The site is truecar.com and the basic underpinnings of this site are the consumers’ ability to access purchase information for vehicles. Apparently truecar.com has the availability of some sort of database or survey information pertaining to what people have paid for various vehicles as well as the extras. It then provides some sort of analysis, maybe a regression analysis, as to the appropriate or average price for these vehicles. With this site, you get information pertaining to what the market is bearing for a particular vehicle with particular options. Since most individuals do not have the ability to go to auctions or have the access to information that dealerships have, I would say that the availability of this information at truecar.com would be essential if it is in fact accurate. I have no knowledge whether or not this information is accurate or the source of their information. However, the basic concept underlying truecar.com I completely support because it assists consumers in providing them with more information on their purchasing decision. If you are buying a car, it would seem to be a reasonable resource to avail yourself to, to have as much or if not more knowledge than the dealership pertaining to the pricing practices or pricing patterns of a particular car in a particular market. With regard to information, more is always better.

Under New Jersey Law, it violates the New Jersey Consumer Fraud Act to make an affirmative misrepresentation of fact as the seller attempted sale of a product. It does not matter that nobody has been misled but there is the capacity to mislead which is the primary ingredient of consumer fraud.

There has been an investigation opened by the Federal Trade Commission which has been resolved recently with Kellogg. It appears as though Kellogg was misrepresenting the benefits of Frosted Mini-Wheats. Kellogg was making claims on their advertising that Frosted Mini-Wheats was “clinically shown to improve kids’ attentiveness by 20%”. The FTC opened investigation because they claimed that it was false and violated federal law. It appears as though the complaint was based on a certain study which demonstrated the improved attentiveness of the children. According to the FTC news release, this was in fact not accurate. It appeared as though just under 11% had better attentiveness. It appears as though the commission approved to the administrative complaint and the proposed consent agreement. It is was to public comment for 30 days beginning and continuing through May 19, 2009.

Public Citizen

Agreement containing consent order

Complaint

News release

This is but just one of various investigations and a complaint that the state has opened up in the last few years. Another example is on June 3, 2009, the state reached settlement with Rubin & Raine of New Jersey LLC. This pertained to certain collection efforts on behalf of Pascack Valley Hospital. Also, on April 14, 2009, the Division of Consumer Affairs issued a press release indicating that a tax preparation firm which was sued had reached settlement. The business involved was Malqui Financial Group, Inc. and Fast Tax Express Corp., both of which did business as Malqui Tax.

The Division of Consumer Affairs recently reached settlement with Rubin & Raine, Inc. and Rubin & Raine of New Jersey LLC. There was no admission of any wrongdoing and they agreed to comply with the State Consumer Fraud Act and Collection Agency Statute and Fair Debt Collection Practices Act.

There is a federal statute prohibiting various actions of debt collectors. This is known as the Fair Debt Collection Practices Act. If you have any questions or concerns pertaining to any debt that Rubin & Raine, Inc. and Rubin & Raine of New Jersey, LLC attempted to collect or International Portfolio Inc. of Conshohocken, Pa. Contact the firm of Carton & Rudnick and we will answer all questions. The Fair Debt Collection Practices Act is a powerful federal statute which prohibits inappropriate and deceptive conduct pertaining to the collection of debt

There have been cases which have interpreted the seller’s of real estate, individual sellers, to be exempt from the wide ranging penalties of the New Jersey Consumer Fraud Act.
The New Jersey Supreme Court recently decided a case that held the definitional section of the Act is self-explanatory in that it applies to all persons. This means that if you individually sell a particular product, you will be subject to the provisions of the New Jersey Consumer Fraud Act if you are a person. A person could be an individual or a legal fiction such as a corporation. In Lyle Real v. Radir Wheels, Inc. and Richard Conklin, the individual defendant, Richard Conklin, argued that he was not subject to the penalties of the New Jersey Consumer Fraud Act and that he is exempt from liability. The Appellate Division dismissed the case but ultimately the Supreme Court held that since he is a person under the Act, he is subject to the restrictions of the New Jersey Consumer Fraud Act.

