Cole Gayle, Jr., of The Consumer Law Group, obtained two judgments against Charlie Falk Auto Wholesale, Inc. (“Falk”), a Virginia used-car dealer. The judgments amounted to approximately $90,000, which included punitive damages for fraud in the sale of automobiles. Falk refused to pay these judgments, claiming lack of funds and that the company was going out of business. The dealership then re-opened under another name. Mr. Gayle then applied to a fund established by the state of Virginia for compensation of our client’s compensatory damages and attorney fees. This fund is set up to partially compensate consumers when dealerships go out of business after judgment for fraud. The maximum recovery is $20,000 per case. On the eve of receiving an award from the fund, and after Mr. Gayle advised Falk that he was filing another suit for fraudulently transferring assets during litigation, Falk capitulated and paid a compromise settlement of $81,000 to satisfy these judgments. - 12 - 20

• CONSUMER WATCH: Looking for options in tough cases
  Mar 08, 2005

  In a recent Richmond Times Dispatch article, Iris Taylor wrote about two arbitration rulings against Charlie Falk’s Auto Wholesale that John Cole Gayle, Jr. of The Consumer Law Group, won. Please be sure to read about Case Number 2 in the article. - 13 - 20

• Consumer Watch: Couple gets some relief in warranty case
  Dec 13, 2004

  CONSUMER WATCH: Couple gets some relief in warranty case IRIS TAYLOR RICHMOND TIMES-DISPATCH POINT OF VIEW Sunday, December 12, 2004 In January 2003, I wrote about Jerry and Angie Barnes' extended warranty ordeal with Haynes Jeep Chrysler on West Broad Street. The couple had purchased a used Jeep Grand Cherokee from Haynes and then paid $1,247.45 for a five-year extended warranty. They wound up saddled with about $4,000 worth of repairs on the Jeep, which should have been covered by the warranty, they said. To their surprise, the five-year contract expired in only two years. A five-year contract should last for five years, they said. When they asked that the warranty be reinstated for the remainder of the five years, Haynes balked and refused to reinstate it, or to reimburse them for repairs. The manager said the warranty expired five years from when the car was delivered to the original owner, not - as the Barneses understood it - five years after the vehicle's limited warranty expired. The two sides eventually deadlocked and Haynes stopped returning their calls and mine. So, the Barneses took their case to John Cole Gayle Jr. of The Consumer Law Group PC in Richmond. This week, Angie Barnes confirmed that Haynes Jeep Chrysler settled with them out of court for $8,000. Haynes Jeep Chrysler had no comment for this article. "I guess it's like David beating Goliath," said Angie Barnes. "I feel like we were able to stop Goliath a little bit and get some concessions where normally people would not have gotten any. I've got this feeling of satisfaction." Haynes Jeep also did not get the "gag order" that it sought, she said - another victory, of sorts. A gag order would have kept the details of the settlement private. It was not a full victory, though. "We never got our warranty rein stated and we're stuck with a car that has so many problems," said Barnes. "We can't afford to buy another car. That's why we had to hang on to it. We'd have to put so much into it to get anything on a trade-in. Also, the Barneses had to split the settlement down the middle with the lawyer. "I guess I'm glad we at least got almost $4,000 to go toward what needs to be done," she said. "But, we're still out $4,000" for repairs already paid for. Having gone through the ordeal, Barnes has this advice for consumers: Have a lawyer review the warranty contract. Be sure the warranty begins when you think it begins. Don't buy a warranty until after you've read the contract. The Barneses signed the sales agreement, but said the contract was not mailed to them until about a month later. Gayle, the lawyer, said the Barneses' persistence paid off. "The message is, if you're persistent and make complaints and force merchants such as car dealers to live up to their promises, even if it involves litigation, often you will get some - but, not necessarily all - of what you want in settlement." He advises consumers who may be considering purchasing an extended vehicle warranty to, "as difficult as it is, read the extended warranty's language" and don't simply rely on discussions with the dealer's employees. - 14 - 20

