Good news. The Financial Crimes Enforcement Network, part of the U.S. Department of Treasury, reports after a recent study that conscientious automobile dealer staff and finance companies are helping to reduce fraudulent vehicle loans obtained through identity theft. Although suspected cases of identity theft are on the rise since 2004, fraudulent auto loans due to identity theft appear to be declining significantly. The SCE and attributes the significant decline to the new Red Flag Rules of the Fair Credit Reporting Act to deal with identity theft. The study notes that credit card fraud continues to be the biggest problem in terms of identity theft crimes. The full report is available at www.fincen.gov/news_room/nr/html/20101015.html, and it is titled "Identity Theft-Trends, Patterns, and Typologies Reported in Suspicious Activity Reports (SARs) Filed by Depository Institutions."
A car dealer is obligated under Wisconsin law to satisfy a car lien on a trade-in within 14 days of taking delivery, where the dealer accepts a vehicle in trade subject to an outstanding lien and the dealer has agreed in the purchase contract to pay a stated amount. See Wis. Admin. Code Trans 139.07.
Wisconsin law provides that any contingent sale of a car or other motor vehicle that the car dealer makes contingent on the consumer getting his or her own financing is rescinded, or undone, by law, if the consumer does not provide evidence to the dealer that he or she has financing within a time established in the purchase contract. See Wis. Admin. Code Trans 139.05(2). Also, the car dealer may not charge any fee or penalty to the consumer in connection with the rescinded deal. See Wis. Admin. Code Trans 139.05(3).
A used car dealer or sales person must make certain disclosures to prospective retail buyers of used cars and other motor vehicles before a purchase contract is signed. See Wis. Admin. Code Trans 139.04(4)-(6). The used car dealer must use Wisconsin’s “Wisconsin Buyers Guide,” a form document proscribed by Wis. Admin. Code Trans 139.04(6), which must be displayed within the car and readable from the outside. The dealer must give this guide to the consumer to keep upon purchase of the car. The Buyers Guide requires the car dealer to inform consumers about certain conditions of the used car so that the consumer is informed of these matters when considering whether to buy the car.
Under Wisconsin law, Wis. Admin. Code Trans 139.03(10), a car dealer may not advertise a car or type of car for sale unless it has available, for delivery within a reasonable time, a quantity of the advertised cars sufficient to meet “reasonably anticipated demands,” unless the advertisement itself clearly states the quantity available or time of delivery.
The Magnuson Moss Warranty Act, Chapter 50 to Title 15 of the U.S. Code, prohibits a car dealer from disclaiming implied warranties when the dealer offers a qualifying written warranty or enters into a service contract with the buyer. The act makes any disclaimer of implied warranties ineffective when the act applies. So an “as is” purchase agreement cannot waive implied warranties when the consumer buys a service contract from the dealer or the dealer provides a written warranty. Two implied warranties, for example, are (1) the warranty that the car is fit for its ordinary purpose (merchantability) and (2) that a car is fit for a particular purpose when the consumer makes the dealer aware that the car must fit that purpose.
If a car dealer sells you a car but does not give you clear title because of a prior unsatisfied lien or perhaps because the car was a prior stolen vehicle with duplicate VIN (vehicle identification) numbers, you may have a claim for fraud or a breach of warranty. A warrant of title from a dealer cannot be disclaimed with an “as is” type of purchase agreement. The Uniform Commercial Code section 2-312 addresses this issue, as does the Magnuson-Moss act at Chapter 50, Title 15 of the U.S. Code (15 USC 2301, et seq.).
Did you know that if you trade a car in on the purchase of another and you are upside-down on the loan to value of the old car—meaning that you owe more on the trade-in than the trade-in is worth—and the car dealer says he will fix this problem by adding the deficiency on to the sales price of the new purchase, you end up paying more in state sales tax on the deal. This “fix” is not a fix at all and could possible violate your rights as a consumer under state and Federal laws. The additional sales tax you have to pay on the amount of the sales price may be considered a “finance charge” for which certain truth-in-lending disclosures should be made to you during the transaction.
President Barack Obama, on May 12, 2010, spoke out against the Brownback Amendment to the pending legislation to protect consumers in the financial industry. The Brownback Amendment would exempt car dealers from coverage under this consumer friendly law. It is important to car dealers because many of them make money on financing. The law, without the Brownback Amendment, would apply to car financing. According to an article posted on the Automotive News website, President Obama said the amendment “encourages misleading sales tactics that hurt American consumers.” The article also notes that the U.S. Treasury, military families, civil-rights groups, the Independent Community Bankers Association and the Credit Union National Association all weigh in against the exemption for car financing. While the National Automotive Dealers Association is urging all of its 17,000 members to “keep up pressure on their senators” to pass the exemption.