Unfair and Deceptive Acts and Practices: 7.5.1 Introduction
New car sales pose a number of issues, covered in various places in NCLC treatises, as described in § 7.1, supra.
New car sales pose a number of issues, covered in various places in NCLC treatises, as described in § 7.1, supra.
The manufacturer, prior to delivery of a new vehicle to a dealer, must affix a sticker to the windshield or side window. The sticker must be clear, distinct and correct, and must include the make, model, and vehicle identification number, the final assembly point, the name and place of business of the intended dealer, and how the vehicle is to be transported to that address.444
New automobiles may be damaged in transit to the dealership or may be damaged at the dealership before the consumer takes over ownership. Manufacturers and dealers prefer to fix and repaint these vehicles and pass them off as new. The practice has become so common that about half the states have enacted laws regulating the practice, requiring disclosure of certain amounts or types of damage to the vehicle occurring before its first retail sale.
A dealer who steals rebates that manufacturers provide to the consumer is obviously committing a UDAP violation,479 in addition to a tort. The more difficult issue is how to discover and prove that the theft took place.
One interesting and unresolved question is whether it is a UDAP violation for automobile manufacturers to include in a new car sticker price a “destination charge” that is not based on actual transportation costs. Some manufacturers use a “destination charge” that is an average charge for all cars shipped that year, and not the actual charge to ship a particular car from the manufacturer to a particular destination. Lawsuits challenging this practice have been settled, but the terms are confidential.
A few state UDAP regulations establish standards concerning slow delivery of ordered cars.480 More generally, it may be a UDAP violation to continually stall a consumer and mislead the consumer into believing a car will be delivered when the dealer has no basis for this claim.481 Dealers cannot misrepresent that delivery will be soon when they know this will not happen.482 Nor can a dealer fail to order a model as promised, and then later try to sw
Secret warranties have been an automobile industry practice for many years. After the automobile’s written warranty expires, manufacturers may establish a policy to pay for repairs for certain widespread defects rather than deal with customer complaints on a case-by-case basis. Because these policies are communicated only to the company’s regional offices and sometimes to the dealers, but never to consumers, they are called “secret warranties.”
The failure of a manufacturer to make reasonable efforts to meet its warranty obligations should be a UDAP violation. Repeated unsuccessful attempts to repair a vehicle can be found to be a UDAP violation.497 The FTC has accepted a consent order from Jeep Eagle Corporation concerning the automobile manufacturer’s failure to perform warranty service promptly and its failure to successfully fix cars.498
There should be little question that automobile lease practices are within a UDAP statute’s scope—UDAP statutes invariably apply to consumer transactions, to practices within trade or commerce, or to sales or leases.503 Nor will there be issues of specific statutory exemptions for automobile dealers or lessors.504
While UDAP statutes are well-suited to challenge automobile leases, another theory should also be considered—that the dealer or lessor has engaged in unconscionable conduct in violation of UCC Article 2A. Every state except Louisiana has now enacted Uniform Commercial Code (UCC) Article 2A on Leases.
While a car lease is usually for a period of years, car rentals are generally daily or weekly. UDAP issues dealing with car rentals usually involve one of three issues: deceptive sales of collision damage waivers and insurance products, misrepresentations about the cost or nature of a rental or related charges, and excess charges to repair damage to the vehicle.
One of the most confusing areas for consumers involves the advisability to purchase insurance or collision damage waivers on car rentals. The very term collision damage waiver may be confusing. A major car rental company has been found liable for misrepresenting that “Collision Damage Waiver” (CDW) was insurance, additional coverage, and protection against negligence which would protect the renter against liability in the event of an accident. In fact, even with the CDW, the consumer could be liable for damages if the consumer was considered negligent.
Car rental companies will often assess charges in addition to advertised rental rates. The failure to disclose these charges can be deceptive.
When a rental car is damaged and the consumer is liable for the damage, the consumer is often at the rental company’s mercy as to how that liability is computed. A number of UDAP actions have challenged rental car company computation of repair charges that consumers must pay.
Car rental companies are beginning to experiment with global positioning systems (GPS) inserted into the car, allowing the company to track customer use. Over-aggressive use and failure to properly disclose these systems to the consumer can lead to UDAP violations. In one case, a rental car company automatically deducted $150 from a customer’s bank account each time the customer exceeded the speed limit. This was found to be a UDAP violation when this practice was not disclosed in advance and the money was withdrawn without notice.561
Automobile brokers may claim to assist both sellers and buyers in consumer-to-consumer sales or leases. The brokers may engage in deceptive conduct both to sellers (or lessors) and to buyers (or lessees).
Various automotive accessories are sold separate from the sale of the vehicle, either by a different seller or by the dealer after the initial sale. While the nature of these accessories changes over time, older UDAP precedent finding certain accessory sales unfair or deceptive should apply by analogy to more recent accessory sales practices.
Automobile repair and towing problems are major areas of consumer abuse. Another NCLC treatise discusses automobile warranty and automobile repair warranties in depth;574 this section analyzes UDAP approaches to automobile repair problems, and § 7.10.8, infra, analyzes UDAP precedent dealing with automobile towing.
State UDAP regulations and cases often require automobile repair shops to provide consumers with written price estimates and repair orders.576 In other states, a freestanding vehicle repair statute may set forth a similar requirement, enforceable through the UDAP statute.577 Backdating these documents or creating false ones is a UDAP violation.578 Providing a quote while not intending do the work for that price is a UDAP violation.
Consumers must be told that they have the right in most cases to keep, and in other cases to inspect, replaced parts.593 UDAP regulations and decisions in a number of states also indicate that automobile repair shops must provide invoices detailing all parts and labor supplied,594 identifying warranty work performed,595 disclosing the nature of the guarantee,596 and stating if used or rebuilt parts ar
It is deceptive to misrepresent which repairs and parts are covered by warranty or to claim falsely that repairs are necessary, that work has been done,601 or that a car is in a dangerous condition.602 Shops may not charge for unauthorized, unnecessary, or unperformed repairs,603 or alter vehicles so that additional repairs are required.604 A repair shop cannot take an engine apart without authorizati
If a repair shop promises to complete repairs within a certain time, it is a UDAP violation not to.613 Several states have UDAP regulations requiring that repairs be performed within twenty-four hours unless otherwise agreed upon.614 Even without an agreement as to the completion date, lengthy delay is a UDAP violation.615 When a repair shop changes ownership, the new owners cannot hide behind the sale agreement in failing to repair cars already at
Unless the repair shop discloses that it does not guarantee its work, if the shop returns the car as fixed, and in fact the problem has not been corrected, the shop must make additional repairs at no cost to the consumer.618 It is deceptive to perform the wrong repair job, thus failing to correct a problem, and then insist that the job was done correctly and that there will be an additional charge to perform additional repairs.619 New Mexico UDAP regulations find it deceptive for a repair shop t
Shops must return the buyer’s car if the buyer pays for all repairs the buyer authorized to be performed.622 Merchants may not wrongfully permit a lien to be filed against a car.623 Holding the car pursuant to a common law possessory mechanic’s lien after violating UDAP regulations is a deceptive and unfair practice.624 Similarly, it is a UDAP violation to assess storage fees without prior notification, when the consumer refuses to pay extra to obt