• Dealership Found Guilty of Fraud, Jury Awards Punitive Damages
  Nov 12, 2004

  Richmond, Va., October 6, 2004. - A Henrico County jury has found a Henrico County car dealership guilty of intentionally misrepresenting a vehicle as never having been in an accident when it knew it had a “Salvage History.” The Circuit Court jury on Thursday, October 7, 2004, found that Windsor Auto Sales committed intentional fraud and violated the Virginia Consumer Protection Act when it described the 1996 Ford Bronco to the plaintiff as undamaged even though Windsor Auto had purchased the vehicle with an invoice that stated “Salvage History.” Windsor Auto’s owner testified that he told the plaintiff that the vehicle had been in an accident. The jury awarded the plaintiff, Faye Teets, $6,000 in damages and awarded $34,000 punitive damages as well, Gayle said. The lawsuit was based on intentional fraud and a violation of the Virginia Consumer Protection Act. “Ms. Teets was unaware that the vehicle had been in an accident. She even thought that car dealers had a duty to disclose whether a car they are selling has been in a wreck. Unfortunately, dealers most of the time do not volunteer this information,” Gayle said, “...and the buyer who trusts dealers to disclose damage during negotiations, is living in a dream world.” “Many dealers either will not advise of any damage, or will disclose some damage claiming it is minor, and intentionally not check the rest of the car in order to remain 'wilfully blind' about the other damage in the car so they can claim ignorance if the vehicle is returned due to prior wreck damage. When a car has any damage, that is a red flag that there may be some hidden damage lurking in a less than obvious place, and that a detailed inspection is necessary. When a car dealer learns of any damage the reputable ones will inspect the car to see if there is other accident damage, and if they find significant damage, then they should return it to the previous owner," Gayle observed. “This should be a warning to car dealers to stop selling cars unless they have done a thorough inspection, and if they find some damage, either return the car, or be honest to customers and take less of a profit." Gayle commented, “State inspections, nor the new fad, Car Fax reports, are no guarantee that a car has not been significantly damaged. The best way to avoid what happened here is to ask if the car has ever been damaged, and even if the answer is 'No,' demand that a body shop of your choice inspect it; if a dealer refuses to allow this, leave.” The two-day case was tried before Circuit Judge Gary A. Hicks. - 15 - 20

Fair Debt Collection Practices Act

• Stop aggressive debt collectors: You have rights
  Aug 23, 2010

  As seen on WWBT, NBC12 News, on July 25, 2010:
  
  By Gray Hall - bio | email

  RICHMOND, VA (WWBT) – If you are the victim of constant aggressive debt collection calls, you do have rights. If the harassing calls don't stop and debt collectors are violating the law, they could end up owing you money.

  Many Americans are overwhelmed with debt and are being flooded with calls from debt collectors. While you may owe the money, attorney's we talked to say there is a legal and an illegal way to try and collect the money.

  Like many Americans, William Brewer fell on hard times and got behind on his bills, not soon after the Debt Collectors started calling. Things got so bad, he was thinking of extreme measures.

  "The crazy thing. I am sitting here telling my mom, 'mom should I go out and rob somebody?' She says 'oh Lord, no, pray', and I am going they want get off my back," he said.

  John Bennett, with Clear Point Financial Services says Brewer is not alone; more people are coming to organizations like his for help.

  "We have seen job loss, reduction income, people don't know how to manage their money in tough times," Brewer said.

  Brewer says he got behind on his cell phone bill it topped a $1,000. He says the harassing collectors were relentless. 

  "Even on Sunday's, I was like 'gees, on God's day they call,'" he said. Brewer's Landlord got sick of the calls and put him out.

  When he tried to explain his financial situation -- the aggressive debt collectors didn't want to hear it.

  "It was at the point they even called and I said look, jobs are not that great right now and they said you need to come up here and work, you need to get out and do something," Brewer said.

  In the act of desperation, Brewer went to the Internet looking for help. He stumbled on The Consumer Law Group and Attorney John Gayle.

  "Once I  get involved, the harassment stops," Gayle said.

  Gayle says many consumers don't realize they have rights under the Fair Debt Collection Practices Act. The law is set up to protect you from aggressive tactics.

