Submission Number: 00067
Received: 1/30/2012 1:30:22 PM
Commenter: Thomas Domonoske
Organization: Legal Aid Justice Center
Agency: Federal Trade Commission
Initiative: Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles; Project No. P104811
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Attached are three documents that describe current problems in the retail sale and financing of vehicles.
One document is the declaration of an Army officer, Lt. Driscoll, about his unsuccessful efforts to obtain Truth in Lending disclosures from a new car dealer in Charlottesville. As explained in his declaration, he went repeatedly to the dealership to consider purchasing a new car. Even though the dealer checked his credit and told him what credit terms it would offer, it did not provide him with Truth in Lending disclosures. When he called and told the dealer he was coming in to pick up terms to review, the dealer gave him a blank retail installment sales contract. The dealer tried to get him to sign documents without even showing him the Truth in Lending disclosures and then was angry that he wanted to review the terms before signing. His declaration shows how car dealers avoid compliance with the law by refusing to provide Truth in Lending disclosures even when a person has negotiated the terms of the deal and then made a pre-arranged trip to the dealership to pick up the written disclosures.
Another document is the plaintiff's complaint from a current case in the W.D. of Virginia, Snead v. 221 South Automotive and Credit Acceptance. It raises ECOA and Virginia Consumer Protection Act claims in a yo-yo sale. As explained by the facts in the complaint, the consumer went to the dealership on January 28, 2010 and selected a car and applied for financing. She went back in early February 2010, and then went back on February 12, 2010, and signed the documents to purchase the car. On March 13, 2010, she was given more documents to sign and required not to date them. In late March 2010, the dealer called off the transaction and told she had to pay more money down. The whole process just wasted her time and she never received any adverse action notices. The case is currently subject to a Motion to Compel Arbitration as the dealer tries to push it out of court. This case shows the common fact pattern of a consumer repeatedly visiting the dealership and allowing the dealership plenty of time to decide whether it wants to be bound by the retail installment sales contract before giving it to the consumer to sign. Despite that time, the dealer gave the consumer a retail installment sale contract to sign and then over a month later called off the transaction. Because no ECOA adverse action notice were given and instead false notices of approval were, the ECOA violation is clear. The dealer's response to these facts is to compel arbitration.
Another document is an amended complaint from the E.D. of Virginia, Martin v. Q & A Enterprises, Inc., et al., that raises several claims following a yo-yo sale. The amended complaint and several key exhibits are included. Most interesting in this case is that several of the potential assignees approved the transaction and yet the dealer called it off. The plaintiff’s lawyer is in a difficult position because the claims against the dealer have been forced into arbitration and the claims against the potential assignees are staying in court. Because the ECOA allows potential assignees to avoid giving notices if the consumer accepts and uses credit from a different ECOA creditor, the risk of inconsistent decisions is very real. The federal court could decide the consumer accepted and used the credit that the dealer appeared to offer when it gave the consumer a credit contract to sign, and the arbitrator could agree with the dealer's standard argument that the contract was conditional on the dealer agreeing to follow through on the contract. This case shows that the dealer's negotiation with a potential purchaser of the credit contract is different than the consumer getting credit from the dealer. In this case, the dealer obviously was not happy with the terms under which some of the assignees approved the deal, and the dealer never told the consumer of those approvals.