John Cole Gayle, Jr., of The Consumer Law Group, P.C., recently won two significant arbitration awards for consumers through the American Arbitration Association. The awards against Charlie Falk Auto Wholesale, Inc., were entered as judgments in the Richmond and Henrico Circuit Courts.

The two cases arose out of car sales from two of Falk's Richmond locations. Falk's home office is in Virginia Beach, VA. The cases alleged numerous fraudulent practices and violations of Virginia's Consumer Protection Act (VCPA), and together cost the dealer over $140,000 in actual and punitive damages, administrative fees, plaintiff's attorney's fees, and costs. Yet the dealer, which previously claimed it was one of the largest independent dealers in the state, now claims it has no money to pay.

The first case, In the Matter of the Arbitration Between Stephanie Cruz and Charlie Falk Auto Wholesale, Inc., alleged misrepresentation of wreck damage, failure to advise that the vehicle had been repossessed (required under Virginia's UDAP), and use of the "five finger spread to cover up items packed into the monthly payment," and charged that this was the dealer's pattern and practice. (The "five finger spread" is a well-known technique in the auto loan industry where the finance manager puts his hand over the high interest rate and other products added to the contract, and presents the contract for the buyer to sign.)

This arbitration took about a year and a half, due in part to the withdrawal of two defense firms. Several witnesses/victims of the dealer who had experienced the same fraudulent practices testified. Their testimonies included information about use of "the five finger fold" by Falk employees when they purchased their cars. They also told of similar misrepresentations that an extended warranty came with the price of the car, when in fact Falk charged almost $1000 for this item.

The second case, In the Matter of the Arbitration Between Serena Laury and Charlie Falk Auto Wholesale, Inc., made almost identical claims to those in the Cruz case.

On July 15, 2004, the arbitrator made her award for the plaintiff and found Falk committed actual fraud, violated the VCPA, and breached its warranty to the plaintiff. In addition to the award, the arbitrator ordered the dealer to pay the consumer's arbitration costs and to notify the three credit reporting agencies to remove any derogatory information it may have caused.

In both cases, Falk's attorney now claims the company has no money to pay the judgments. Gayle said that as part of his collection efforts, he would make a complaint to the Virginia Motor Vehicle Dealer Board. He hopes the Board will take administrative action against Falk, as well as providing his clients a recovery of their damages under the Motor Vehicle Transaction Recovery Fund. The fund will pay up to $20,000 for an approved claim against a dealer convicted of fraud.