  "Calling people names, verbal abuse, threats of imprisonment, calling third parties who are not involved in it," he said.

  The law limits when and how often debt collectors can call. Gayle says there is also a statue of limitations on re-payment of a debt -- five years from the date of default on written contracts, and three years for unwritten.

  "In other words, it is so old they can't pursue this debut in further legally," he said. If it's proven the debt collectors broke the law they could actually end up paying you a thousand dollars or more.

  "I had one client who lost her hair because of all the calls so on top of the damages of a statutory one thousand dollars you can get actual damages," said Gayle.

  Brewer now has a job and the collectors have stopped calling. From now on, he's hoping future calls are only from family and friends.

  "My intention is to pay all my bills. I want to get my credit back on line and my life back online and everything else," Brewer said.

  Remember, while there are limitations, it's not against the law for debt collectors to call you -- and if you don't pay they can take legal action against you, but can not threaten legal action unless they actually plan to follow through.  

  Copyright 2010 WWBT NBC12. All rights reserved. 

  - 16 - 20

• The $555,000 Student-Loan Burden: provided by The Wall Street Journal
  May 14, 2010

  By Mary Pilon:
  
  When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.
  
  It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency.
  
  "Maybe half of it was my fault because I didn't look at the fine print," Dr. Bisutti says. "But this is just outrageous now."
  
  To be sure, Dr. Bisutti's case is extreme, and lenders say student-loan terms are clear and that they try to work with borrowers who get in trouble.
  
  But as tuitions rise, many people are borrowing heavily to pay their bills. Some no doubt view it as "good debt," because an education can lead to a higher salary. But in practice, student loans are one of the most toxic debts, requiring extreme consumer caution and, as Dr. Bisutti learned, responsibility.
  
  Unlike other kinds of debt, student loans can be particularly hard to wriggle out of. Homeowners who can't make their mortgage payments can hand over the keys to their house to their lender. Credit-card and even gambling debts can be discharged in bankruptcy. But ditching a student loan is virtually impossible, especially once a collection agency gets involved. Although lenders may trim payments, getting fees or principals waived seldom happens.
  
  Yet many former students are trying. There is an estimated $730 billion in outstanding federal and private student-loan debt, says Mark Kantrowitz of FinAid.org, a Web site that tracks financial-aid issues -- and only 40% of that debt is actively being repaid. The rest is in default, or in deferment, which means that payments and interest are halted, or in "forbearance," which means payments are halted while interest accrues.
  
  Although Dr. Bisutti's debt load is unusual, her experience having problems repaying isn't. Emmanuel Tellez's mother is a laid-off factory worker, and $120 from her $300 unemployment checks is garnished to pay the federal PLUS student loan she took out for her son.
  
  By the time Mr. Tellez graduated in 2008, he had $50,000 of his own debt in loans issued by SLM Corp., known as Sallie Mae, the largest private student lender. In December, he was laid off from his $29,000-a-year job in Boston and defaulted. Mr. Tellez says that when he signed up, the loan wasn't explained to him well, though he concedes he missed the fine print.
  
  Loan terms, including interest rates, are disclosed "multiple times and in multiple ways," says Martha Holler, a spokeswoman for Sallie Mae, who says the company can't comment on individual accounts. Repayment tools and account information are accessible on Sallie Mae's Web site as well, she says.
  
  Many borrowers say they are experiencing difficulties working out repayment and modification terms on their loans. Ms. Holler says that Sallie Mae works with borrowers individually to revamp loans. Although the U.S. Department of Education has expanded programs like income-based repayment, which effectively caps repayments for some borrowers, others might not qualify.
  
  Heather Ehmke of Oakland, Calif., renegotiated the terms of her subprime mortgage after her home was foreclosed. But even after filing for bankruptcy, she says she couldn't get Sallie Mae, one of her lenders, to adjust the terms on her student loan. After 14 years with patches of deferment and forbearance, the loan has increased from $28,000 to more than $90,000. Her monthly payments jumped from $230 to $816. Last month, her petition for undue hardship on the loans was dismissed.
  
