Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles, Project No. P104811 #00058

Submission Number:
Jerard Heller
The Law Offices of Jerard C. Heller
Initiative Name:
Public Roundtables: Protecting Consumers in the Sale and Leasing of Motor Vehicles, Project No. P104811
I have been practicing Consumer Protection law for 30 years, primarily representing people who have been ripped off by car dealers, auto finance companies, auto repair shops and related businesses. The simple fact that I can make a living in such a narrowly defined area of law is proof of just how rampant the use of unfair and deceptive trade practices by car dealers really is. The scary part if that I am busier than ever, indicating to me that these practices are becoming worse and more widespread. Although the particulars of deception encountered by car buyers know no bounds and vary widely, certain fact patterns certainly seem to be more prevalent than others. In "new car" sales, the overwhelmingly most prevalent deception is the "yo-yo sale", or what the industry euphemistacally calls "spot delivery". The dealer tells the customer "your credit is approved, here's your new car". The customer pays a down payment (usually several thousand dollars), leaves his or her old car at the dealership as a trade-in, and drives home to show off his shiny new car to his family, his boss, members of his church. A few days to a few weeks later, he gets a call from the dealer, that he has to come back "to sign a few more papers". When he arrives back at the dealership with his new car, he is told that his credit was not approved after all, and he has to re-contract at less attractive terms, such as a bigger down payment, higher interest rate, longer term, or all of the above. When he protests that "we had a deal, I'm not signing anything else and I'm taking my new car home", he is typically told that he will be arrested for car theft, or discovers that his new car is either blocked in by other cars the dealer parked behind it, or simply gone. If he declines and simply asks for return of his downpayment and trade, he is told that the tradein has been sold and that they are keeping the downpayment for his having used their new car. Having no car and no other money to buy a car elsewhere, most people succumb to this coercion and extortion and simply sign the new contract. A fairly concise description of this "dehorsing" process - which basically allows the dealer to steal the tradein and downpayment - can be found in one of my cases form about ten years ago, Samuels v. King Motor Co. of Fort Lauderdale, 782 So.2d 489, Fla.App. 4 Dist.,2001. In used car sales, the most common problems are the car which "runs perfectly and has never been scratched", but has a bent frame and a blown head gasket. Regardless of whether the car is new or used, the single biggest problem for consumers buying cars is the pandemic use of mandatory arbitration of disputes. This process can never be truly fair because regardless of who the arbitrator is, he or she knows that they were chosen by the dealer (since the dealer always writes the contract, which includes the arbitration clause and identifies the arbitration service to be used), and if the arbitrator rules against the dealer they will simply not choose that arbitrator again. Judges and juries don't have to consider the effect their decision will have on their future employment. Knowing that they will never have to appear before a tribunal other than of their own choosing, car dealers feel emboldened - immune- from the consequences of their deceptive trade practices. IF THERE IS ONE SINGLE RULE THAT CAN BE PASSED TO PROTECT CONSUMERS (AND HONEST CAR DEALERS WHO MUST COMPETE WITH THE DISHONEST ONES)IT WOULD BE TO BAN PRE-DISPUTE MANDATORY ARBITRATION. The parties would still be free, once a dispute arises, to agree upon a truly neutral party to arbitrate, should they choose to. It should also not be overlooked that the existence and nature of the arbitration clause is NEVER explained to the consumer, who is always shocked to learn that they have agreed to it. These waiver of constitutional rights are now near universal, which deprives buyers of any choice but to agree or to simply not buy a car.