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1.2.9 Misrepresentations Concerning Demonstrators, Program Cars, and Other Low-Mileage Vehicles

Car dealers may misrepresent low-mileage vehicles as demonstrators, executive cars, or program cars to justify the fact that the car is for sale at a dealership when such a car would ordinarily have a retail owner. In fact, the car may have a very different history—for example, use as a rental car, as a lemon, as a repossession, or as part of a fleet lease.

  • • The nature of such deception as to a car’s prior use and how it works is described in § 2.1.7, infra.
  • • How to investigate such deception as to a car’s prior use is examined in §§ 2.2–2.5, infra.
  • • MVICSA may be violated when the dealer does not provide title documentation for the buyer to sign, in an attempt to hide the fact that the vehicle has already been titled in the name of a purchaser for use, and is thus a used vehicle. See §§ 3.9.2.2–3.9.2.5, infra.
  • • Such deception as to a car’s prior use may involve common law fraud, which may lead to punitive damages. See Ch. 8, infra.
  • • Deception as to a car’s prior use may involve a breach of implied or express warranties, which may lead to revocation of acceptance, withholding of installment payments, and a claim for damages, even if the seller had no knowledge of the car’s prior history. See § 9.2, infra.
  • • A breach of an implied or written warranty in a deception as to a car’s prior use case may also lead to a Magnuson-Moss Warranty Act claim, which would provide for attorney fees. See § 9.2, infra.
  • • Probably the best way to challenge such deception as to a car’s prior use is under a state UDAP statute, which will often provide attorney fees, minimum, multiple, or punitive damages, and which may not require proof of the defendant’s intent or knowledge. See § 9.4, infra.
  • • Deception as to a car’s prior use may violate a state’s automobile dealer licensing statute or regulations, which will either provide a cause of action, leverage with the dealer, or an indirect cause of action under a UDAP, warranty, or fraud claim. See § 7.7, infra.
  • • If the seller claims ignorance of the vehicle’s prior use, rescission on the grounds of mistake may be available. See § 9.3, infra.
  • • How to litigate a case involving deception as to a car’s prior use is examined in Chapter 10, infra, including: advising the client, who to sue, what claims to plead, jurisdictional issues, res judicata, class actions, evidentiary issues (such as how to introduce evidence of the defendant’s misconduct against other consumers), trial of cases involving deception as to a car’s prior use, damage issues, settlements, attorney fees, and collecting judgments against the defendant, the defendant’s surety, related lenders, and auction companies.