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Automobiles

For many people, buying an automobile is the second largest purchase they will make in their lifetime. Contrary to popular opinion, there is no cooling off period applicable to automobile purchases and leases in New York State. Therefore, consumers should become fully informed before making a decision to purchase or lease a new or used automobile.

Some sales practices by automobile dealers may be considered deceptive and violate State and federal statutes. See this Manual's chapter on False Advertising and Deceptive Trade Practices for more information.

Purchases

New Car Purchase Contracts

Any contract for a new motor vehicle signed by a consumer must also be signed by the dealer or the dealer's employee. Once a new car contract is signed by the consumer and dealer, the price stated in the contract may not be increased. Any contract entered into between a retail dealer and a consumer which permits the price to be increased after the contract is executed is void and unenforceable.1 However, the dealer may, instead of furnishing a contract when a deposit is accepted, give written disclosure that there is no guarantee of getting a car exactly as ordered, and that the deposit is fully refundable if the consumer decides not to purchase the car later.2 If the dealer and consumer sign a contract stating a trade-¬in allowance, that allowance may not be reduced upon delivery of the trade-in vehicle unless its value has been diminished by circumstances other than normal wear and tear.3

If a retail dealer accepts a deposit from a consumer under a written contract, the contract must contain the estimated delivery date of the automobile and the place of delivery. The contract must state that if the automobile has not been delivered within 30 days following the estimated delivery date, the consumer has the right to cancel the contract and receive a full refund, unless the delay is the fault of the consumer.4

The interest rate offered at the time of deposit or customer order for a new car must be guaranteed until delivery by the dealer, manufacturer, or finance company, depending on who is financing the automobile.

If a consumer signs a contract that states specific options or features to be included with an automobile and those features are not delivered with the vehicle, New York State law requires that the dealer must offer to reduce the contract price by the dollar amount of the missing features. The consumer has the choice to accept the vehicle as is, or refuse it.5 If the consumer is willing to wait for delivery or installation of the missing features, then the dealer can collect the full purchase price. The consumer must indicate his or her willingness to wait in writing and must specify how long he or she will wait.

Contract Cancellation: Failure to Post Refund Policies

Every "retail mercantile establishment," including auto dealerships, must clearly post its refund policy as to all "goods, wares or merchandise" offered to the public for sale on a sign:


(a) Attached to the item;
(b) Attached to the cash register;
(c) On a sign clearly visible to the buyer from the cash register; or,
(d) On a sign posted at each store entrance used by the public.

State law also requires that the retail establishment state whether or not it has a refund policy, and if so, under what conditions. The buyer's remedy for violation of this provision is to receive a cash refund or a credit, buyer's option, for up to 30 days after the date of purchase, provided that the buyer did not "use" or "damage" the merchandise.

As an auto dealership may be a "retail mercantile establishment" under the statute, failure by auto dealers to comply with General Business Law  218-a may give consumers the right to cancel their auto contract within 30 days of "purchase" (i.e., the signing of the automobile contract).


Contract Disclosures

The contract's printed portion must be in at least eight point type, and contain the following information:6

The contract must also contain the following items in at least ten point bold type:7

Consumers who finance the purchase (or in some cases, the lease) of new or used motor vehicles through their dealer, a bank, a national company such as GMAC, or a third party are protected by the provisions of the New York Motor Vehicle Retail Installment Sales Act (MVRISA).8 MVRISA prohibits any of the following in retail installment sales contracts:9

If any of these provisions are in a retail installment sales contract, the provision is considered void (unenforceable), but the rest of the contract is valid.11

At the consumer's written request, the holder of the contract must give the buyer a written statement of the dates and amounts of payments made and the total amount unpaid under the contract. The buyer must be provided with a written receipt for any payment in cash.12

After the payment of all sums under the contract, upon written demand, the consumer must be given a statement indicating payment in full and that the security interest in the vehicle has been released (i.e., the holder can no longer repossess the vehicle).13

Provided it is permitted by the contract, the holder may collect a delinquency and collection charge for any payment at least ten days past due, and charge, if the holder refers the account to an outside attorney, up to 15% of the amount due, plus court costs.14

Consumers have the right to pay the full amount due on the contract at any time, despite any provision in the retail installment sales contract to the contrary. If they do, they are entitled to receive a refund credit of the unearned portion of the interest, minus a $15.00 fee.15

Failure to comply with MVRISA generally does not render the contract unenforceable, but triggers certain statutory penalties.16 Examples of these penalties are when a person willfully violates MVRISA they may be found guilty of a misdemeanor, and are subject to a $500 fine upon conviction. Further, persons who willfully fail to make the disclosures required in retail installment sales contracts may not recover any credit service charge (i.e., any amount beyond the cash value of the car at the time of sale), delinquency, or collection charge. However, holders may avoid liability by correcting any error within ten days after receiving written notification of the error by the buyer.17

Automobile Auctioneers

Section 23 of the General Business Law regulates automobile auctioneers, defined as any person, not claiming title of the vehicle being sold, who sells or offers for retail sale more than five motor vehicles, motorcycles, or trailers in any calendar year, or who displays or permits the display of three or more motor vehicles, motorcycles, or trailers in any one calendar month upon their premises. Auctioneers are also required to be registered as motor vehicle dealers under Article 16 of the Vehicle and Traffic Law. Auctions at which (i) only vehicles are being sold after repossession or foreclosure of a lien, estate sales, or under a court order, (ii) conducted by federal, State, and local government, or (iii) auctions at which the only vehicles sold are owned by a business or regulated public utility, or a company which maintains a fleet of 25 or more vehicles used for their business, are not covered by the statutory provision.