This interpretation of the New Jersey Consumer Fraud Act has wide ranging implications. I would estimate that the significant implication is with regard to the sale of real estate. If the seller of the home misrepresents immaterial fact or fails to advise the purchasers of a material fact with the intent to deceive, there would be liability under the New Jersey Consumer Fraud Act.

CARTON AND RUDNICK

Hopefully we will get some specifics and provide another update.

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Many people are asking this question in light of the anticipated bankruptcy of General Motors and the currently filed bankruptcy of Daimler Chrysler. Many consumers and vehicle purchasers feel that they are without an option with regard to making a claim for breach of warranty or Lemon Law under New Jersey or any other law. There are various other claims associated with the sale of a vehicle which do not necessarily require the presence of the manufacturer as the defendant. There are various claims which a purchaser of a vehicle can make against the seller of a vehicle. In the case which the seller and the manufacturer are bankrupt and there are still remaining claims against the finance company, assuming it was financed through the selling dealership. Quite frequently, the finance companies are holders of the retails on the sales contract and are subject to the holder rule. The holder rule requires that the holder of the paper, usually a finance company, is subject to all claims that the purchaser of the automobile will have against the seller. In addition, the holder of the paper would have all the defenses that the seller of the automobile would have.
So hypothetically, if an individual were to purchase a vehicle from a Chrysler dealer and the dealer was still on business, the plaintiff would have most of his claims against the selling dealer as well as the finance company, if the appropriate steps were taken. The exception to this would be the Lemon Law claim since New Jersey Lemon Law applies to new car dealers only. There are various other theories which could potentially be made against the finance company which have been demonstrated by New Jersey case law. In Lotito v. Mercedes Benz, the court held that because of the close proximity and nature of identities between the finance company and the manufacturer, the plaintiff in essence has the same or substantially similar claims against the finance company as it would against the manufacturer due to the nature and extent of the relationship between these parties.

As an example, if a dealership acquired a vehicle at auction for $5,000 and it is placed on the books at $9,000, in my opinion, the salesman has been denied the appropriate profit on the increased cost of the vehicle.

Further, hypothetically, if a dealership principal owned companies which supplied the gap or other after market products, what would the appropriate costs be attributable to this product? The “captive” company could price a product wherein there is no profit for the dealership, thus funneling of the profits into the subsidiary which is owned and controlled by the dealership principals and/or management team. In my opinion, the sales staff or the employees have a claim against the ownership for this type of conduct.

The New Jersey Supreme Court has demonstrated in the case of Wilson vs. Hess that it is the obligation for all parties to a contract to perform it fairly and in good faith. It is this failure to perform a contract in good faith which results in the imposition of the possibility of damages. In the Wilson case, the franchisor, Hess, was alleged to have set the prices up in such a manner to drive the franchisees out of business. I guess in a perfect world, a franchisor is free to set whatever price they want to charge to the franchisee. However, New Jersey Courts imply an obligation to act in good faith.

Many complaints from salesmen over the years include the dealership failing to reveal the method and manner in which the pay is calculated, failing to disclose the amount of charge backs, failing to disclose the appropriate cost of the vehicles and various products sold and failing to comply with the written pay plans. The causes of action under New Jersey Law range from breach of contract and fraud to lack of good faith and fair dealings. If you feel you have been treated improperly by a dealership, feel free to contact the law firm of Carton and Rudnick.

This is not a joke. It is true.

The names will withheld until suit is filed BUT today I saw, possibly, the worst case in the many years that I have been doing this type of work.

Both of my clients are legally blind. The primary obligor and the cosigner. They do not even have a driver’s license nor are the permitted to drive. The dealership even got the car registered and insured. The customer was at the dealership with his cane and his glasses. When they told me the story it was hard to believe. They are both legally blind.

