We have handled a number of undisclosed damage / wreck cases recently.  These cases are not confined to any specific areas of Texas, though we tend to see more cases in the Dallas-Fort Worth and Houston areas (perhaps due simply to larger populations).

Generally, car dealers have told our clients that a car or truck had never been wrecked when the vehicles had prior damage and/or repairs.  We see situations in which car dealers purchase cars at auction, and are notified by the auction before purchase that the cars have frame damage or unibody damage.  This information at times appears on Carfax and/or Autocheck reports, and the timelines in those reports can assist in proving a car dealer’s knowledge of prior damage.  Under Texas law, a consumer might be able to recover diminished market value to the vehicle, cost of repairs, mental anguish, punitive damages, and attorneys’ fees.

Beware whenever a car dealer represents that a car or truck has never been wrecked.  Secure Carfax and Autocheck reports, and hire a mechanic or inspector to inspect the vehicle.

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We have seen a number of cases in which a dealer tells a consumer that a previously-wrecked vehicle has not been wrecked.  We have also seen situations in which a dealer tells a consumer that a car had experienced just minor damage from a prior wreck, when in fact the car had been “totalled” and had a salvage title.  However, there appear to be significantly fewer situations in which a dealer surreptitiously sells a “chopped car.”

A “chopped car” is a car that has been constructed by taking two badly damaged cars and joining them together.  This allows the dealer, or the “chop shop,” to take otherwise potentially near valueless vehicles and make a decent profit.  Stay away from chopped cars.  A chopped car is a “2-for-1″ deal that you can afford to pass up.

Do you remember your first set of keys?  Were you fortunate enough to have keys to your own car, or were “your” car keys really your parents’ keys for their “not so cool” car?  Whichever was the case, your car keys represented a lot of things.  Freedom.  Mobility.  The ability to “get away.”  Car dealers understand these things, and they can use them to your disadvantage.

The longer a car dealer keeps you at the lot, the more likely it is that you are going to buy a car.  You begin to feel committed to the salesperson.  You feel like you have invested so much time in the buying process that you should complete it.  These are valid feelings, but they do not help you make an intelligent, economic decision.  Nevertheless, car dealers play into these feelings.  If a car dealer cannot use more subtle ways of keeping you at the dealership until the deal is closed, they might “throw your keys on the roof.”

If you have driven to the dealer a vehicle that you might trade, a car dealer might ask for the keys to the vehicle.  The salesperson will tell you that she needs to get an appraisal of your trade-in.  She will then hand the keys off to an unknown employee, who in turn disappears.  If it seems to the salesperson that negotiations are not going well, your keys will be magically “lost.”  The car dealer has effectively thrown the keys on the roof, so that they cannot be found.  There was a time when some dealers would literally throw the keys on the roof in order to “lose” them.  Now, dealer employees might say to each other “put them on the roof” as a way to say, “Let’s play keep-away with the keys.”  At this point, the dealer will pull out every sales technique in the book to sell you a car.  You continually ask for your keys only to be told, “We are still looking for them.”  You are stuck.  Your car is at the dealer, and you have no way to leave.

How do you avoid this situation?  Do not give your keys to anyone until you have a written deal, including terms for your trade-in.  This might seem cumbersome, but you need to avoid allowing a dealer to control when you can leave.  Otherwise, you might make a car-buying decision that you will later regret.

There was actually a case in the Dallas-Fort Worth area years ago in which a hearing impaired person was allegedly treated this way.  Here is the Fort Worth Court of Appeals opinion (later reversed by the Texas Supreme Court) -

881_S_W_2D_843_1-23-10_1042

A Wyoming jury found a used car dealer guilty of several felony counts.  Here is a link to a detailed article -

 http://ca.sys-con.com/node/1256584

You see an ad for a particular vehicle, at a particular price.  You call the car dealer to make sure that the vehicle is still available.  The salesperson assures you that the vehicle is still there.  You and the family hop into your car (the one that has caused you to look for a new one) and drive to the dealership.  Excited, you arrive at the dealership.  You ask for the salesperson with whom you had the telephone conversation.  Joe Salesguy appears.  You ask about the car and are told, “It just sold!”

Alternate ending (just like you see on DVDs):  Joe Salesguy says, “Yep – we still have it!”  You test-drive the car, and you love it!   (Big mistake.  Never fall in love with a car.)  You meet with the finance person and are ultimately handed documents for your signature.  You are shocked to read that, as a result of add-ons, the price is thousands more than quoted.

The Texas Deceptive Trade Practices – Consumer Protection Act (“DTPA”) prohibits a car dealer from advertising a vehicle with the intent not to sell it as advertised.  The Texas Department of Motor Vehicles also prohibits dealers from advertising a vehicle for a price at which the vehicle will not be sold to any retail buyer.  If a dealer does so, the Texas DMV might pursue enforcement action against an allegedly offending dealer.  For example, Austin Mac Haik Ford Lincoln Mercury and Allen Samuels Dodge, in or about April, 2009, entered agreed orders (separately and unrelated to each other) with TXDOT.  TXDOT had alleged that each dealership had featured a price on a vehicle that was not the price for which each vehicle would be sold to any retail buyer.  Each dealership apparently paid $2,000.00 as a result.  The agreed order does not indicate that either dealership engaged in the alleged conduct.