Section 23 provides several consumer protections in order to ensure that consumers are not defrauded, have the benefit of warranty coverage, and receive good title to any motor vehicle purchased at auction.

Auctioneers:

In addition to the above requirements, any waiver of a consumer's warranty rights under the warranty of merchantability, warranty of serviceability,18 or warranty of fitness for a particular purpose by such words as "as is" or "with all faults" is prohibited. Further, the statute prohibits "misleading representations" or "any act or practice or course of business which operates or would operate as a fraud or deception on any person" by auctioneers, their salespersons, or agents.

Injured buyers may also seek court injunctive relief and/or the greater of actual damages or $500. The court has discretion to award up to three times the actual damages and attorneys' fees to a prevailing plaintiff. Consumers have the option of seeking State Attorney General enforcement and the individual court remedy described above, against the auctioneer.

The New and Used Car Lemon Laws apply to sales by automobile auctioneers, providing the other requirements of these laws are met. For sales at auction, manufacturers are liable for violations of the New Car Lemon Law, and dealers are liable for violations of the Used Car Lemon Law. (See the sections "New Car Lemon Law" and "Used Car Lemon Law.")

Automobile Broker Businesses

Automobile brokers are businesses who, for a fee, commission or other payment paid by a consumer, provide a service of purchasing, arranging, or effecting the purchase of an automobile as an agent, broker, or intermediary for the consumer. Those who act as an intermediary for three or less automobiles in a single calendar year, or are registered automobile dealers, are not considered automobile brokers.19

Every contract between a consumer and an automobile broker must meet several major requirements, which are:20

Any contract not complying with the statute is void and unenforceable; the provisions of the statute may not be waived by the consumer.21

Any automobile broker contract may be cancelled within three days from the date that a copy of the executed contract is received by the consumer. Brokers must include with the executed contract a cancellation notice whose wording is contained in the statute.22

If the consumer elects to cancel because the final price exceeds the estimate by more than 5%, or because the delivery is late, the consumer must give notice to the business at the address in the contract. The business must then make a refund to the consumer within ten business days following receipt of the refund request.23

Automobile brokers may not collect any fee or commission in advance of performing the services in the contract from consumers.24 All monies paid to the business must be deposited in an escrow in a New York bank. The monies may only be drawn on by the business upon delivery of the car (unless earlier refunded to the consumer).25

The New York State Attorney General has enforcement authority over the statute, and may seek civil penalties, injunctive relief, and restitution for consumers.26 Injured consumers also may sue, and receive the amount they paid to the automobile broker. At the court's discretion, consumers may be awarded attorney's fees and up to three times their actual damages.27

Financing

Financing Car Purchases

Retail Installment Sales Contracts

As discussed previously, consumers, when financing a purchase of a new or used vehicle, are protected under MVRISA. MVRISA applies to any contract entered into in New York State, and any contract where the buyer was solicited in person by the seller and the buyer then signs the contract in New York.28 The contract signed, which is known as a "retail installment contract," is a lengthy document which gives the holder, or owner in possession of the vehicle, a security interest in the vehicle -- it permits the holder to repossess the vehicle if the consumer defaults. (Events which trigger default are generally specified in the retail installment contract.)

All retail installment sales contracts must be in writing, contain all of the agreements of the parties (including the financing terms), and be signed by the buyer and the seller. The seller must deliver or mail to the consumer a copy of the contract signed by the seller. Until the seller does so, a buyer, who has not received delivery of the motor vehicle, has an unconditional right to cancel the contract and to receive an immediate refund of all payments made.29

Contract Cancellation: Failure to Secure Financing Terms

Many auto contracts in New York State contain a provision in the front which contains words similar to these:

IF YOU AGREE TO ASSIST ME IN OBTAINING FINANCING FOR ANY PART OF THE PURCHASE PRICE, THIS ORDER SHALL NOT BE BINDING UPON YOU OR ME UNTIL ALL OF THE CREDIT TERMS ARE PRESENTED TO ME IN ACCORDANCE WITH REGULATION "Z" (TRUTH-IN-LENDING) AND ARE ACCEPTED BY ME. IF I DO NOT ACCEPT THE TERMS WHEN PRESENTED, I MAY CANCEL THIS ORDER AND MY DEPOSIT WILL BE RETURNED.

This or similar language would also permit the consumer to cancel his or her order until the completed retail installment sales contract is finally presented and agreed to by the consumer.

Credit Checks

The Fair Credit Reporting Act (FCRA), which is enforced by the U.S. Federal Trade Commission (FTC) and the New York State Attorney General, regulates the use of credit reports.30

According to the FTC, "an automobile dealer may obtain a report only in those circumstances in which the consumer clearly understands that they are initiating the purchase or lease of a vehicle and the seller has a legitimate business need for the consumer report to complete the transaction."31 Even when the consumer is purchasing or leasing a vehicle, the dealer only has a right to obtain a credit report when it has a legitimate need, or a permissible purpose, for the information, such as financing (to review creditworthiness and prior payment history), or to access a consumer report to see if the consumer has a history of passing bad checks.32 Thus, a request for general information about models, prices and financing or to test drive a car does not necessarily indicate an intent to purchase or lease a vehicle from a particular dealer. In such situation, the dealer must secure written permission from the consumer. The credit reporting agency has the duty to disclose to the consumer the information that was released to the dealer upon request.33

Under the FCRA, automobile dealers or others who improperly obtain credit reports can be subject to civil penalties of up to $2,500 per violation.34 Dealers who fail to comply with the FCRA can also be held liable to the consumer.35 Additionally, the FCRA permits a private cause of action against furnishers of credit information who fail to properly investigate disputed information.36

The FTC has developed the following specific guidelines regarding the use of credit reports by automobile dealers:37

It should also be noted that if a consumer is not going to be applying for financing through the dealer, there is no reason for the dealer to request the consumer's credit report. Consumers should be wary of any clause in a contract that states otherwise, and should cross out such language requesting the authorization.

