January 26, 2007 - A judgment for intentional fraud and willful violation of the Virginia Consumer Protection Act against Checkered Flag Motor Car Company was entered by the Virginia Beach Circuit Court on January 26, 2007 based on an arbitration decision by an arbitrator, retired Norfolk Circuit Court Judge, John E. Clarkson.

Judge Clarkson found that Checkered Flag fraudulently misrepresented the vehicle to Sunshine Hardison, as a one owner non-wrecked vehicle and that it concealed the vehicle’s prior repossession, something which the Virginia Consumer Protection Act requires to be disclosed, according to John Cole Gayle, Jr., of The Consumer Law Group, a Richmond law firm, who represented Ms. Hardison along with John M. Barrett of Virginia Beach. In fact, according to the decision, the vehicle had been owned by numerous owners, repossessed, had suffered a serious front end collision, all of which the dealership knew about, and the mileage was questionable. During the purchase, when Ms. Hardison asked why there was a dent in the engine, Checkered Flag’s salesman stated it came from a wrench falling on it. After purchase, when Ms. Hardison brought the vehicle back to Checkered Flag with her concerns, it stated that there was nothing it could do about it since she had driven it off the lot.

In assessing damages, Judge Clarkson awarded Ms. Hardison $2,500 in compensatory damages, and these damages were trebled to $7,500.00 due the willful violation of the Virginia Consumer Protection Act (VCPA). He awarded $50,000 in punitive damages for the intentional fraud (with the dealership getting a credit for the $7,500 in punitive damages awarded under the VCPA), and he awarded $57,321.50 in attorney fees to Ms. Hardison’s attorneys. Furthermore, he ordered Checkered Flag to pay the $4,738.20 cost of the arbitration to The McCammon Group, the company that administered the arbitration. The dealership has now paid its obligation, said Gayle.

“Car dealers have no problem spotting prior accident damage when making an offer on a trade in, but when buyers confront the dealer after a sale about undisclosed wreck damage, the dealer always claims that it did not know about the wreck,” said Mr. Gayle. “Checkered Flag did the same thing in this case, under oath, but what turned the tide was the discovery of the person that had owned the vehicle when it was wrecked and sold it back to Checkered Flag. She testified that when she traded it back to Checkered Flag, she told them about the accident.”

“Just like its claim that it didn’t know about the prior wreck, Checkered Flag claimed that it had no knowledge of the vehicle’s repossession history, but when confronted with its own title records showing the repossession of the vehicle, it had to change its story.”

"Numerous previously wrecked and potentially unsafe vehicles are sold every day by car dealers to unsuspecting buyers. Is there anything that can be done to even the playing field and make a vehicle’s accident history more transparent? “Yes,” says Mr. Gayle. “First, every accident that is reported to an insurance company is reported to a national database maintained by insurance companies for the prevention of insurance fraud. These companies know, with one mouse click, whether a vehicle has ever been in an accident and how serious it was. This database is much larger and more thorough than services consumers have access to such as Carfax. Congress needs to pass a law requiring a car dealer to review this database with every sale and either give consumers access to this database, or at least, disclose any accident information on this database about the vehicle to the buyer. Second, Virginia could pass a law, just like the current North Carolina law, that requires a seller to disclose, to the best of its knowledge, whether a vehicle has been in an accident whenever a vehicle’s title is transferred. There’s no reason this could not be done here, other than the car dealers would use their political muscle to stop it.” Services like Carfax are OK, but they are not foolproof, says Gayle. “Since they are dependent on vehicle history information voluntarily provided to them by other companies, if individuals or companies choose not to report a repair, then there is no way it ever gets into their database. Carfax often gives buyers a false sense of security when the report is clean.”

"Hopefully this case is a warning to car dealers throughout Virginia to thoroughly inspect vehicles when they buy them, to get any seller, whether a wholesaler or individual, to sign a document that says whether or not the vehicle has been in an accident, and if they are going to sell previously wrecked vehicles, to get a written statement from that buyer that shows this information was disclosed.”