California Lemon Law Lawyer Blog

Until this week, Chrysler said it would not recall older Jeep models that NHTSA asked them to recall. Clarence Ditlow of the Center for Auto Safety had asked Fiat and Chrysler to recall Jeep models with gas tanks located behind the rear axle because they tend to burst into flames in rear impact collisions. The Center's letter explains the sorry history. There have been 349 FATAL fire crashes of 1993-2004 Jeep Grand Cherokees, 1993-2001 Jeep Cherokees and 2002-2007 Jeep Libertys that have resulted in 478 deaths, of which at least 157 were deaths due to fire.

Under pressure, Chrysler agreed to a recall. The fix involves installation of a trailer hitch to help absorb impact to the rear of the Jeep. The NY Times report is here.

Clarence Ditlow, interviewed by Automotive News, said the fix would be less than $100 per vehicle.

Jenelle Embrey who witnessed a fatal Jeep crash where a boy was rescued only to watch his mother burn to death in a 1998 Jeep Grand Cherokee has started an online petition to recall the Jeeps.
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Since Chrysler moved the gas tanks from behind the rear axle in 2005 for the Grand Cherokee and 2008 for the Liberty there has not been a single confirmed death in those later models.

The federal safety agency opened an investigation in June 2012, but so far no recall has resulted.

NHTSA, the federal safety agency, has opened an investigation of complaints by owners of 2011-2013 Ford F-150 trucks with the 3.5L GTDI engine. This engine is the V-6 EcoBoost engine that Ford advertises so heavily on TV.

Owners have complained of unexpected sharp reductions in power during hard acceleration at highway speeds, such as passing other vehicles. Ford is well aware of the problem having issued three technical service bulletins to its dealers.

This investigation and the complaints are probably of some concern to Ford since the F-150 is Ford's best selling vehicle and the models being investigated number about 400,000.

Yesterday, the California Legislature Senate Judiciary Committee voted 4-2 to pass first-in-the-nation legislation to bar used car dealers from selling, renting, leasing, loaning, or otherwise transferring ownership of used vehicles that have federal safety recall repairs pending, until they're fixed.

A single mom from Kansas testified about her horrific experience with a Ford Windstar that was being recalled because the axle was prone to breaking. The dealer who sold her the minivan kept assuring her it was safe. Then when she was driving with her boyfriend on the freeway, going about 65 mph, the axle broke, she lost steering, and it flipped. Seat belts saved them from serious injury.

The next day, she went online to Ford's website and entered the VIN and found out the van had two outstanding safety recalls --including for the axle breaking. She also confirmed the recall status by calling the local Ford dealer and obtaining a Carfax report. The dealer could have checked any of those sources, but failed to do so, putting her life, and her family's lives, and the lives of others on the roads, in jeopardy.

A Sacramento TV station has an video on the bill and witnesses who testified in support.

The SF Chronicle has a fine report on the car-title loan business in California. Car-title loans" aka auto-equity loans were taken out by 38,000 people in 2011 in California.

Any owner with equity in a car (meaning they own it outright or owe just a small amount) can get a short-term loan for up to half of the car's value by pledging their car's title to secure the loan.

The cash comes with Mafia style interest rates between 80 to 130% a year plus extra fees. The loan companies risk next to nothing because as soon as someone falls behind in payments, the company reposses the car and sells it at an auction. The loan company pays itself out of the proceeds of the sale of the car.

These loans are so pernicious that 31 states have outlawed car-title loans. Unfortunately, the California Financial Code allows unlimited interest on some secured loans between $2,500 and $5,000.

"Car lenders say they have to charge so much because they're high-risk loans," said Rosemary Shahan, president of nonprofit advocacy group Consumers for Auto Reliability and Safety. "There's no risk. They just show up and take your car if you don't pay. They can resell it to recoup their costs."

What's particularly insidious, Shahan said, is that borrowers will make many sacrifices to keep making payments on the high-interest loans.

"People will hang on for dear life to their car because it's their lifeline to get to work, medical appointments, school," she said. In many cases, people who took out the loans would have been better off simply selling their cars and buying less-expensive ones, she said.

My former law partner, Assemblyman Roger Dickinson, D-Sacramento, has been holding hearings on auto-title loans. His bill to limit interest rates to 36% was killed by industry lobbying and legislators who care more about special interests than consumer protection.

Dickinson plans to continue investigating the industry and will introduce legislation next year to rein in interest rates and fees.