Insurance

The amount charged for insurance must not exceed the authorized amounts chargeable under rate filings made with the New York State Insurance Department. The consumer must be sent an insurance policy containing the amount of the premium, the lines of insurance and the terms and conditions of the coverage within 30 days after signing the retail installment sales contract. State law allows the buyer to select and pay for their own insurance that may be required, but a failure to do so allows the holder of the financing or car loan to substitute the necessary insurance, and to charge the buyer for it.


New Car Requirements at Purchase

Window Stickers

Under the federal "Monroney Act," every manufacturer of new cars is required to attach to the windshield or side window of the automobile a sticker prior to its delivery to the dealer.38 This "Monroney sticker" must contain, among other things, the vehicle's make and model, the final assembly point, its destination, the manufacturers' suggested retail price for the vehicle, and the manufacturers' suggested retail price for each accessory or item of optional equipment.

Willful failure to attach or willful removal of the required label on a new automobile is prohibited by federal law, and subjects the offender to fines and/or imprisonment.39 Complaints regarding this law should be sent to the following address:

Office of Consumer Litigation
United States Department of Justice
P.O. Box 386
Washington, D.C. 20044

Dealers are not bound to charge consumers the manufacturer's suggested retail price, and no legal limit has been set for the pricing of motor vehicles.

Bumper Quality Labels

Manufacturers are prohibited from selling, leasing, or offering to sell or lease any 1993 or later model passenger motor vehicles in New York unless a "bumper quality label" is attached to the vehicle's window near the federal Monroney sticker. The bumper quality label is required to specify the maximum impact speed for the front and rear bumper in which the vehicle sustains no damage to the body and safety systems and only minimal damage to the bumper. Manufacturers violating the law "without just cause" are subject to a civil fine of up to $50 per vehicle.


New and Used Car Requirements at Purchase

Odometer Requirements

Consumers have the right to know how many miles the car they are buying has been driven.40 Every seller (both dealer and private seller) must tell the buyer the cumulative mileage of the odometer (including whether the car has exceeded 99,999 miles) and whether the seller knows the mileage to be accurate.41

Any suspected odometer tampering should be reported to the DMV's Office of Field Investigations at:

New York State Department of Motor Vehicles
Division of Field Investigations
6 Empire State Plaza
Albany, NY 12228
518-474-2019

If the seller violates this obligation with the intent of defrauding a buyer, the buyer can recover $1,500 or three times the actual damages suffered, whichever is greater.42

Odometer readings must be placed on automobile inspection stickers.43

"Grey Market" Vehicles

Dealers are prohibited from selling any new or used motor vehicles originally intended for distribution outside the United States without prominently displaying a label on the vehicle stating, "This vehicle was not sold by the manufacturer for distribution within the United States. It may not have the same standard features, emissions equipment, safety equipment, optional equipment, specifications and warranty, or otherwise be identical to the other motor vehicles which are sold by the manufacturer for distribution in the United States." Any person violating this section or knowingly aiding and abetting violations of this section will be liable to any "person aggrieved," including a consumer, to the extent of any "additional margin obtained or obtainable on such purchase and resale."

Damage to a New Motor Vehicle at Purchase

Retail dealers must give consumers, prior to the sale and delivery of a new motor vehicle, written notice of any repairs of physical damage to the vehicle. Damage must be a retail value of more than 5% of the lesser of the manufacturer's or distributor's suggested retail price, the repair of which was performed after the vehicle's shipment from the manufacturer to the dealer, including damage while in transit. Examples of when this notification would be necessary include advising the consumer that the vehicle served as a demo vehicle, or was in a flood. This notice requirement does not apply to identical replacement of stolen or damaged parts.

Upon receiving notice, the consumer is entitled to cancel his or her order and receive a full refund of his or her deposit. However, if the dealer has failed to provide notice, the consumer has four months after the date of purchase to cancel. In this case, the consumer is entitled to a refund of the purchase price, any trade-in allowance, and all fees and charges. If the vehicle has been driven more than 1,000 miles, a small deduction is made from the full refund, based on a specified formula.

Used Car Purchases

The Certificate of Prior Use

At the time of sale, used car dealers must disclose in writing if the vehicle has been used as a taxicab, police vehicle, rental vehicle, or driver education car. Dealers must also provide the buyer with written notice if the vehicle was previously returned to the manufacturer or dealer because it was repurchased under the New or Used Car Lemon Laws or a similar statute of another state. This notice reads:

"IMPORTANT: THIS VEHICLE WAS RETURNED TO THE MANUFACTURER OR DEALER BECAUSE IT DID NOT CONFORM TO ITS WARRANTY AND THE DEFECT OR CONDITION WAS NOT FIXED WITHIN A REASONABLE TIME AS PROVIDED BY NEW YORK LAW."

Notice of a repurchase must also be placed on the motor vehicle's certificate of title.

If these disclosures are not made, an injured consumer may sue to recover a maximum of up to three times his or her actual damages, with a minimum recovery of $100. The court may also award attorney's fees to the consumer. The Attorney General may also enforce this section and obtain injunctive relief, restitution for consumers, and civil penalties.

