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2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE HOT TOPICS

You should be aware that state Attorneys General are very liberal in using UDAP laws to bring claims against auto dealers. Private lawsuits, especially class actions, present another risk under state UDAP laws. Examples of suits brought against dealers include: • Misrepresentations about the vehicle’s fuel efficiency, safety features, and warranty; • Payment packing; • Retaining amounts of itemized sums listed as “amounts paid to others”on retail installment sales contracts without disclosing that the dealer may retain part of the funds; • Concealing negative equity in the cash price of a vehicle; • Violating the FTC’s Used Car Buyer’s Rule which requires a Used Car Buyer’s Guide to be affixed to the window of each used vehicle offered for sale or lease (remember that a federal law violation is automatically a UDAP violation under many state UDAP laws); • Hiding the cost of an “etch”product in the vehicle’s sale price; and • Imposing extra charges when customers who leased cars attempted to exercise their right to purchase at a previously determined price. UDAP plaintiffs may not be bound by contractual limitations of liability or merger clauses, or contributory negligence, and they often do not have to prove reliance on the act or practice. Arbitration clauses may not apply as well depending on state law and how the clauses are drafted. Also, courts have ruled that it is not a good defense that the seller acted in good faith under the advice of counsel. Unlike the FTC, most state courts adopt the least sophisticated consumer standard for assessing whether a practice could be unfair or deceptive and do not use a “reasonable consumer”standard.

State UDAP laws are written very broadly and courts have held that they are to be liberally construed in favor of the consumer. This puts conceivably any selling or financing practice at risk from an enterprising plaintiff’s lawyer who finds a disgruntled consumer. As a “catch-all” for dealer misconduct, state UDAP laws offer consumers a powerful weapon in many states. State attorneys general, continue to bring UDAP claims against dealers for a variety of allegedly unfair and deceptive practices, often relating to the advertising and disclosures made by the dealer. One state even filed a complaint against a dealer’s lender for facilitating perceived deceptive practices by the dealer in the selling of inoperable vehicles by providing the financing of the vehicles.

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