Purchasing a car can be exciting. But, car dealerships do not always do the right thing for their customers, and people can end up with little recourse even when a dealership's unlawful sales practices are well-documented. Nassau Suffolk Law Services' Consumer Defense Unit helps low-income families facing debt collection actions stemming from such misleading sales tactics. Consumer Debt Unit Staff Attorney Sharon Campo recently assisted two of her clients in achieving a happy ending to their car loan fiascos.
Misrepresentations and Fraud Result in Repossession
Client H was about to have a baby and needed a bigger car to accommodate her growing family. H went to a South Shore car dealership but was denied financing. Later the same day, a salesman called H and told her he had gotten financing approval on a different car. H told the salesman that she could only afford the same monthly payment as her current car, about $400 per month. The salesman assured H that the monthly payment of over $650 per month would only be in effect for the first six months and would be reduced at the end of this introductory period.
Based on that representation and desperate for a bigger car, H bought the car. After six months of making payments, H requested the promised lower monthly payment. However, the dealership told her to call back again in another six months. H waited again, only to be told again to call back later.
After one year of making unaffordable monthly payments on top of car repair bills, H could not afford the car anymore. Eventually, the car was repossessed and sold at auction.
The financing company still held H responsible for the amount owed minus the amount received at auction: nearly $20,000. The financing company sold the debt to a debt buyer who then sued H in Suffolk County Supreme Court. H tried defending herself pro se before finding NSLS.
Staff Attorney Campo reviewed the car loan documents Plaintiff gave H. Campo found that in addition to the dealership's misrepresentations about the monthly payments being lowered, the dealership also added on an extended warranty to the financing agreement without H’s knowledge. Further, the dealership lied to the financing company about H’s income, more than doubling the amount she had reported to the dealership.
Campo discovered that the dealership was one of many Long Island dealerships that settled with the New York State Attorney General for using misleading sales tactics like those H experienced. Campo filed a motion to amend H’s answer asserting numerous violations of the Truth in Lending Act, New York General Business Law, Uniform Commercial Code, and, of course, the settlement with the Attorney General.
Faced with the pending motion, Plaintiff agreed to discontinue the action.
Hidden Fees and Contract Switcheroo Threaten to Derail Path Back to Financial Stability
The second client, W, came to Campo after losing her job. W was unable to keep up with her car payments, and while the car had not been repossessed, she was being sued by the lender for nearly $25,000. W had the potential to earn significant income to pay for the car once re-employed, but she needed time to get back on her feet.
Campo reviewed the car loan documents and discovered that the financing company charged repossession fees even though there had been no repossession. It had charged other miscellaneous fees without any explanation whatsoever. Additionally, the New Jersey-based dealership had potentially violated federal and New Jersey state consumer laws in a number of ways:
· The dealership failed to provide W a full and complete copy of the contract;
· It asked W to sign a contract and then told her to come in a second-time weeks later claiming she needed to sign a new contract because her financing was not approved previously;
· It charged fees that were not itemized; and
· It charged fees for the license and registration even though W paid for those fees out of pocket when registering the vehicle in New York.
After Campo raised the multiple improper fees to Plaintiff's counsel, they agreed to settle for a significantly reduced balance on a 48-month payment plan that allowed W to keep the vehicle.