National Motor Vehicle Title Information System

The United States Department of Justice established the National Motor Vehicle Title Information System which requires vehicles that have been too badly damaged to be worth repairing, or vehicles that were stolen be listed in the database. The purpose of this initiative is to prevent consumers from unassumingly purchasing these vehicles. Salvage yards, junkyards, and insurance companies are required to report vehicles that have been totaled effective March 30, 2009.

Deceptive Practices by Used Car Dealers: The Used Car "Buyer's Guide"

Federal law requires used car dealers to post a "Buyer's Guide" on the window of each used vehicle offered for sale, and to attach this window sticker to the purchase contract. This guide becomes part of the sales contract and overrides any contrary provisions of the contract of sale. The Buyer's Guide includes:

  1. A statement that spoken promises are difficult to enforce and that consumers should get promises in writing;
     
  2. Any warranties provided by the dealer;
     
  3. The availability and terms of any service contract;
     
  4. A suggestion that consumers ask if the vehicle may be inspected by an independent mechanic; and,
     
  5. A statement identifying the major mechanical and safety systems and some major defects that occur in used vehicles.

The FTC is responsible for enforcing this law. It is a violation of the FTC Act for a used vehicle dealer to:44

Leased Vehicles

Consumer Leasing Act

Under the Federal Consumer Leasing Act, consumers leasing personal property, including motor vehicles, for more than four months and in which the total contractual obligation is no more than $25,000 are entitled to various protections.

Lessors must give consumers at the beginning of the lease period a dated, written, statement on which both parties are identified, and in which the following items, among other things, are clearly and conspicuously disclosed, as applicable:

The Consumer Leasing Act also requires that most lease advertisements disclose certain essential terms, such as the numbers, due dates, or periods of scheduled payments and the total initial payments required to be made.45 Consumers may bring civil actions in court for damages (usually $1,000 in auto lease cases), attorney's fees, and costs, due to violations of the Act.46

The above information only briefly summarizes the Consumer Leasing Act (CLA). Due to the complexity of the Act and the frequency of violations, consumers are advised to contact experienced attorneys when CLA issues are presented in their case.

Damage to the Leased Vehicle at its Return

There is no New York statute governing the responsibility of the parties in the event the vehicle is returned to the lessor with defects. In general, the consumer should examine the contract carefully and understand the company's policies on damaged leased vehicles. In most cases, for items which do not ordinarily break without some party being negligent (e.g., a radio volume knob that has been broken off; broken glove compartment latch), the company can only collect from the consumer if they prove the damages were due to the consumer's negligence. Similarly, any consumer who performs the required maintenance may not be charged for parts or maintenance items required at the end of the lease term (e.g., transmission fluid and oil changes; front end alignment; transmission tune up). Finally, the consumer is not responsible for paying the cost to the lessor to restore items which tend to wear out during ordinary use (e.g., worn tire tread; worn brake pads; rusted tailpipe) in order to make the auto road worthy for the next consumer.47

Lemon Law

New Car Lemon Law

In New York, a buyer or lessee of a "new" motor vehicle (including a van or truck, but not a motorcycle or off-road vehicle) from a dealer used for personal, family, or household purposes which turns out to be a "lemon" -- a defective car that cannot be repaired -- may find relief through the "New Car Lemon Law." The New Car Lemon Law gives consumers two major rights: the right to receive free repairs,48 and if the vehicle cannot be repaired after three attempts, the right to receive a refund or replacement vehicle.49

Only the non-residential portion of a motor home is covered (i.e., the engine and drive train); defects to the living quarters are not protected by the statute. Sales by automobile auctioneers are also covered under the Lemon Law (See Automobile Auctioneers above).

The New Car Lemon Law applies if the motor vehicle:

As long as these statutory provisions are met, the New Car Lemon Law applies. For example, a "demonstrator" purchased by a consumer from a dealer with 10,000 odometer miles at purchase or a motor vehicle previously owned by another consumer is covered by the New Car Lemon Law's refund or replacement remedy.50 The New Car Lemon Law also provides for a mediation process, which is discussed in greater depth later in this section entitled "New York State Attorney General's Lemon Law Arbitration Program."

A consumer whose vehicle is not covered under the Lemon Law may still pursue other legal remedies. (See the Magnuson-Moss Act below.)

The Right to Receive Repairs Under New Car Lemon Law

Under New York law, if any material defect develops during the first two years or 18,000 miles of ownership of a new car, the consumer must report it to the manufacturer or its authorized dealer. The problem must then be repaired free of charge, even if the actual work is done after this period.

A motor vehicle must be sold or registered in New York to be entitled to receive the statutorily required warranty (i.e., the right to receive repairs) under the Lemon Law.

Dealer's Refusal to Make Repairs

Consumers may receive a new vehicle or refund (even if the four repair attempt/30 days out-of-service requirement below is not met) when the manufacturer's agent or authorized dealer of a newly purchased vehicle refuses to make requested repairs. First, the consumer should inform the dealer of the defect. If the dealer refuses to make the requested repairs, the consumer must only wait seven days after informing the dealer of the defect. After seven days, the consumer can inform the manufacturer directly that the dealer refused to make the repairs. The consumer must give the manufacturer notice of the dealer's refusal by certified mail, return receipt requested. The manufacturer then has 20 days to begin the requested repairs. If by the end of the 20 day period, the manufacturer does not begin the repairs, the consumer is entitled to the replacement of the vehicle with a comparable motor vehicle or refund of the purchase price.51

The Right to a Refund or Comparable Vehicle

Consumers are entitled, at their option, to a comparable replacement vehicle or a refund of the purchase price plus all taxes and fees if:

In addition to these requirements, for the consumer to be entitled to a replacement vehicle or a refund, the defect or defects must "substantially impair" the value of the motor vehicle to the consumer.

