You Have Questions About Auto Fraud in Virginia and We Have Answers
Below are some initial questions many clients have when they first contact The Consumer Law Group, P.C.. The questions below can address many initial concerns you may have. If you don't find the answers here, you may contact us for answers to more complex questions or questions specific to your case.
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What should a consumer do about claims against a dealership that has gone out of business?
Often this question comes up when a dealership closes and vehicles that were traded in on the purchase of another car have liens that never get paid off by the dealer. The lien holder sends a letter to the consumer that their monthly payment is late on a loan they thought had been paid off by the now defunct dealership.
This scary problem scenario does not have an easy or quick solution. The first step is to contact your state dealer board. Almost every state has an administrative agency that may be a subdivision of your state's Department Motor Vehicles or is independent. Virginia has the Motor Vehicle Dealer Board (804-367-1100, Toll Free 877-270-0203, Fax 804-367-1053, or www.mvdb.virginia.gov). Confirm what they know about the dealership closing; find out if the dealership has an insurance bond which most states require the newer dealership to post since it has no track record for being a stable, well-managed dealership; and get the insurance company's name address and where claims are to be filed. Then you contact this insurance company about your claim. Often the bond requirement is a minimum of $25,000, to cover all claims. Thus you should make your claim as soon as possible since the policy limits will be exhausted by other people in your same situation.
Once the bond is exhausted, or if there is no bond, many states have a monetary fund sustained by dealership licensing fees, which has been established to reimburse persons who have suffered loss or damage in connection with the purchase or lease of a motor vehicle due to illegal actions of licensed or registered motor vehicle dealers or salespersons. The amount of the claim will have limits ($20,000 in Virginia), and only covers actual damages and attorney fees, as opposed to punitive damages. Additionally, there may be a limit of the aggregate amount of claims that will be paid for one dealer ($100,000 in Virginia). Virginia's fund is called the Motor Vehicle Transaction Recover Fund. See the Virginia Motor Vehicle Dealer Board's web site noted above for more information. Usually, you must obtain a legal judgment against the dealer for fraud in order to recover. While this may sound daunting, usually the dealer does not respond to the lawsuit and at trial you simply have to put on the evidence of its failure to pay off the trade-in, show the court the late payment notices you received, and show how much this has damaged you monetarily.
This process will take several months; so, before you embark on that route you have to make a preliminary decision: should you make payments on the trade-in you no longer possess or own in order to preserve your credit rating, or, if you cannot afford that, advise the lender what happened, and watch it try to find the trade-in and then sell it and get a deficiency judgment against you for the difference between what you owe it on the trade-in and what it was able to sell the vehicle for at auction. Your lawsuit would be for any monetary loss this has caused you (including damage to your credit), as well as legal fees and punitive damages. But remember the most you can recover from the Transaction Recovery Fund is $20,000 in Virginia, assuming other claims have not exhausted the $100,000 ceiling.
What can I do if the dealership says my loan was denied and wants me to sign new paperwork?
This type of sale is one of many examples where dealers use unfair tactics, creating what we call a "yo-yo sale." This is where the dealer tells you your loan was approved, but later calls and says that the loan was not approved and demands the car back unless you pay more money. Often the dealer knows the loan contract that it signs with you (called the Retail Installment Sales Contract) will not be approved, but acts as if it's a done deal so that you become emotionally committed to the car. When the dealership calls you to sign a more expensive contract or lose the car, you agree to do so to avoid the embarrassment with friends and losing the car you now love.
Virginia Law Offers Consumers Protections From This Tactic
Unfortunately, in Virginia, this can be legally done, but only under certain circumstances. Your Buyer's Order is supposed to have a paragraph that is required by VA statute that permits the dealer to cancel the sale if it is unable to assign the loan (that is to get a third party lender) to purchase this loan contract on the same terms you agreed to. Even if you were told "the loan was approved," if the dealer later on calls and says the loan did not go through, under the law, you have 24 hours to return the vehicle, at which time the dealer is required to refund ALL your down payment and return any trade-in. Once that is done, the deal is over and you should move to finding another car somewhere else. The dealer will likely try to get you to pay a larger down payment or offer a new loan contract that costs you more since it knows you are now emotionally committed to the car. But you are NOT required to agree to any new deal. My advice is to demand ALL your down payment and trade-in (which they are required to give to you) and go somewhere else that does not mislead you about what it's really going on.
If a Dealer Refuses to Return Your Down Payment or Trade, Contact Our Consumer Protection Attorneys
Legally, these cases are not worth fighting unless the dealer refuses to return a down payment or a trade-in once they decide to renege on the deal. Unless you have some loss of a down payment or trade-in, the court usually says "No harm, no foul." However, if you’ve tried to get your down payment and/or trade-in back from a dealer and they’ve refused, you may be entitled to legal recourse. Call The Consumer Law Group today at 804-282-7900 to learn more.
How can a consumer determine if his vehicle was wrecked prior to being sold to him?
There are several ways to determine if a vehicle has a salvage history or has been wrecked prior to being sold to a consumer. The consumer can obtain a Carfax report, a DMV title history, or contact his insurance provider to locate salvage or wreck history, but the best way for a consumer to know for sure, and to have the requisite expert that will be required in a court of law, is for the consumer to have the vehicle inspected by a licensed body shop expert.
What can a consumer do if she pays a mechanic to fix her car, and they replace the wrong part, while charging her for a different part?
Some mechanic shops charge a consumer to replace a part in their vehicle, while just repairing the part, or not even touching that part, and attempting to repair a problem through other means, without disclosing this to the consumer. It is fraudulent to charge for a part that is not replaced. The consumer should first ask for a written estimate that describes what you have asked the mechanic to repair. The estimate should include a price for parts and labor. Ideally, it will list the parts to be replaced. Then the consumer should be in the habit of asking the mechanic to give him back the old parts before paying for the repair, and taking back the vehicle. Also, if the consumer states that he/she is going to want the old parts back after work is performed before authorizing the work, it may prevent this fraud from occurring. In the event that a repair is conducted, and the mechanic cannot produce the old part(s), and then an expert mechanic acknowledges the fraud, the consumer should contact The Consumer Law Group at 804-282-7900 immediately.
What can a consumer do if a mechanic is negligent in repairing the vehicle, and this negligence leads to a future problem or an accident?
In the event that the consumer has reason to suspect that a repair facility performed a repair negligently, and has thus caused further damage to the vehicle as a consequence, the consumer has the burden of proof and must obtain a expert mechanic to inspect the vehicle and testify that the previous mechanic was negligent, and specifically, that their negligence was the exact cause of the current problem(s), or that their negligence created a condition that was the direct cause of an accident.
What should a consumer do when a warranty company rejects honoring the warranty because they claim the consumer did not maintain the vehicle, or that the consumer abused the vehicle?
When the warranty company rejects a claim based on the consumer’s improper maintenance, or because the consumer abused the vehicle, the consumer has the burden of proof to show that the vehicle’s problem is a result of a factory defect as opposed to the consumer's lack of maintenance. This will require the consumer to hire an expert mechanic to conduct an inspection of the vehicle, prepare a report, and be willing to testify if he/she discovers that the vehicle is defective, and that the consumer is not the cause of the vehicle’s mechanical problems.
What should a consumer do once he knows that the vehicle was wrecked prior to being sold to him?
Upon discovery that the vehicle has been wrecked prior to ownership, the consumer needs to have the vehicle inspected by an expert body shop and have a report completed, and then contact The Consumer Law Group at 804-282-7900 so the remaining investigation can be conducted and the case can be evaluated.