California Lemon Law Lawyer Blog

Two leading auto safety advocacy groups are asking the Federal Trade Commission to order Enterprise Rent-A-Car to start fixing vehicles with a safety recall before renting them to consumers.

What can happen when a rental car company fails to perform safety recalls can be tragic. Two sisters rented an Enterprise rental car that caught fire in the engine and then collided with a tractor-trailer. Enterprise admitted in a California court its failure to fix a Chrysler PT Cruiser was responsible for the deaths when the car crashed. A jury awarded $15 million in damages.

Consumers for Auto Reliability and Safety of Sacramento and the Center for Auto Safety of Washington, DC filed the request this week. Carol Houck, the mother of the two women who died, joined in the petition. Ms. Houck said she wanted the F.T.C. “to order that any safety recall not be discretionary,” adding: “They have to be pulled from the lot and fixed. It is not rocket science.”

Enterprise Rent-A-Car, Alamo and National Car Rental are each part of Enterprise Holdings, that has more than a third of all airport business in the U.S.

Christopher Jensen reports in the NY Times that auto manufacturers are working against proposals to provide more authority and resources to the NHTSA, the federal auto safety agency. The agency has long been hobbled with inadequate resources. The maxiumum fine that can be levied against manufacturers for violating the safety act is not sufficient to provide any deterrence. Bills in Congress would be enhance consumer auto safety.

In May 2010, co-counsel and this law firm filed a nationwide class action on behalf of owners of 2008 and 2009 Honda CBR 1000RR motorcycles. The complaint alleges that the engines burn oil at an extraordinary rate and that when owners complained to Honda, Honda took the position the problem does not exists.

The complaint alleges that Honda breached its factory warranty in violation of the California lemon law by failing to repair or replace the faulty engines. The complaint asks for the remedies as allowed by various consumer protection laws.

In June 2010, this law firm and co-counsel filed a nationwide class action alleging that the 2004 and 2005 Ford Freestar and Mercury Monterey models have defective transmissions, that the transmissions failure is manifested by a sudden loss of power, that repairs cost $1,000 to $3,000, and Ford typically has refused to cover any of the cost.
The complaint lists various remedies due affected owners.
The federal safety agency has received over 227 owner complaints of transmission failures in these models. Ford reported to the agency that it had received 2,791 warranty claims involving a loss of power.
The case is civil number 8:10-cv-01505-AW and is pending in the federal district court in Greenbelt, Maryland.

Toyota has extended the factory warranty on automatic transmissions and electronic control modules on about 250,000 model year 2001–3 RAV4s and is offering to reimburse the cost of repairs.

The extended warranty will cover the transmission and the electronic control module for 10 years or 150,000 miles (whichever comes first).

Owners who wishe to be reimbursed should send the repair bill, proof of payment and proof of ownership at the time of the repair to Toyota Motor Sales, Customer Experience Center (WC-10) 19001 South Western Avenue, Torrance, Calif., 90509.

Christopher Jensen has more details in his article on the NY Times Wheels blog.

This week, a Colorado judge sentenced a used car dealer to 53 years in prison for selling salvage cars with clean titles. A jury had convicted Camden Fortney of Camden Motors of 21 felony counts of defrauding customers by selling salvaged cars with clean titles.

As reported in the Colorado Sentinel newspaper, Fortney paid bribes of $100 to $500 to insurance adjusters with Colorado Casualty Insurance Company so he could buy salvaged vehicles. After repairs, the dealer sold the cars with clean titles. The insurance company repoted the scheme to the prosecutor and bought back 52 vehicles with fraudulent titles. Two adjustors were fined and put on probation.

In its June issue, Consumer Reports flatly advises against buying any service plan. One reason not to buy a service contract is that cars manufactured in the last five years have far fewer problems than in years past. In the article, CR pointed out that two-thirds of owners of five-year old cars reported no problems and serious repairs such as engine or transmission replacement, "were quite rare."