A refund may be reduced, for any use of the vehicle in excess of 12,000 miles, by a formula in the statute and for any damage not attributable to normal use. Consumers are entitled to a refund of any tax paid when they receive a refund of the full purchase price from the manufacturer. An application should be submitted to the Department of Taxation and Finance for a tax refund by the consumer.

Under the New Car Lemon Law, consumers who lease lemons are entitled to receive a refund of any down payment made, plus the total of any lease payments made minus any service fees charged. The lease contract in a Lemon Law proceeding is void as of the date of the arbitrator's (a representative from the State who looks over the case to resolve an ongoing dispute) decision. No "early termination penalty" may be assessed as a result of this termination of the lease.

The manufacturer, not the dealer, is legally responsible for providing the Lemon Law refund or replacement remedy. However, a consumer may at their option, return the motor vehicle to the selling dealer or any other authorized dealer who attempted to make the repair instead of the manufacturer's facility. Further, the consumer may not be charged for shipping costs in this case.52

Used Car Lemon Law

The rights of a consumer purchasing a used motor vehicle in New York depend primarily on whether the vehicle was purchased from a dealer. If the consumer purchased a used vehicle from a dealer, State law protects them from defective motor vehicles. Under the Used Car Lemon Law, discussed further below, a dealer is a person or business who sells, offers for sale, leases or offers for lease at least three vehicles in the prior year.53 If the sale was from a private party, the consumer is in a much weaker position if the vehicle is problematic.

If the vehicle was purchased, leased, or transferred after 18,000 miles of operation or two years from the date of original delivery, whichever is earlier, the Used Car Lemon Law applies, so long as the motor vehicle was purchased and leased from a New York dealer.

The law covers only vehicles which are normally used for personal and non-business purposes. Motorcycles, motor homes, and off-road vehicles (dirt bikes, scooters, etc.) are not covered.

Used Car Warranties

Under the Used Car Lemon Law, any dealer in New York State selling or leasing a used motor vehicle must give the consumer a warranty depending on the mileage of the vehicle at the time of purchase or the inception of the lease. (Purchases of vehicles through automobile auctioneers are covered by the Used Car Lemon Law. See the section entitled Automobile Auctioneers above for more information.) The written warranty must require the dealer or their agent to repair, or at the dealer's election, reimburse the consumer for the "reasonable" cost of repairing a covered part (see below):

Vehicles sold for under $1,500 (or in the case of a lease, where the agreed value is less than $1,500), or which have odometer readings of more than 100,000 miles are exempt from the law if the mileage is indicated in writing at the time of sale or lease.

Lemon Law Refunds and Replacements

Consumers are entitled to a replacement vehicle or refund under the Used Car Lemon Law if, within the required statutory warranty period (see above):

The 15 day period does not include days when the dealer cannot complete the repair because of the unavailability of necessary repair parts. The statutory warranty period is extended by any days the vehicle is in the dealer's (or their agent's) possession for the purpose of repairing the vehicle for covered repairs. The dealer is required by law to diligently attempt to obtain these parts. However, if a vehicle has been out of service for a cumulative period of 45 days, even if a portion of that time is due to the unavailability of replacement parts, the consumer is entitled to the replacement or refund remedies under the law.

In addition to the above, the defect must "substantially impair the value of the car" (see the section entitled "New Car Lemon Law," above). The dealer may also raise the defense that the defect was the result of unreasonable modifications, abuse, or neglect.

If the dealer offers the consumer a comparably priced replacement vehicle, the parties may agree to an adjustment in price for the new vehicle. The dealer must provide the consumer with a refund of their purchase price if the consumer elects this remedy.

The remedies in the Used Car Lemon Law may be invoked by "consumers", defined as the purchaser or lessee, of motor vehicles normally used for personal, family, or household purposes, or the purchaser or lessee's spouse or child if the used motor vehicle is transferred to them during the statutory warranty period (see above), and "any other person entitled by the terms of the car's warranty to enforce the obligations of the warranty."

Magnuson-Moss Act

The federal "lemon law," the Magnuson-Moss Act, expands consumers' options when they have purchased a defective vehicle. The Magnuson-Moss Act prohibits implied warranty disclaimers (i.e., selling a car "as is"), at least during the term of any written warranty.54 A written warranty is defined as meeting at least one of two criteria: 1) a written statement that a product is defect free or will perform at a specified level of performance for a specified time, or 2) a written promise to refund, repair, replace, or take other remedial action if the product fails to meet promised specifications.55 Magnuson-Moss also states that if the seller "enters into" a service contract with the consumer within 90 days of a sale, then the seller cannot disclaim implied warranties.56 An agreement to arbitrate must be disclosed in the written warranty or else the agreement is not enforceable;57 in fact, some jurisdictions will not enforce agreements to arbitrate claims under the Magnuson-Moss Act at all.58

Additionally, Magnuson-Moss written warranties may exist even when a court finds no express warranty exists. Thus, if a court finds there is no express warranty, a repair or replacement warranty meets the Magnuson-Moss' definition of "written warranty." Revoking acceptance using Magnuson-Moss offers certain advantages over other revocation options, and can be available when there are no other options. An example of this is when the immediate seller has effectively disclaimed implied warranties, and the consumer seeks to revoke acceptance as to the manufacturer or other indirect seller. Magnuson-Moss provides for a remedy in this situation.59

This law greatly affects the rights of car buyers. For any product which has a written warranty, if any part of the product or the product itself is considered defective, after a reasonable number of attempts to remedy, the warrantor must permit the buyer the choice of either a refund or replacement of the product.60 Magnuson-Moss, like the State Lemon Law, provides this as an affirmative right, so that the consumer need not prove all the elements required by the U.C.C. for revocation of acceptance.

