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California Car Buyers Bill of Rights: A Sour Deal for Consumers

By Rosemary Shahan,
President
Consumers for Auto Reliability and Safety

California’s consumers are getting a sour deal under the Car Buyers Bill of Rights, according a report we released, “Looking Under the Hood”,. The new law made headlines nationwide when it took effect last July 1. This is the first major report evaluating it.

Some of the tires on the new law have already gone flat.

The law requires dealers to offer used car buyers at least a two-day return option for used vehicles priced below $40,000. But dealers have made the two-day option into a trap for consumers. To get the option, dealers demand that buyers sign new, standardized forms that give the dealers “sole discretion” to decide whether a vehicle is eligible to be returned, or not.

“This is a ‘Catch-22’ scenario for car buyers,” said Norma Garcia, Senior Attorney, Consumers Union. “Even if you pay extra for the return option because you don’t trust the dealer, the dealer still gets to decide if you can get your refund, or not.” That defeats the whole purpose of the return option. Some experts believe that the forms violate the law.

Auto dealers also fail to provide disclosures in languages commonly used by millions of Californians when they negotiate for a car. California law requires dealers to provide contracts in Spanish, Chinese, Tagalog, Vietnamese, and Korean, so they can understand the terms of the contract before they sign. However, a crucial standardized form regarding the return option is not even available in languages other than English. According to legislative findings in AB 309, more than 12 million Californians speak languages other than English in their homes.

We are joined in our conclusions by many consumer organizations.

“Many dealerships are drawing up English-only contracts that were negotiated by the buyer in another language. These contracts are illegal in California because they take advantage of consumers who may not understand exactly what they're signing," said Joe Ridout, spokesman for the non-profit Consumer Action, based in San Francisco and Los Angeles. Consumer Action provides a hotline for consumers in English, Spanish, and Chinese.

"Some car dealers and their lawyers are playing a new game called 'How to get around the intentions of the Car Buyer's Bill of Rights,'" said Steve Blackledge, legislative director for CALPIRG. "The new research by CARS and Consumer Action shows that dealers are violating both the law and the spirit of the law, and collectively we're going to shine a light on their misdeeds until they stop."

A low-income consumer who decided not to get the return option because he could not afford the extra $75, plus the restocking fee, recounted his nightmarish experience with a van equipped with an engine that blew up within approximately 20 miles of the dealership where he bought it.

A consumer from Marina Del Rey described her ordeal attempting to get relief after a dealership sold her and her husband a used Toyota, while giving them far less than agreed for their traded-in truck and charging them over $1900 for an unwanted service contract. She said that the dealership failed to provide a separate disclosure for the price for the service contract, as required by the Car Buyers Bill of Rights. They finally succeeded in getting more for their trade-in and canceling the service contract.

The key provisions of the Car Buyers Bill of Rights are:

• Dealers must offer at least a two-day return option for purchasers of used vehicles priced below $40,000 (with some exceptions), including vehicles sold “as-is”

• Dealers are prohibited from engaging in “loan packing” of add-ons commonly “packed” into loans, while deceiving customers about the cost. :

• Dealers must provide detailed disclosures about the price to purchase items commonly deceptively “packed” into auto loans, including anti-theft devices, GAP insurance, and extended service contracts

• Dealers must disclose consumers’ credit scores, in writing

• The amount dealers may be compensated in return for raising the interest rate on auto loans is capped at 2.5% for loans up to 60 months, and 2% for longer loans

• Dealers are prohibited from selling lemon law buybacks, vehicles with frame damage, or other problem vehicles as “certified” used cars

For more information check out the Consumers for Auto Safety and Reliability (CARS) site and read our report.

Based on an inquiry made on March 5, 2007 to Reynolds & Reynolds, which prints and distributes standardized forms to California auto dealers. Lawmakers delayed the effective date of the Car Buyers Bill of Rights an extra six months, from the normal effective date of January 1, 2006 until July 1, 2006, in order to allow dealers added time to make sure they had the correct forms and training needed to comply with the law. View document as pdf file.