Dealers often sell contracts administered by third parties whose main role is to deny expensive claims. The fine print in the service contracts provides unreasonable conditions, which, if not met, lead to the administrator denying coverage. One favorite is that there is no coverage for defects that manifest in the first 30 days or 3,000 miles of ownership. Another is a requirement to change oil and transmission fluid more often than what is recommended by the manufacturer.

From what my clients have reported to me, the manufacturers' service plans such as the GM Protection Plan do not use dishonest tactics to deny claims, but given how reliable cars are today, the plans are probably not a good investment. Consumer Reports concurs on that point.

GM is running ads touting awards on 15 of its cars from Consumers Digest (not to be confused with Consumers Reports). What GM fails to disclose is that it paid Consumers Digest for the right to mention the awards in the ads. Don't you think the financial incentive had something to do with the awards in the first place?

According to the Wall Street Journal Consumers Digest typically asks auto makers $35,000 for the first award and $25,000 for each subsequent award.

J.D. Power & Associates announces quality awards based on surveys of thousands of new-car owners and auto makers pay as much as $300,000 for copies of a survey and the same amount to use the awards in ads. J.D. Power makes up enough awards in narrow categories (like best quality in first 30 days of ownership) so every auto maker gets awards thus maximizing income. The company's financial ties to the industry mean its reports are as meaningless as those of Consumers Digest.

Clarence Ditlow, director of the Center for Auto Safety said "When they start taking money from car companies, there is a conflict of interest,"

The Senate is debating financial reform bill and the car dealers want no part of it. The proposal, backed by the Obama administration, provides for a new consumer protection agency that would have jurisdiction over banks and other lenders. The car dealers, who arrange financing on most car purchases, are lenders.

Republican Sen Brownback has an amendment to exempt the car dealers. In opposing the amendment, consumer advocates point out that car dealers often take advantage of consumers in setting the terms of leases and purchases. Dealers, for example, sell cars only to later demand an additional down payment to complete the deal.

The Pentagon supports the bill because low-income military people are often victimized by shady car dealers that set up shop just outside many bases.

Continue reading "Car Dealers Afraid of New Federal Regulator" »

It usually takes a crisis to get Congress to act on important problems. Toyota created a crisis by failing to disclose its vehicles have a tendency to suddenly accelerate.

Key congressional committees are working on new laws that would strengthen auto safety. Under the bills being considered, all new cars must have brake override mechanisms to stop the cars even when the accelerator is engaged and the cars must have black boxes to record data just before and after a crash.

The federal safety agency administrator is proposing that Congress give the agency the ability to order immediate recalls if consumers are in danger. Currently, a federally required recall is a lengthy and cumbersome process, meaning virtually all recalls are voluntary actions by the carmakers.

Concurrently, Sen Barbara Boxer has introduced a bill that would bar federal safety agency employees who go to work for auto manufacturers from lobbying the agency for at least three years. Late last year, Toyota employees, who recently worked for the agency, successfully lobbied the agency to narrow the scope of a recall.

The NY TImes does its usual fine job of covering these developments: http://www.nytimes.com/2010/05/07/business/07auto.html?pagewanted=1&hp

Consumer Reports rarely comes out with a "don't buy" on a new vehicle, but it is saying that with respect to a Lexus SUV, the 2010 Lexus GX 460. The problem is that when pushed to its limits on CR's track’s handling course, the rear of the GX slid out until the vehicle was almost sideways before the electronic stability control system was able to regain control. This, CR explains, could lead to a rollover accident, which could cause serious injury or death.

Continue reading "Consumer Reports: Don't Buy the 2010 Lexus GX 460 SUV" »

The typical new car has 20 million lines of code with as many as 2,000 bugs according to Dr Keith Armstrong, an electrical engineer. In a recent press conference hosted by ToyotaTruth.com, he and other experts opined that under certain conditions, one or more bugs may cause a car to suddenly accelerate. But finding the bug after the fact may be almost impossible.

One problem is that each car manufacturer considers its code proprietary ruling out collaborative efforts to improve the safety of the computerized controls on each manufacturer's code.

Continue reading "Hidden Software Bugs May Cause Sudden Acceleration" »