More information: http://tinyurl.com/cvbjlna

An East Coast law firm has filed an antitrust and monopolization case against Carfax alleging it hs become a monopoly in the business of issuing vehicle history reports (VHR) with a 90% share of the market. The complaint alleges Carfax has exclusive agreements with manufacturers as well as vehicle merchandising sites like Autotrader.com and Cars.com.

"Carfax has unlawfully acquired and maintained its market power in VHRs through exclusivity agreements with numerous major players in the auto industry," the complaint reads, citing how AutoTrader.com and Cars.com include hyperlinks to Carfax reports but exclude reports from other VHR providers.

"Carfax has stigmatized any listing without such a link in the eyes of consumers who infer that the absence means that the car has a blemished history," the complaint states.

The complaint lists 50 dealers from New York, 29 from New Jersey, and a handful of operators from Connecticut, Arizona, Maryland, Washington, Wisconsin, Vermont, Delaware, Florida, Virginia, California, Massachusetts, Illinois, Montana, Texas and Pennsylvania.

The action is a so-called mass action suit. The lead attorney said it was the best option because it allows the affected dealers to "level the playing field" with such a large entity like Carfax. And if successful in court, each dealer would be given an individual hearing to argue for personal damages incurred under the mass action.

Dealers spend anywhere from $10,000 to "multiple tens of thousands of dollars per year" in order to provide customers with free Carfax reports, which the complaint claims are "inflated prices" given what other VHR providers charge dealers.

"While we can't comment on pending litigation or the specific terms of our agreement with CARFAX, what I can tell you is that vehicle history reports are an important part of the shopping experience. Cars.com launched vehicle history reports on our site in 2005 in response to consumer demand. It is one of many data points we bring into our site to give shoppers access to as much information as possible about a vehicle in which they are interested, ultimately helping them make more informed buying decisions."

The suit also alleges that car 37 of the 40 major certified pre-owned used car programs managed by the car manufacturers have exclusive agreements with Carfax under which selling dealers must buy Carfax reports to show the customers.

Chris Jensen in the NY Times reports on a FTC proposal to revise the familiar Buyer's Guide that the law requires be affixed to all used cars offered for sale by dealers.

The FTC's proposed revision states that “The dealer won’t pay for any repairs. The dealer is not responsible for any repairs, regardless of what anybody tells you.” Consumer groups and some Attorneys General are saying this is wrong as a matter of law and would only help shield lying dealers from liability.

California law and the law in most states provides that a dealer can be held responsible for repairs to a vehicle if the dealer makes false statements to a consumer about the vehicle’s condition or title/damage history.

A FTC representative said they may reconsider in light of the consumer groups' objections.

NBC New did an undercover investigation of used cars being sold with open safety recalls. NBC News interviewed Rosemary Shahan of CARS, a consumer advocate, who is working on legislation to require dealers to perform recalls before selling the car. Safety recalls are as you would guess recalls for defects that could cause a serious collision.

Owners of some 2011 to 2013 Prius models are reporting that the windshields distort nighttime light sources so that light sources are tripled. The effect can be disorienting to the driver. Owners have commented on this matter on such forums as www.PriusChat.com.

Owners who have complained to the Toyota get no help; Toyota has no fix for this problem. This week, I filed a lemon law case against Toyota on behalf of a Prius owner who tried, without success, to get Toyota to remedy the problem. Owners, including my client, have posted videos illustrating the windshields’ effects on You Tube. If you search You Tube for “Prius Windshields Triples Light Sources” and you will find the videos. My client and another owner are featuring in a Channel 7 news report that ran on February 26, 2013. (Ignore the Toyota ad that runs before the video!).

One theory as to why this is happening is that Toyota’s windshield manufacturer, reportedly AGC Asahi Glass, added a glazing on the windshield to reduce glare that, as a side effect, is causing the problem. Toyota so far won’t comment on the problem.

For reasons unknown, the Federal Trade Commission is in the process of updating the used car window sticker, the one that discloses if a warranty comes with the car. As a NBC consumer report explains, consumer advocates see it as a giant step backwards.

“The FTC really blew it,” said Rosemary Shahan, founder and president of Consumers for Auto Reliability and Safety (CARS). “This industry has a real problem and the proposed rule changes do not address that.”

Under the proposed new Buyer’s Guide buyers would be advised to check the vehicle’s history via a federal database and to check a FTC website (which is not even created) that would have information about vehicle history reports.

