California Lemon Law Lawyer Blog

Carfax.com and Experian's Autocheck.com sell vehicle histories for about $35 and $25 per search, respectively. Anyone wanting to research a car history should know there are now sites with more complete histories offered at much lower prices. One is Auto Data Direct, Inc., www.add123.com, and the other is CARCO Group, Inc., www.autotitleinfo.com. These sites charge only $4.95 and $3.50 per VIN search, respectively.

These sites have information collected by the U.S. Department of Justice pursuant to the National Motor Vehicle Title Information System (NMVTIS). Under NMVTIS, insurers and salvage pools from all 50 states are required to report when they total vehicles. The system has over 9 million salvage vehicle records

eBay Motors states over 3 million vehicles have been sold through its site. No doubt the vast majority of buyers were satisfied, but attorneys in this office have talked to buyers who were defrauded by sellers using eBay. For example, one buyer found that the classic car he bought from an Arizona car dealer was rusted out. About the time the lawsuit was filed, the dealer went out of business. eBay itself and Paypal offer little or no protection for car buyers.

In an effort to help protect buyers, eBay has now announced that each buyer can get a free vehicle history report provided by Experian’s AutoCheck. This is a measure of protection, but AutoCheck reports do not have complete histories of all accidents or other adverse events such as water intrusion.

Gov Schwarzenegger signed two car buyer protection bills. Given the fact his own administration had publicly opposed them both, this is a stunning reversal. Senate Bill 95(Corbett) will require auto dealers to pay off liens on cars that were traded in with negative equity, before they can sell or transfer them -- which usually happens within a day or two -- or within 21 days (if they keep them that long). The auto dealers and their trade associations were hugely opposed to this bill -- especially the provision for pay-offs prior to resale.

Assembly Bill 647 (Yamada) will require the CA DMV to allow public access to the
national database of totaled/wrecked/stolen autos (NMVTIS), and to comply with the federal Anti-Car Theft Act.

Both bills were sponsored by CARS, a non-profit run by Rosemary Shahan. Rosemary was in large part responsible for the passage of these bills into law.

Car dealers routinely accept trade-in cars promising to pay off the existing loan as part of the deal. But what happens when the dealer goes out of business without paying off the loan? That leaves the consumer owing money on the trade-in with the finance company looks to the consumer to keep paying. With many car dealers going out of business in the past year, consumers are stuck with loan payments on a car they no longer own. Some folks end up with two car payments--one on the trade-in and one on the car they bought.

A bill of the California Legislature, SB 95, would help deter this abuse and would add protection to victims. The bill would raise the dealer bond to $100,000 and would add a requirement that dealers pay off loans on trade-ins within a short time period.

KABOB client Stefanie Feliciano is a typical of persons caught in this scenario. A dealer failed to pay off the loan on a trade-in car leaving her with the loan obligation. This weekend a Sacramento TV station, KCRA, featured a story and video on Ms Feliciano and the bill, SB 95, accessible at http://www.kcra.com/money/19553191/detail.html.

On January 30, 2009, the federal safety agency will make available a national database on stolen and totaled (salvage) vehicles. Consumers may go to www.nmvtis.gov for information on how to use the system. At this time, the database has information from only 27 states that cover 73% of U.S. vehicles. A federal law requires all states to participate by 2010.

Starting March 30, 2009, salvage yards, junk yards, and insurance companies must provide information on junked cars for inclusion in the database.

Shamefully, California, New York and Pennslyvania officials are balking at participating. Observers say it may be because those states get revenue from supplying vehicle information to private databases (presumably Carfax and AutoCheck). Presumably this will get worked out in time.

Three consumer advocacy groups had to sue the U.S. Department of Justice to get this done. Rosemary Shahan of Citizens for Auto Reliability and Safety led the way.

As most car buyers know, Carfax.com sells auto histories. Carfax' website tells consumers, "Don't buy a used car without CARFAX Vehicle History Reports! Order a CARFAX Vehicle History Report. . . the first step to protecting yourself against buying used cars with costly hidden problems. CARFAX searches its nationwide database and provides a detailed vehicle history report in seconds."

Carfax' advertising is deceptive because the reports often do include the most important information a car buyer should know--whether the car has been in a serious collision.

Reporters at a Vancouver, B.C. TV station just completed an investigative report on the unreliability of Carfax reports. The report gives examples of cars that had been in severe accidents that had "clean" Carfax reports. Car dealers use the Carfax reports to convince buyers the vehicles had never been hit. Car dealers typically buy cars at auto auctions where any frame damage is usually disclosed. Car dealers can determine if cars have been in accidents by inspecting for after-market components and unrepaired damage.

Buyers often trade in cars with outstanding loans on the the dealer's promise it will pay off the loan. Honest dealers promptly do so, but a small number of dishonest dealers do not pay off the loan. When that happens, the lien-holder finance company usually finds the car and reposses it leaving the consumer out the down payment, payments, and no car. Alternatively, the car is not repossessed, but the buyer cannot get clear title because of the lien.

Dealers engaging in this type of fraud are often about to go out of business. When DMV finds out about the practice, DMV revokes their license to sell cars. The dealers usually disappear.

