State and Federal Laws Prohibit Odometer Tampering and Inaccurate Odometer Disclosures

Buyers rely heavily on a vehicle’s mileage in determining a vehicle’s condition and value.  Accurate odometer readings and disclosures, therefore, are essential for maintaining a reliable basis for determining a vehicle’s condition and value.

For these reasons, state and federal law prohibit not only odometer tampering, but also inaccurate odometer disclosures.  Under federal law, a seller is required to provide an odometer disclosure statement certifying that (a) the odometer reflects the actual mileage, (b) the odometer reflects the amount of miles beyond the mechanical limit of the odometer, or (c) the odometer reading does not reflect the actual mileage.

Besides rolling back or modifying odometer readings (e.g. using odometer “kill switches”), unscrupulous sellers of motor vehicles also ignore tell-tale signs of possible odometer discrepancies or fraud.  For example, there may be inconsistent odometer readings recorded in a vehicle’s title or repair history.  That is, a vehicle’s title history may show lower mileage in 2007 than in 2006.  Additionally, there may be signs of possible odometer tampering that the seller should have noticed such as missing screws around the odometer casing or evidence that the casing and trim around the odometer were removed at one time.  Such signs would put the seller on notice that the odometer may have been tampered with and would require the seller to investigate the odometer’s accuracy further.  If the seller ignored these signs, it would not have a solid basis for certifying that “the odometer reflects the actual mileage.”

Buyers concerned about potential odometer inaccuracy can use Carfax, Autocheck, and other such reports to see if there are odometer discrepancies in a vehicle’s history.  However, these types of reports are not always complete.  In addition, some repair facilities and specialty garages inspect vehicles for odometer tampering.

If a seller does tamper with the odometer or fails to provide accurate odometer disclosures, it does so at its own peril, because the federal law imposes severe penalties on violators.  Buyers should be aware, however, that the federal law does not require odometer disclosures for vehicles over ten years old.

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Tips For Buying a Quality Used Car

Purchasing a used car can be a great value or a great disappointment. Unfortunately, many used car buyers learn after the fact that the vehicle they purchased was not worth the price they paid. There is often little recourse because many of these cars are sold “as is” or have warranties limited to 90 days or less. Therefore a little bit of research and investigation prior to your purchase can go a long way towards making your used car purchase a positive experience.

Have a certified mechanic inspect the car prior to purchase. This is the single most important step to ensure that you are purchasing a good used vehicle. Many used car purchasers make the mistake of not having their car inspected until after they have purchased it and mechanical problems start to arise. A good mechanic can tell you many things about a vehicle’s past after a thorough inspection. In addition to learning whether the vehicle has any obvious signs of mechanical problems, a mechanic can tell you if the vehicle was properly maintained, was abused, has accurate mileage, was involved in a collision and any expenses you are likely to incur in the near future. It is well worth it to pay for a mechanical inspection prior to purchasing a car rather than incurring costly repairs once you own the vehicle.

Order a Carfax or Autocheck report on the vehicle. Carfax and Autocheck reports are available online and will tell if a vehicle was previously used as a rental, was a lemon-law buyback, has an inaccurate odometer, or was involved in a collision that was reported to a governmental agency. You should order your own report directly from the service because some car dealers will provide you with an abbreviated version of the report which does not contain the complete vehicle history.

Check the used car market to find the approximate value of the car you intend to purchase. Websites such as www.kbb.com and www.cars.com will provide you with the approximate value of cars which are similar in age, mileage, options, and overall condition to the car you are considering purchasing. Knowing the approximate market value of the car you are interested in purchasing will help you negotiate a fair price with the dealer.

Have the car manufacturer’s dealer run a warranty history. If the car you are considering buying is less than six model years old you may be able to obtain a warranty history from one of the manufacturer’s authorized dealers. Just bring the car’s Vehicle Identification Number (VIN) to the dealer and ask them to provide you with a copy of the warranty history on the car. The warranty history will show all of the repairs that were made to the car that were covered under the manufacturer’s warranty.

The above tips can help you avoid a sour experience with your used car purchase.

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Michigan Court of Appeals Allows Consumer to Return Defective RV to Manufacturer

After years of decisions stripping consumers of their rights, the Michigan Court of Appeals finally issued a decision that upholds and affirms consumers’ rights.  In Davis v. Forest River, the consumer filed a lawsuit against the manufacturer and selling dealer for the sale of a defective RV and their failure to repair the RV.  Davis v. Forest River, Case No. 270478 (February 21, 2008).  The RV exhibited a number of defects and was out of service because of repairs for several months.  Before the trial, the consumer settled his claims with the dealer.  The jury awarded the consumer a refund, allowing him to return the defective RV.