  Sallie Mae supports reforms that would allow student loans to be dischargeable in bankruptcy for those who have made a good-faith effort to repay them, says Ms. Holler.
  
  Dr. Bisutti says she loves her work, but regrets taking out so many student loans. She admits that she made mistakes in missing payments, deferring her loans and not being completely thorough with some of the paperwork, but was surprised at how quickly the debt spiraled.
  
  She says she knew when she started medical school in 1999 that she would have to borrow heavily. But she reasoned that her future income as a doctor would make paying off the loans easy. While in school, her loans racked up interest with variable rates ranging from 3% to 11%.
  
  She maxed out on federal loans, borrowing $152,000 over four years, and sought private loans from Sallie Mae to help make up the difference. She also took out two loans from Wells Fargo & Co. for $20,000 each. Each had a $2,000 origination fee. The total amount she borrowed at the time: $250,000.
  
  In 2005, the bill for the Wells Fargo loans came due. Representatives from the bank called her father, Michael Bisutti, every day for two months demanding payment. Mr. Bisutti, who had co-signed on the loans, finally decided to cover the $550 monthly payments for a year.
  
  Wells Fargo says it will stop calling consumers if they request it, says senior vice president Glen Herrick, who adds that the bank no longer imposes origination fees on its private loans.
  
  Sallie Mae, meanwhile, called Mr. Bisutti's neighbor. The neighbor told Mr. Bisutti about the call. "Now they know [my dad's] daughter the doctor defaulted on her loans," Dr. Bisutti says.
  
  Ms. Holler, the Sallie Mae spokeswoman, says that the company may contact a neighbor to verify an individual's address. But in those cases, she says, the details of the debt obligation aren't discussed.
  
  Dr. Bisutti declined to authorize Sallie Mae to comment specifically on her case. "The overwhelming majority of medical-school graduates successfully repay their student loans," Ms. Holler says.
  
  After completing her fellowship in 2007, Dr. Bisutti juggled other debts, including her credit-card balance, and was having trouble making her $1,000-a-month student-loan payments. That year, she defaulted on both her federal and private loans. That is when the "collection cost" fee of $53,870 was added on to her private loan.
  
  Meanwhile, the variable interest rates continue to compound on her balance and fees. She recently applied for income-based repayment, but she still isn't sure if she will qualify. She makes $550-a-month payments to Wells Fargo for the two loans she hasn't defaulted on. By the time she is done, she will have paid the bank $128,000 -- over three times the $36,000 she received.
  
  She recently entered a rehabilitation agreement on her defaulted federal loans, which now carry an additional $31,942 collection cost. She makes monthly payments on those loans -- now $209,399 -- for $990 a month, with only $100 of it going toward her original balance. The entire balance of her federal loans will be paid off in 351 months. Dr. Bisutti will be 70 years old.
  
  The debt load keeps her up at night. Her damaged credit has prevented her from buying a home or a new car. She says she and her boyfriend of three years have put off marriage and having children because of the debt.
  
  Dr. Bisutti told her 17-year-old niece the story of her debt as a cautionary tale "so the next generation of kids who want to get a higher education knows what they're getting into," she says. "I will likely have to deal with this debt for the rest of my life." - 17 - 20

Credit Fraud & Identity Theft

• Win at the Credit Scoring Game: by Carla Fried provided by CNNMoney.com
  Aug 31, 2009

  To get the best deal on a loan, you need some new strategies to bump up your score - and keep it there.
  
  

  Borrowing money today requires impressing an increasingly hard-to-please crowd. With creditors of all kinds more cautious than ever, you need an A+ application to land the best terms -- and that means an A+ credit score, the number lenders use to judge your risk of default.
  
  The most commonly used credit scoring system, called FICO, rates people from a very risky 300 to a pristine 850. And right now we're in the middle of a credit score crunch: "You need a 750 or better today to have the same treatment you got with a 700 two years ago," says John Ulzheimer, president of consumer education at Credit.com.
  

  John D'Onofrio, CEO of Autoloandaily.com, seconds that: "Two years ago a 680 was enough to get a great car loan rate. Today it's often the minimum to qualify at all."