If an alternative dispute mechanism is disclosed in the written warranty and it qualifies under FTC rules, then the consumer must resort to this non-binding mechanism before instituting suit.61 If a qualifying mechanism is not disclosed, then it is ineffective.62 While these Magnuson-Moss preconditions may be more burdensome than a notice of a breach (which unlike the U.C.C., Magnuson-Moss does not require), Magnuson-Moss is an important option where the consumer did not meet the U.C.C. notice requirement.

In general, the Magnuson-Moss Act gives consumers control over whether an action is heard in State or federal court. A consumer can obtain federal court jurisdiction under Magnuson-Moss by claiming at least $50,000 in economic damages. On the other hand, consumers can keep their case out of federal court in a Magnuson-Moss case simply by seeking less than $50,000 in the complaint. Attorney's fees based on actual time spent will be covered if the consumer does prevail.63

Leased Vehicle Lemon Law

Both the New and Used Car Lemon Laws (Sections 198-a and 198-b of the General Business Law) apply to leased vehicles. (See sections entitled "New Car Lemon Law" and "Used Car Lemon Law.") Consumers may also have the right to have their repair costs covered under the auto manufacturer's warranty or an extended service contract they purchase from the leasing company or a third party.

The Lemon Law and Motor Homes

As stated above, the Lemon Law applies to the non-residential portions of a motor home (e.g., the parts devoted to propelling the vehicle). The motor home manufacturer, rather than the manufacturer of any defective part, is responsible for providing a refund or comparable motor home (e.g., Winnebago rather than Ford is responsible for refunding the consumer's purchase price).64

Motor homes are treated like motor vehicles in almost all respects. However, State law requires the consumer to provide notice to the motor home manufacturer as a condition of receiving the Lemon Law's refund or replacement remedy. If a defect has been subject to two repair attempts or the home has been out of service for repairs a total of 21 days, whichever comes first, the consumer must report these facts to the motor home manufacturer or its authorized dealer by certified mail, return receipt requested, prior to instituting any proceeding under the Lemon Law to receive a refund or replacement vehicle.

If the consumer fails to make this report, any repair attempts which occurred prior to the consumer's notice are not counted for purposes of determining whether the consumer has met the Lemon Law's two repair attempts or 21 day out service requirement. However, the notice requirements discussed above only apply if the motor home manufacturer or its authorized dealer has previously informed the consumer in writing of their responsibility to provide notice to the motor home manufacturer, and the consumer has acknowledged receipt of this notice in writing.

State law also provides a remedy to consumers in the event of a refusal by an agent or authorized dealer of a motor home manufacturer to undertake repairs under the New Car Lemon Law. In this case, the consumer may, after waiting seven days after the agent or dealer receives notice of the defect, forward written notice of the refusal to the motor home manufacturer by certified mail, return receipt requested. If after 20 days, the motor home manufacturer, its authorized agent, or any repair shop to which they refer the consumer, fails to begin repairs, the consumer is entitled to the Lemon Law remedy.

In addition to any warranties provided by the manufacturer of a new motor home, motor homes purchased and registered in New York are warranted against all material defects. State law requires motor home manufacturers to replace motor homes which were reported defective within the first 18,000 miles of their operation, or during the first two years of the original delivery (whichever is earlier) provided that the manufacturer was unable to correct or repair such defects after a reasonable number of attempts. The consumer may also choose to return the motor home for its full purchase price or, if applicable, the lease price and any trade-in allowance. However, it is the duty of the consumer to report such defects to the manufacturer. Upon notification, the problem must be corrected for free.

Dispute Resolution

In case of a dispute, should the manufacturer have an informal dispute resolution program (e.g., an arbitration program) which complies with the requirements of the federal Magnuson-Moss Act and the State Lemon Law, consumers must, by law, participate in that program. If they do not, the law states that the manufacturer may refuse to provide the Lemon Law's refund or replacement remedy.65 At arbitration proceedings, consumers and arbitrators must be given a notice entitled the "New Car Lemon Law Bill of Rights" which explains the provisions of the law.

The informal dispute resolution programs of manufacturers are binding on the manufacturer, not the consumer.66 This means that a consumer who is unsuccessful in a manufacturer's program may sue in court. In addition, the New York State Attorney General's arbitration program (see below) includes consumers who have lost in a manufacturer-sponsored arbitration.

Consumers should ask manufacturers, prior to going to court or filing with the Attorney General's arbitration program, whether the manufacturer has established their own arbitration program. Given the non-binding nature of manufacturer's dispute resolution programs, and the Lemon Law's requirement that consumers participate in these programs, it generally makes sense for consumers to use these programs first. However, consumers should carefully prepare for these proceedings. A judge or an arbitrator under the Attorney General's program, while not bound by the decision made in the manufacturer's dispute resolution program, may be persuaded by the earlier decision.