To make matters even worse the car is a mess. It looks like it was in a prior accident with a different hood and various parts are melted on the interior of the car. They were told the car had only one prior owner when it had two.

The following are the causes of action (theories of liability) against the dealer and/or the lender.

• Consumer Fraud-deceptive conduct. Cox v. Sears.
• Fraud
• Breach of contract
• Breach of good faith and fair dealings. Wilson v. Hess
• Revocation. Cuesta v. Classic
• Negligence
• Discrimination against disabled persons, the blind. Law against discrimination.
• Declaratory relief that the contract is void ab initio (from the beginning)

Prior to instituting suit against an automobile dealership for consumer fraud or breach of warranty, it is necessary to understand the nature and extent of the insurance provided for the dealerships for this type of conduct. Initially, there are two primary insurance companies that provide this type of coverage. The largest one is Universal Underwriters which is now owned by Zurich. As a matter of public policy, punitive damages, triple damages and consumer fraud are not covered within the provisions of these polices. Generally, the policies provide for payment of a lawyer to defend the claim. At such a time, if there is a jury verdict or settlement, it generally will be the obligation of the dealership. Any settlement would be paid by the dealership. However, there are various allegations that the selling dealership would be covered for under their policy of insurance. Each policy is different and has to be reviewed, however, generally, Truth in Lending violations and negligence are almost always covered as a matter of course. A negligence allegation would be that the dealership failed to act in a reasonable manner pursuant to their relationship with the customer. Truth in Lending violations are statutory violations and are a violation of the Federal Truth in Lending Act.

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In this case, the plaintiff was asserting that the dealership made affirmative misrepresentations or false promises that the vehicle had previously not been in an automobile accident. The vehicle that was purchased by my client was a Lexus GS with 84,000 miles. As part of the transaction, the dealership representatives provided my client with a CARFAX which indicated there were no prior accidents in the CARFAX history. Therefore, the purchaser of the vehicle relying upon the CARFAX assumed that the vehicle did not have any prior accidents.
After my client was driving the vehicle for a period of time, she learned that the vehicle was in fact in a prior accident when it was looked at by another auto body shop. The petitioner alleged that when she returned to the dealership and complained of the problems, the dealership failed to help her and failed to repurchase the vehicle.

The petitioner then accessed CARFAX and it appeared as though the vehicle had been in two prior automobile accidents. The question was why CARFAX had not reported the vehicle with an accident at the time of the sale. The answer is relatively simple and that this information was not in the CARFAX database at the time of the sale to the plaintiff. Thus, the dealer took the position that they were unaware of the prior automobile accident. The plaintiff produced an expert who testified that had the dealership looked at the vehicle carefully they would have known the vehicle was in an automobile accident. It took some time but acquired the police report and then the record of the automobile accidents for which there was actually three. The sum of the total prior accident damage on the vehicle was approximately $15,000.

The issue in the arbitration is whether or not the dealership knew or should have known of the automobile accidents and whether or not the CARFAX was an affirmative misrepresentation or a false promise. Under New Jersey Law, there is no requirement that a false promise or an affirmative misrepresentation be within the knowledge of the defendant. In addition, good faith is not a defense in this regard.

Ultimately, the arbitrator decided that the dealership committed an act of consumer fraud by selling this Lexus with 84,000 miles with three prior accidents. The arbitrator determined that the CARFAX constituted an affirmative misrepresentation which is actionable under the New Jersey Consumer Fraud Act. The arbitrator then tripled the damages as required under the New Jersey Consumer Fraud and awarded counsel fees. This determination by the arbitrator is probably a matter of public record within the American Arbitration Association guidelines. I think that they keep a record of all the arbitrations, however, I am uncertain as to the method by which these documents might be obtained.

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I won the case and I will not name the dealer currently BUT the claim was that the car was sold and was in a two prior accidents and the plaintiff was told that the car was not involved in any prior accidents. The plaintiff was shown a CARFAX that showed no accidents.