This law firm has represented a number of clients who have been the victim of these practices.
On January 4, 2009, the New York Times reported on such dealer practices. The article quotes Bryan Kemnitzer of this firm who represents a consumer who bought a car from Vacaville Ford with a lien on it resulting in her inability to register it with DMV.

On January 7, 2009, the San Francisco Chronicle reported on the same practices quoting victim Stephanie Feliciano, Roseville, CA. Feliciano traded in a Camry to a Sacramento dealer who failed to pay off the loan on the Camry. Mark Anderson of this law firm represents her in a pending action against the dealer bond company.

All California car dealers must post a $50,000 bond to protect consumers who are defrauded by car dealers. If the buyer obtained a new loan that was arranged by the selling dealer (on top of the existing loan), the buyer may sue the new lien holder for damages since the new finance company is subject to the same claims the buyer has against the dealer.

High-tech digital odometers are making it easy to chat unsuspecting used car buyers according to a USA Today article. Unscrupulous sellers can obtain the software or services from the Internet to reset the odometers. Old style mechanical odometers could be reset, but it was fairly easy to detect that the tampering had taken place.

A NHTSA study six years ago estimated that tampered odometers could found on 450,000 cars a year costing consumers $1 billion annually. State and federal prosecutors continue to bring charges against car wholesalers and dealers for odometer fraud.

Bay Area Checkbook has published a survey of 495 auto repair shops in the San Francisco Bay Area. It found plenty of good and bad shops--195 shops were rated superior for overall performance by 90% or more of their customers while 54 shops were rated inferior, the lowest rating, by at least 1/4 of their customers. The leading complaint was work not performed properly (39% of complaints) followed by poor customer service, high costs, performed unnecessary work, and slow turnaround.

Checkbook subscriptions are only $34 per year. Checkbook is a non-profit well worth our support. Checkbook uses survey techniques to rate vendors and service providers of many descriptions.

In good news for consumers, the California DMV announced that it would join the National Motor Vehicle Titling Information System (NMVTIS) in 2008. Being part of the system allows the state to instantly verify the validity of out-of-state ownership documents, including the VIN, odometer, and any damage history before issuing a California title. Participation will be an enormous help to law enforcement going after vehicle theft and fraud and it will allow consumers to check a current title and odometer readings.

California had foolishly refused to join NMVTIS saying is own computer system had to be updated first. Now, thanks to excellent lobbying by consumer advocate Rosemary Shahan of the non-profit group Consumers for Auto Reliability and Safety, DMV has finally done the right thing. Rosemary reports that DMV will let a contract to Carfax.com or AutoCheck.com (an Experian company) to make the data accessible to consumers over the Internet. This development is truly a great advance in providing vital data to consumers shopping for used cars and trucks.

Thousands of Hurricane Katrina cars are being sold in the used car market. Many vehicles were written off as total losses by the insurance companies. Many have been repaired to a point, but there may be hidden damage. You should carefully inspect (or better yet hire professionals) to check the car before you buy. Look for silt in the spare tire area; take the door apart and look for mud inside the door panel. Before you buy, go to National Insurance Bureau Crime Bureau, which has a list of flood cars by VIN number. (Go to the Theft and Fraud Awareness page).

A new California law prohibits car dealers from selling used cars as "certified" if they had been wrecked or in a flood unless properly repaired or the odometer was rolled back. Certified cars may not be sold "as is."Under the new law, cars damaged in a wreck or flood and not properly repaired cannot be sold as certified. If the repairs did not make the car safe or if the accident or flood damage, in spite of the repairs, substantially impaired the use of the vehicle, it cannot be sold as certified. Previously, wrecked and poorly repaired cars were sometimes sold as "certified."

Beginning with used car sales in July 2006, California used car buyers can pay a fee to obtain a two-day right to return the car for any reason. The fee varies from $75 to $400 depending on the price of the car. Buyers of older vehicles especially are advised to pay the fee for this protection. There are of course restrictions on the return.The buyer can return the vehicle for any reason. If the car breaks down, the buyer can still return it. However, the right to undo the deal has many restrictions, as you would imagine: a) the buyer can only put up to 250 miles on the vehicle before turning it in and b) the buyer has to pay a “restocking fee” (from $175 to $500) depending on the price of the vehicle. However, in turning in the vehicle, the buyer gets a credit for the fee paid for the two-day cancellation option. This means the net cost of returning the vehicle would be $100 to $200 depending on the purchase price of the vehicle.
Cars or trucks costing over $40,000 are not covered nor are RVs or motorcycles.
If the buyer had a trade-in vehicle, the dealer is obligated to give it back. One problem with the new law is that the dealer does not have to return the vehicle under the third day after the purchase of the car being returned. So the buyer cancels on day 2 and turns in the car and is then stuck without his or her trade-in until day 3. This means the buyer may have no transportation for a day.
If the dealer sold the trade-in in the two day period, the dealer must pay the buyer either the price the dealer agreed to pay for the trade-in or retail market value, whichever is higher.
Once a vehicle is turned back in, the dealer has to cancel any car loan it arranged.

Useful information on the history of used cars and trucks is available at www.carfax.com, www.autocheck.com, and www.Info4cars.com. Buyers are advised to always check a car or truck's history (all you need is the Vehicle Identification Number) before buying. Carfax and the other services use DMV information to warn you if you are buying, for example, a "lemon buyback."