New York State Attorney General's Lemon Law Arbitration Program

In addition to the manufacturer's arbitration program, consumers may submit their disputes under the New and Used Car Lemon Laws to an alternative arbitration mechanism administered by the New York State Attorney General. A consumer seeking to participate in this program must file a "Request for Arbitration" form with the Attorney General which will be reviewed for eligibility and completeness. Upon acceptance, the consumer will be asked to pay a $250 filing fee, refundable to the consumer if he or she is awarded Lemon Law relief.67

The Attorney General's program is different from the manufacturers' programs in several ways. First, participation by the consumer in the Attorney General's program is optional (i.e., consumers can go to court without filing with the Attorney General). Second, unlike manufacturers' programs, the decision made by an arbitrator pursuant to the Attorney General's program is binding on both the consumer and the manufacturer. Consumers may only appeal the Attorney General's arbitration decision for the limited reasons provided in Article 75 of the N.Y. Civil Practice Law and Rules. These reasons include, but are not limited to: corruption or fraud in the process; bias of the arbitrator; clear errors of law; or miscalculation of figures in the award. A disagreement over a finding of fact by the arbitrator is not a basis for appeal.68

AUTOCAP

The Automotive Consumer Action Program (AUTOCAP) is a voluntary arbitration program sponsored by State or local franchised automobile dealer associations. AUTOCAP resolves car complaints between customers and dealers in two steps. Initially, AUTOCAP will attempt to settle the dispute through informal mediation between the consumer and the dealer. If that is not successful, an impartial panel, consisting of dealers and consumer professionals, will recommend a solution. Participating dealers agree to honor panel recommendations, which are not binding on consumers. Therefore, consumers who remain dissatisfied with the decision can pursue legal remedies as noted above.

Some AUTOCAP panels handle disputes under the Used Car Lemon Law. AUTOCAP may be contacted at these locations:
Greater New York AUTOCAP
18-¬10 Whitestone Expressway
Whitestone, NY 11357
1-800-522-3881

Niagara Frontier AUTOCAP
Auto Dealers Association
1144 Wehrle Drive
Williamsville, NY 14221
(716)-631-8510
1-800-274-8501
Email: [email protected]

New York State AUTOCAP
P.O. Box 7347
Albany, NY 12224
1-800-342-9208

Warranties

Warranty of Serviceability

Another important protection given by State law is called the warranty of serviceability. Any used car sold by a dealer to a retail customer in New York State must contain a Certificate of Adequacy which indicates that the car will give satisfactory service on the highway at the time of delivery.69

The Department of Motor Vehicles (DMV) has enforcement authority with respect to the warranty and complaints relating to defective cars.70 All complaints should be referred to the nearest DMV office. Consumers may also visit http://www.nydmv.state.ny.us/vehsafe.htm#Vehicle%20Repair to learn more information about how to complain about vehicle repairs, inspections or dealers. Consumers may also contact the DMV Division of Vehicle Safety Services at (518) 474-8943 between 8:30 a.m. and 4:15 p.m. weekdays to file a complaint. The DMV will send inspectors with experience as mechanics to investigate complaints stating that used cars sold by dealers do not meet the warranty of serviceability. If the investigator determines that the warranty has been violated, they will recommend to the dealer that the car be repaired at no cost. If the car is beyond repair, they will recommend that the dealer refund the purchase price. The possibility of a DMV hearing and suspension or revocation of the dealer's registration is often enough to convince a dealer to resolve the complaint.

A consumer can also file a private lawsuit to enforce the warranty of serviceability. Presumably, consumers who purchase used motor vehicles from automobile auctioneers may also sue dealers who violate the warranty of serviceability. See the section entitled "Automobile Auctioneers" for more information.

The warranty of serviceability cannot be waived. It applies to all used cars bought from dealers -- even if the contract says the sale is "AS IS." Although the warranty of serviceability specifically concerns the car's condition at the time of delivery, a consumer may be protected even if it takes time for the car to break down. The key point to be proven will be that the car broke down because of a defect that existed at the time of delivery.

Consumers may lodge complaints against dealers who violate the "warranty of serviceability" described above at the Division of Motor Vehicle Safety of the Department of Motor Vehicles. Presumably, they may also sue dealers violating the warranty of serviceability provided in section 417-a of the Vehicle and Traffic Law and receive the remedies provided in that section.

Application to "Junk" Vehicles

The warranty of serviceability does not apply to a vehicle sold by the dealer as "junk." In this case, the consumer will be asked to sign a Customer's Declaration which states that the vehicle will not be operated on public roads at the time of purchase and that the consumer knows the vehicle is unsuitable for operation, probably needs extensive repairs, and must pass inspection before it can be registered. In this case, the consumer will not receive a Certificate of Adequacy or any guarantee that the vehicle has been inspected.

Warranty Coverage for Used Vehicles

Warranty coverage must include, at a minimum, the following parts: engine, transmission, drive axle, brakes, radiator, steering, alternator, generator, starter, and ignition system (excluding the battery). Any waiver of the warranty is void.

If a problem which is covered by the consumer's warranty develops, the consumer should report it immediately to the dealer who then must repair it free of charge or (at the dealer's election) reimburse the consumer for the reasonable cost of repairs. As long as the consumer reports the defect before the warranty expires, the repair must be made at no charge to the consumer, even if the actual work is done after the warranty period is up.

The written warranty provided by the dealer may contain language excluding coverage in the following cases:

The law also states the warranty may exclude coverage for property damage arising from a failure of a covered part, loss of the use of the car, loss of time, inconvenience, commercial loss, or consequential damages.

Automobile Parts Warranty

Under N.Y. law, an express written warranty must be provided on automobile parts. The warranty applies to parts that are new, used, modified, rebuilt, remanufactured (disassembly and recovery), improved, or reconditioned. However, used parts that are removed from a motor vehicle without any attempt to improve the part's condition, and are clearly marked "AS-IS" are exempt from the statute. The warranty must be provided by the "initial seller," defined as the entity who "manufactured, modified, rebuilt, remanufactured, improved, reconditioned, or recycled ... or... first sold the part."