For an interesting explanation about loan packing practices and prosecutions in CA, see: F&I Newsletter, Feb. 7, 2007.

Rosemary Shahan, President of Consumers for Auto Reliability and Safety, is a nationally renowned consumer advocate who has won many victories for car buyers. She is best known for initiating California’s landmark auto “lemon law” and fighting for the installation of air bags in all cars.

She has repeatedly testified before Congress on auto safety issues. She has received many prestigious awards from consumer groups in recognition for her work and is widely quoted by national media as an expert on auto issues. Shahan was closely involved in the negotiations over the Car Buyers Bill of Rights, which is a watered-down version of a popular ballot initiative CARS proposed.

Posted on April 06, 2007

Comments

Based on this article , Is a dealer suppose to be able to speak and read five languages?

I think I know an average amount of people at my age of 49 , and I do not know of any people who can speak and read five languages.

From my view , this requirement is extreme and puts an undo burden on the dealer/business.

Posted by: Elmoe at April 6, 2007 01:42 PM

Altough some of the new legislation makes sense, the Automotive sales business is the most heavily regulated and taxed industry in the Nation. It is no wonder car dealers need to find new ways to produce income, afterall...Today almost all consumers are armed with wholesale book values, and invoice pricing, due to the internet. A good fair deal is a thing of the past for the dealer, as consumers pay an average of a few hundred bucks over cost for most new cars, and want to get retail book value for thier trade-in. This makes it difficult for the average honest dealer to survive. This "Bill of Rights" should be labeled "Dont buy a car you are not sure of, and buy a warranty if this is the case". Unethical practices are used by very few dealers, and as with anything, there should be a "buyer beware" attitude. Go to an established NEW CAR dealer to do business, stay away from "Joe's Corner Car Lot". Buy a warranty with a used car. Do your research on the car, the dealer, etc...But people...this is business.
Be fair with the dealer so he can stay in business to service your investment, and be there for you in the future. Stop whining, be fair, and see what happens. Your buying experience and the overall deal will be much better. Dont treat the car dealer any different than your appliance store owner or dry cleaner. Belive me, thier return on investment is much greater than the average new car dealer, and thier risk/reward equasion much easier. Ask yourself this question...
"If there were no new car dealers left (due to over-regulation and so called consumer protection laws), who would you buy your next car from?"
Answer: "Joe's Corner Car Lot".

Posted by: zigy at November 28, 2007 10:25 AM

Are there any laws or agencies to protect consumers from a private party sales. I purchased a car from a private party for $20,000.00. Making a down payment of $1,250. and making monthly payments to the private party for $400.each month. This man was to hold the title until I paid in full.I totaled my canceled checks and I ask for the title. He said I still owed him and filed a small claims action.Before we went to court he came to my business A police Officer came in and said he was here to let the man take my car. I protested and showed my canceled checks totaling $20,000. and stated this was a civil matter and the courts would decide how to handle the difference.The officer disagreed. I went to my car and tried to drive away but the tow truck driver hooked up my car and proceeded to drag the car with me in it with the tires screeching and smoking. All my business neighbors came out of there offices This was so Violating I am still crying. My CPA came to my business to offer money to the man because I needed my car I am a single parent. I was being Tried and convicted in the parking lot. The man refused and The Officer ordered me out of my car or he would Arrest me.When I walked by the man He laughed and said get an Attorney. When We went to court The man was sited for violating civil code 2981 not a secured creditor, not having a right to take my car . The Judge would have ordered him to give me my car back but he donated it to a Church. Now I am out the money and the car.I went to see an Attorney who did not help me at all everything She had me file got rejected or dismissed the court did not know what it was for She took my money and did not help.I am still looking for answers. on how to make this wrong A right. This man had a Auto Leasing Company In Ohio. He knew what he was doing. Can anyone help me resolve this.

Posted by: Teresa at October 2, 2008 03:20 AM

Posted by: Teresa at October 2, 2008 03:21 AM

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