As we have written on this blog, car dealers make money a number of ways.  Warranties are one of the highest profit items available for car dealers, and they are usually sold by dealers’ “F&I” (finance and insurance) employees.  The F&I person is the one with whom you sit down after you have negotiated a price for a vehicle with a salesperson.  If the F&I person sells a warranty to you, check it out.  Be sure to review all applicable policies and lists of covered items.  Then, be sure to call the warranty company to assure that the car dealer actually took out the warranty in your name.

We have seen cases in which car dealers were paid for a warranty by a consumer’s lender but then failed to pay the money to the warranty company.  Then, when covered repairs are needed, there is no coverage.  Here is a story about one dealership allegedly engaging in even worse conduct involving alleged warranties -

http://www.woodtv.com/dpp/news/local/central_mich/Greenville-dealership-accused-of-fraud

Photo Source: Wikipedia

Car dealers have a number of ways to make a profit.  One way is to add non-factory installed equipment to a new vehicle, and then to mark it up.  These “add-ons” have have quite a high profit margin.  Common add-ons include pinstriping, chrome wheels, navigation equipment, truck bedliners, and (at times) nonexistent undercoating and seat protectant.  Most dealers will then tape a sheet, listing all the add-ons and respective prices, next to the label listing the manufacturer’s suggested retail price.  One Texas dealer attempted to sell last-year model trucks by installing custom-type add-ons to attract customers.

Don’t forget that there is almost always dealer profit built into every add-on.  Also remember that some add-ons might be for products never provided, such as window etching or fabric protectant.  I am aware of one dealer which charged for fabric protectant but did not have equipment necessary to apply the protectant.

Photo Source: Wikipedia

What is “washing the title”  of a car or truck?  It is not a way to make a vehicle more saleable by giving it some type of special designation.  Instead, it is a way to hide salvage or other bad “brands” on a title.

When a car is wrecked so badly that it is declared a total loss by an insurance company, the title to the car might be designated, or “branded,” as salvage.  Very few consumers want to purchase a salvage vehicle.  Therefore, a dealer might attempt to “wash” the title to remove the brand.  The dealer might get the vehicle titled in a different state, hoping that the brand will not be on the new title.  The dealer might then use the non-branded out-of state title to obtain a new title in the dealer’s state.  The new title, if based on the out-of state title, might not have the salvage brand.

Be careful when purchasing a vehicle with an out-of-state title, or which appears to have been shipped to several states within a short period of time.  You might become the victim of a title-washing scam.

Many car dealers have just one goal – sell a car to every person that walks onto the lot.  This presents numerous problems for consumers (ignoring for the moment the fact that many consumers really are “just looking”).  One of the biggest problems is that not all people who want financing to purchase a car can be approved for financing.  The car dealer wants to sell a car “on the spot,” but the customer’s credit and/or job history is such that it will be difficult at best to obtain financing for the purchase.  “No problem,” says the car dealer.

A dishonest car dealer will tell a consumer that financing has been approved to purchase the vehicle, when in fact it knows that it has been unable to locate a lender to whom it can sell the ultimate loan.  Nevertheless, money changes hands, a large stack of papers is signed, the trade-in is left with the car dealer, and the consumer takes delivery of the new vehicle.  Everything is great, until the car dealer gives up on its quest (unknown to the consumer) to obtain a lender willing to buy the “paper,” or loan, being extended to the customer.  The dealer then demands that the new car be returned.  Harassing phone calls and repossession might also quickly follow.

If you buy a car, never, ever, ever sign a “conditional sale” or “borrowed vehicle” agreement.  Unscrupulous dealers use these agreements to attempt to keep themselves out of hot water when a deal goes bad, while at the same time explaining the alleged agreements to consumers as simply formalities.  A dealer might still “spot” deliver a car to you, resulting in a “yo-yo” sale, but you might be better-protected legally if you did not sign such an alleged agreement.

You purchase a car or truck from a car dealer.  The dealer tells you that that vehicle is in great shape.  It has never been wrecked.  You, like most people, are excited.  You can’t wait to show the car or truck to friends and family.  Your vehicle, whether new or new to you, looks great.  Then, things change.

You might take your vehicle to a mechanic for repairs, and he asks you about the prior wreck.  Or, your uncle Fred, a lifelong car buff, notes a discoloration in the paint on a portion of the car and asks when the car was wrecked.  Or, you begin to notice that a door on the truck does not close correctly.  You begin to believe that you have been defrauded.

Aside from the anger, shame, and mental anguish that arises, what are your economic damages?  You might need to pay to have certain things repaired as a result of the prior wreck.   However, even if the damage from the prior wreck has been fixed, your vehicle’s value might be less as a result of the wreck and repair.  This economic loss is known as “diminished value.”

You can probably perform some research on your own to get an idea as to the diminished value.  However, it is preferable to hire an expert.  Here are links to a few companies who purport be be experts on diminished value.  I don’t vouch for any of them.

http://www.autoloss.com/

http://www.collisionclaims.com/index.asp

http://www.mycarlostvalue.com/