Car dealers beware: Your sales pitch could cost you plenty...
If you're a car dealer, you know the headaches that an upset buyer
can cause. This can be especially true if we're talking about issues
involving a used car not covered by a warranty.
At Scaringi Law, part of my practice focuses on representing new- and used-car dealerships in such cases and ensuring that my clients' sales force is properly trained so it can avoid legal potholes.
The biggest pothole to avoid is overselling a used vehicle's reliability. Let's take a look at the laws designed to protect consumers and what you, as a dealer, need to do to stay on the right side of the line.
Lemons may be bitter, but Pennsylvania's consumer protection law stings
When most people think about auto sales and the law, the so-called Lemon Law is the first thing that often comes to mind. However, this law only applies to new cars and often involves legal recourse that reverberates all the way back to the car manufacturer.
Far more crucial to most car dealers, especially those selling used vehicles, is the Unfair Trade Practices and Consumer Protection Law. It's a law with teeth and written to be broadly interpreted to favor the buyer.
The kicker comes near the end of the law, which has a catch-all phrase defining deceptive trade practices as "engaging in any other fraud or deceptive conduct that creates a likelihood of confusion or misunderstanding" on the part of the consumer. In legal circles, this phrase is big enough to drive a truck through, clearing the way for plaintiffs to bring actions on almost anything.
What an enthusiastic car dealer or salesperson might see as a few harmless adjectives used while closing the deal can come back to haunt him should a court view the sales pitch as implied guarantees about the vehicle's condition, dependability and road-worthiness.
And when it comes to penalties a business could face, we're talking a potentially large price tag. The law allows for triple damages if a business's actions are shown to be egregious. Dealerships also can get hit with paying attorney's fees for the plaintiff as well as their own defense.
Suddenly, that low-margin used-car sale can turn into a $30,000 legal debt, throwing a dealership into a deep ditch of red ink.
Staying on the right side of the law
By understanding the Unfair Trade Practices and Consumer Protection Law and properly training dealership staff to keep its sales pitches within legal guidelines, even those in the fast lane of the car business can speed on without worry.
Still, keeping in the right legal lane can be more difficult than one might think. Oft-used sales terms such as "original," "like-new," "used," "reclaimed," "restored" or "second-hand" can mean different things to different parties in a car sale. Even seemingly generic descriptions, such as "the car runs great" or is "in mint condition," can imply legal guarantees far beyond what the salesperson intends.
While the law applies to virtually any product sold in the state, cases tend to occur more often with used cars and other big-ticket second-hand items, such as appliances. That's because new products often carry manufacturer and even consumer-purchased warranties that cover lemons.
Car dealerships and garages also can run afoul of the law by misrepresenting their repairs, using substandard repair parts or simply failing to perform the job according to normal specifications and standards. This means a car dealership's garage and body shop could get into legal trouble, too.
Bottom line: You and your sales staff should never, ever make a claim about a car that you can't substantiate.
A multi-point legal inspection
Rest assured, in this economy, when someone gets stuck with a used car that no longer runs or a sudden bill for a big-ticket repair that falls short, there's a good chance he'll be looking to sue.
Don't let this happen to your car dealership.
Head off potential problems by consulting with a knowledgeable attorney who can provide proactive legal insight and sales staff training. It's something I do with my clients, and should a claim be made, I'm there to evaluate it, negotiate it and, if necessary, defend it.
One example of proactive conduct is developing a form for consumers to sign, enumerating their right to an independent mechanic's review of the car they're about to purchase. Or, if there are problems, they should be disclosed, and the customer should sign off on them before the purchase is finalized.
By taking these steps, including properly training your sales staff not to oversell a vehicle, you will have traveled a long way toward relegating such legal problems to the rear-view mirror.
So how about a multi-point legal inspection for your car dealership?