CARFAX later, months after the transaction, that the car was in two accidents and the plaintiff found out and was upset, returned to the dealer and demanded he money back.

The dealer, according the the plaintiff, refused this request and she was forced to seek legal advise.

To be continued

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What is a misrepresentation under New Jersey's Consumer Fraud Act:

An “affirmative act” is something done voluntarily by a person. It includes not merely physical acts, but also any steps taken voluntarily by a person to advance a plan or design, or to accomplish a purpose. “False promise” is an untrue commitment or pledge (which is communicated to another person) to create the possibility that that other person will be misled. Model Civil Jury Charge 4.43 http://www.judiciary.state.nj.us/civil/charges/4.43.pdf The defendant’s intent is not pertinent as good faith is not a defense to an affirmative representation. Cox v. Sears, 138 NJ 1, 16 (1994).

There are many cases that address what is considered ocnsumer fraud under New Jersey law.

The following are examples of affirmative representation that were actionable.
A cellular service provider’s advertisement that its service was so reliable that “you could make your wireless phone your only phone” Union Ink Company v. ATT Corp, 352 N.J.Super 617, 644 (App.Div 2002). A real estate agent’s statement that the termite problem was minimal when it was not. Byrne v. Weichert Realtors, 290 N.J.Super 126, 134 (App.Div 1996). Misrepresenting the mileage on a Corvette. Cuesta v. Classic, 358 N.J.Super 512 (App.Div. 2003). See also Cogar v. Monmouth Toyota 331 N.J.Super 137 (App.Div 1997)(odometer case)

In Ji v. Palmer, 33 N.J. Super. 451 (App. Div 2000) the sellers agent of a certain apartment building represented to the purchasers that the certificate of occupancy was sufficient to rent the unit as a multi family when in fact the unit was zoned single family and could not be utilized as a multi family dwelling. It was admitted that this was a mistaken belief by the seller’s agent but was determined to be actionable. The Appellate Division specifically determined that the seller’s agent intent was irrelevant under the CFA.

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I recently filed a demand for an arbitration under the American Arbitration Association consumer rules against a New Jersey dealership, South Jersey. The hearing is concluded and a decision should be rendered soon and I will start from the beginning and explain how arbitration works as opposed to a court case filed in Superior Court.

Remember all defendants are presumed innocent and the plaintiff has the obligation to prove the case.

Unfair and deceptive Practices Acts. The New Jersey Consumer Fraud Act would be considered a UDAP statute. The purpose is to assist consumers in battling fraud in the market place and provides several protections top consumers that are meant to encourage consumers to bring suit and attract competent lawyers to litigate the cases. The UDAP statutes include provisions for tripled damages, attorney fees and injunctive relief. The State AG's office is also permitted to bring suit under the Consumer Fraud Act.

The UDAP statutes vary significantly by State, with some providing more protection that others. There is a published report indicating the strength and weaknesses of all the statutes for all of the 50 states. The report indicates that Michigan and Rhode Island are the two weakest statutes because the courts have interpreted tham to cover almost no transactions.

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A class action is a procedural device to allow one or a few representatives act on behalf of many other people. Because the person is acting in a representative capacity the rules require that this claim be substantially similar to the other “absent” class members. The interests must be similar, the claims must be similar, and the underlying facts supporting the similar claim must be similar. As an example if the class member is alleging that he was charged an improper document fee as part of an automobile transaction, the other class members must also have purchased the product and must also have purchased a vehicle.

As you can see there are some very simple cases that are well suited for class actions. See for example Cerbo v. Ford of Englewood where the plaintiff was alleging that she and other consumers were overcharged for title and registration fees. This was a huge class action with thousands of class members who received a refund of the overcharges to an extent with certain conditions. The claims were simple and very amenable to class action procedures. Simple claims make the best class actions. Class action settlements range into the billions of dollars depending on the size of the class and the size of the claim. Just search the internet for class action and settlement and you will get pages of class action results.

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