On appeal, the manufacturer argued that under Michigan law a consumer can’t obtain a refund from a manufacturer because of a lack of “privity,” i.e., the lack of a direct sale between the manufacturer to the ultimate buyer. 

The Michigan Court of Appeals, however, rejected the manufacturer’s argument.  The appellate court found that “privity has long been categorically eliminated in Michigan as a prerequisite to purchasers bringing suit against manufacturers…”  Davis v. Forest River,  p. 3.   The court further ruled that consumers can pursue claims for rescission (cancellation)  of contract against manufacturers and that the adoption of commercial contract laws didn’t affect the abolition of privity with regard to claims for rescission by retail buyers against manufacturers.   

The decision is significant because Michigan’s Lemon Law, like many other states’ Lemon Laws, does not cover a number of high-price consumer products such as motor homes, motorcycles, boats, and snowmobiles.  As a result, consumers and manufacturers have often fought over whether consumers can obtain a refund from manufacturers.  The Davis opinion establishes that consumers are able to obtain refunds under both Michigan law and the federal Magnuson-Moss Warranty Act from manufacturers in cases where the Lemon Law doesn’t apply. 

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Spot Delivery/Yo-Yo Sale: Car Dealers Attempt to Rewrite Sales Contracts to Increase Their Profits

An increasingly common car sales tactic is the “spot delivery” or “yo-yo sale”—allowing a buyer to take delivery of a vehicle before the dealer has confirmed that another entity will buy the finance agreement.  (Technically, in most dealer-arranged financing, the dealer is the original lender or creditor.  The dealer then sells the finance agreement to a third party lending institution).  The yo-yo sale involves telling buyers that they are approved for financing on a specific vehicle, having them sign all the paperwork, and allowing them to take the vehicle home.  A few days or weeks later, the salesperson calls the buyers and informs them that the financing has “fallen through.”  The salesperson tells the buyers that they can keep the vehicle if they agree to pay a higher interest rate or get a co-signer.  Alternatively, the salesperson might tell the buyers that they must buy a different vehicle.  Essentially, the car dealer tries to rewrite the contract with terms that are more favorable to the dealer and less favorable to the buyer.  If consumers express unwillingness to comply with the post-sale demands, then the salesperson threatens repossession or arrest.

However, this sales tactic is illegal.  Federal law (as well as the laws of some states) prohibits this type of transaction.  The federal Truth in Lending Act, for example, requires clear and conspicuous disclosure of financing terms, including the annual percentage rate (APR).  Spot deliveries make the point at which financing begins uncertain, which causes the annual percentage rate (APR) stated in the finance agreement to be incorrect.  Moreover, because the dealer is usually listed as the creditor or lender in a finance agreement, financing has not “fallen through.”  Instead, the dealer has been unable to sell the finance agreement for as much profit as it wants.  Through spot deliveries, dealers are merely attempting to increase their profits by having the consumer enter into a new finance agreement.  However, dealers should still be bound to the original sales terms. 

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Beware of the Illusory Warranty

Carmakers keep increasing the length of their warranties.  Now, some companies offer 10 year/100,000 mile warranties.  In addition, Chrysler recently started offering a “lifetime” powertrain warranty.

 However, don’t be surprised if car companies say you can’t enforce their warranties after four years.   The law imposes a time limit by which claims must be brought.  This time limit is known as the “statute of limitations.”  Many states have a four-year statute of limitations for goods such as cars.  Carmakers frequently argue that the four-year statute of limitations on their warranties begins to run when a motor vehicle is first delivered to the consumer.  According to them, you have four years from the date of the original delivery to bring any claim or lawsuit to enforce a warranty. 

Therefore, a six-year warranty can’t be enforced after four years—so the carmakers say.  In other words, a car manufacturer could stop covering repairs under its six-year warranty after four years.   If you sued the carmaker for failure to honor its warranty, the carmaker could say tough luck: you waited too long.   The four-year statute of limitations would have expired based on car manufacturers’ reasoning. 

 As a result, it remains to be seen if these long-term warranties will be worth more than the paper they’re printed on. 

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Consumer Info

This blog will provide information on lemon laws, warranty laws, and other consumer-related issues.  

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