  Think you're still in the clear? Don't be so sure. Lenders have been making changes that could cause your score to slip from excellent to average. Improve and protect your number with these strategies:

  Learn Your Score. You have three FICO scores, based on your credit reports at the three credit bureaus: Experian, Equifax, and TransUnion. The numbers tend to be in the same ballpark, so pony up $16 to get one representative score at myfico.com. You can get an estimate free at Creditkarma.com. But the FICO score gives you a better sense of what lenders see.

  Scout for Mistakes. Your scores are only as good as the information they're based on. And a third of people who've pulled their reports have found errors, according to a Zogby poll. That's good reason to read your report.

  When you buy your FICO score, you'll get a copy of the report it was based on. Get gratis histories from the other bureaus via annualcreditreport.com (you're entitled to one free from each bureau every 12 months).

  Spot an error? Request a correction, following the instructions on the bureau's website. Let's say the size of a credit line was misstated or an account was mistakenly marked delinquent. Getting the error fixed could raise your score as much as 200 points, says Ulzheimer, who has also worked for Equifax and FICO.

  Never, Ever Be Late. As you'll see in the pie chart on the right, the biggest chunk of your credit score comes from your payment history. Just one late payment can shave 100 points off a 750-plus credit score, says Ulzheimer. Lenders can't tattle on you to the bureaus until you're 30 days past due, adds credit expert Gerri Detweiler. But don't risk it. For all your bills, enter recurring due-date reminders on your computer calendar.

  Missed a payment? Get back on track within the next 30 days, and you should "get back the lion's share" of points lost, Ulzheimer says. More than 90 days late? The damage can stick for years. If it was a one-off lapse, call your issuer and plea for a good-will adjustment to your credit report. (It's a long shot.)

  Remember the Magic 20%. The second-biggest factor in your score is how much you owe vs. how much credit has been extended to you. The part of this that's easiest to finesse is your credit card utilization rate, or your total card balances compared with your total credit limits, as well as each card's balance relative to its limit.

  Example: If you've charged $5,000 on cards and have $50,000 in credit, your rate is 10%. For the best score today, 10% is ideal, but you can probably creep up to 20% and keep a high rating.

  Unfortunately, with banks lowering credit limits and canceling unused cards, it's harder to maintain such a low percentage. In the previous example, if your available credit is cut to $20,000, your rate shoots to 25%. That could sink your score by as much as 50 points, says Ulzheimer. The lesson: Know your limits, watch for changes, and stay under 20% on each card and in total (0% if you'll be applying for a loan soon).

  Already above 20%? Paying down debt is the obvious way to lower your utilization rate, but another strategy is to apply for an additional credit card to increase your overall credit limit. That may cause you to lose a few points in the short term -- so don't do it if you're about to apply for a mortgage -- but it should pay off in the long run.

  Keep Oldest Cards in Play. As noted, credit issuers these days are eagerly canceling cards that are not in use. Besides reducing your limit and increasing your utilization ratio, having an account closed can hurt you in another way, especially if it's among your older ones.

  See, 15% of your score rides on the length of your credit history. The longer you ably manage revolving debt, the better you look. So don't cancel your oldest cards. And don't let them get canceled on you: Move a recurring charge to each so they stay active.

  Already ditched or been ditched? A new card (see previous) can help with your utilization rate, but there's little you can do to help the "history" component of your score, except to keep other old accounts in use.

  Accept Fate on the Rest. There are other factors involved in your score, but they're not so easy to manipulate. For example, 10% is based on how well you manage a mix of credit types, such as mortgages, car loans, and credit cards. But you don't want to go out and, say, finance a car just for a score boost; besides, you can easily get 750-plus with just a few well-tended credit cards.

  Along the same lines, 10% is based on "new credit," but the effects of a new application can be positive or negative, depending on your history.

  In other words, if you want to be among the crème de la credit crème, accept what you can't change, and focus on what you can.

  - 18 - 20

• 7 Ways to Be a Dolt About Credit: By Sheyna Steiner
  Jun 08, 2009

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• Debt: The next big American crisis? By Chris Hansen, Correspondent Dateline NBC
  Apr 09, 2009

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