Consumer groups and the attorneys general in 40 states are saying that dealers should disclose significant vehicle history information if they have it.

“We think this a lost opportunity,” said Bill Brach who is with the association of attorney generals. “When it comes to a used vehicle, nothing is more important for a consumer to know than its history. Was it previously wrecked, flooded, or a lemon law buyback?”

A dealer association spokesman tried to justify the new rule with this bit of double talk: “It does not help consumers to require dealers to disclose information about a vehicle that may not be available to a dealer or that may not be accurate.” But no one is asking dealers to disclose what they don't know; they are asking dealers to disclose what they do know or should know.

The FTC is siding with the dealers. Commission staff members who wrote the proposed new language told me they don’t think having vehicle history information on the Buyer’s Guide is workable or necessary. Whose side are they on?

Consumer Reports is still the best source of unbiased information on what cars to buy. CR is also a good source for a list of what cars not to buy. CR has published its worst cars of 2012 list. The list is in ascending rank order, starting with the lowest-scoring vehicle in CR's ratings.

Jeep Wrangler Unlimited: The latest Wrangler Unlimited earned just 20 out of 100 points. Bad demerits are fuel economy (17 mpg), ride, handling, braking, wind noise, access, driving position, seat comfort, fit and finish, visibility, fuel economy, and reliability. That covers just about everything.

Jeep Liberty is now discontinued, but it scored worse than its predecessor and is the lowest-rated vehicle in its category. CR faults Its ride, clumsy handling, and a noisy engine that guzzles gas.The interior is uncomfortable and has a high depreciation rate.

Smart ForTwo: CR says this car is not Smart. The ForTwo gets 39 mpg but requires premium fuel; the 1.0-liter engine is OK in urban traffic, but is seriously challenged on highways. It has a harsh ride, clumsy handling, and a jerky transmission.

2012-Scion iQ. CR says it is slow, noisy, and uncomfortable with tiny rear seats.

Mitsubishi iMIEV: This is the cheapest electric, but it comes with a jarring ride and lack of handling agility. It has a short range and uncomfortable seats. The heater is inadequate in cold weather!

Chevrolet Spark: This is a new model designed for city driving. But the Spark measures 20 inches shorter than a Honda Fit meaning it is very small. The engine has only 84-hp and the transmission is jerky. The ride is stiff and jittery,

Toyota-FJ-Cruiser. CR notes this vehicle has very poor visibility with access to the cabin difficult, poor handling, and a jiggly ride.

Chevrolet Colorado/GMC Canyon: These are twin, old models with poor reliability, owner satisfaction, fuel economy, ride quality, accident avoidance, and crash-test protection.

Toyota Yaris: Handling is ho-hum and acceleration is slow. The car is noisy, with a choppy ride. Seating is uncomfortable. The radio is awkward.

Dodge Avenger: This is an outdated design that trails other midsized sedans. Handling, the ride, and controls are below par.

The LA Times reports that Hurricane Sandy destroyed and damaged so many cars that car prices will increase. An estimated 250,000 new and used cars were flooded taking them off the market! One Honda dealer told me he lost 600 new units. Fisker lost $34 million in inventory. Toyota lost 4,500 new vehicles. Honda lost over 3,000 new vehicles sitting on dealer lots and in storage.

The Times article also discusses the problem of dealers selling flood cars without having been properly repaired and without disclosure.The flooded by Superstorm Sandy on the East Coast will drive up used-car prices, even as far away as California.

Some dealers say prices could increase $700 to $1,000 on the typical used car especially in the flood zone area.

Consumer advocate Rosemary Shahan said that "Cars that have been submerged in saltwater, and contaminated by bacteria and various toxins, will soon start to appear all over the country, even in states far from the center of the storm." Ms Shahan said some Nissan vehicles flooded by Hurricane Katrina were auctioned as new here in California.

Buyers should inspect cars for signs of flood damage, including engines that hesitate or run roughly, musty interior smells or signs of silt residue or premature rust and check vehicle histories using www.add123.com, Carfax.com or Autocheck.com.

The American Suzuki Motor Corporation has been a minor player in the market. Last week, it announced it had filed for bankruptcy protection and said it would cease selling automobiles in the United States as part of a plan to reorganize its business.

The SX4 sedan is among the vehicles Suzuki will stop selling in the United States, but it will continue to sell motorcycles and all-terrain vehicles.

The bankruptcy filing indicates the company is leaving thousands of creditors owed over $100 million. They company did say car warranties and buyback agreements would be honored.