The initial seller must warrant its parts to be "fit for the ordinary purposes for which such parts are used" for the first 3,000 miles of operation of the motor vehicle after the part's installation, or 90 days following the part's original delivery to the consumer, whichever comes first. If the part is defective, and the consumer reports the defect to the initial seller, its agents, or authorized dealers during the term of the warranty, the seller must repair the defect. If the seller is unable to repair the part, it must replace the part, or refund the consumer's purchase price.

Consumers must retain the part which is the subject of the warranty claim until the claim is resolved or until the initial seller requests return of the part, whichever comes first. The consumer's failure to return the part to the initial seller upon request is grounds for denying warranty coverage. Similarly, the initial seller may deny coverage if the defect is the result of the consumer's abuse, neglect, unauthorized modifications, or the failure of another part.

The part's warranty extends to any person to whom the motor vehicle in which the part was installed, is transferred during the period of the warranty, and to anyone else entitled by the written provisions of the warranty to enforce its obligations.

Federal Trade Commission (FTC) Used Auto Parts Guides

The FTC Guides for the Rebuilt, Reconditioned and Other Used Automobile Parts Industry (Used Auto Parts Guides), advise industry members not to misrepresent their products are new, the condition of the product or the extent of rebuilding, and that the rebuilder was the original manufacturer. The FTC requires that the industry conspicuously disclose in advertising and packaging, that the products include used parts.

The Used Auto Parts Guides define industry products broadly to include all self-propelled vehicle used parts and assemblies containing used parts. For example, automobile parts, and truck, tractor, and motorcycle parts, if used, come under the Guides, as do the large diesel engines, clutches, and transmissions in heavy equipment.

Rental Cars

Rental Car Discrimination

There is no specific State law governing the quality of rental cars. Car rental agencies may not refuse to rent to a person at least 18 years of age provided that insurance coverage for persons of that age is available. Any extra cost for insurance related to the age of the person renting the motor vehicle may be passed onto such person. Knowing violations of this provision carry a penalty of up to $500.71 Additionally, it is unlawful for rental agencies to refuse to rent a car because of a person's race, color, ethnic origin, or sex,72 or because a person does not possess a credit card.73

Many consumers have been under the belief that they are unable to rent a car until they turn 25. This is not true. However, it is generally much more expensive to rent a car until a consumer reaches the age of 25 due to the higher liability associated with the 18-24 age bracket for drivers.

Rental Vehicle Damage, Insurance, and Charges

Section 396-z of the General Business Law governs car rentals lasting for 30 days or less. Section 396-z details rental provisions which shift the liability for vehicle damages from the rental car company to the driver. However, before engaging in vehicle rentals, the driver has the option of purchasing insurance against loss. This optional insurance often known as "collision damage waiver" in rental policies is capped at $9-12, depending on the price of the rental vehicle. It is important that consumers understand their potential liability if they decide to decline this insurance option. Additionally, consumers should be aware that often their own vehicle insurance policies and/or credit cards offer similar coverage just like the sort offered by the rental agencies. Consumers should know their vehicle insurance policies to ensure that they are not paying twice for the same coverage.

The statute defines an authorized driver as: (a) a licensed driver to whom the vehicle is rented; (b) such person's spouse, if licensed, and at least 18 years of age; (c) anyone who operates the vehicle in an emergency to a medical facility; and, (d) any licensed driver listed in the rental agreement as an authorized driver. Any claims made by the rental company for damage to the car for under $100 must be based on a physical survey made upon the return of the rental vehicle (unless the return is done by automation or after hours, in which case the claim must be made within 10 days of the vehicle's return). Claims for over $100 require the damage to be the result of intentional damage, intoxication, racing, taxi driving, or involvement in a crime, or the driver fails to furnish an accident report. Further, any repair charge is limited to the actual costs incurred by the rental company and must be billed separately from rental charges.

Section 396-z prohibits rental companies from:

Agreements inconsistent with General Business Law   396-z are void and they may not be enforced by the rental company. Companies violating the law are subject to a penalty of $500-$1,000 for each violation. The New York State Attorney General enforces the law and may seek injunctive relief, penalties, and restitution for consumers.

Rental car companies are required to make child car seats available to consumers. Depending upon the company, these child car seats may be available for free or for an additional charge.

Theft of Rental Vehicles

Authorized drivers are required under the law to provide notice to the rental company within 48 hours of learning of the theft of the rental vehicle.

Rules for New York City Residents

New York City regulations require that in cases where a reservation has been made for a rental car, a suitable one must be made available, at the same price, within one-half hour of the reserved time. Contact the New York City Department of Consumer Affairs for additional information.

Car Repairs

Consumers should choose a reliable repair shop recommended by the DMV, trustworthy family or friends, or an independent consumer rating organization. Drivers should also check out the repair shop's complaint record with the New York State Department of State Division of Consumer Protection, Office of the New York State Attorney General, a local consumer protection office, or the Better Business Bureau (BBB). Some consumer car repair tips include:

Automobile Repair Shops

All motor vehicle repair shops must be registered with the DMV.74 Consumers may verify that a motor vehicle repair shop is registered by visiting the DMV website. Shops must give a written estimate of the cost of repair service (complete with sales tax) upon request of the customer, and may not charge more than the estimate without the consumer's permission. The shop is permitted to charge a reasonable fee for the estimate.

No work may be done by a repair shop which has not been authorized by the consumer, either in writing or orally.75 The shop must prepare an invoice, and a copy of the invoice must be given to the consumer.76

All work done by a repair shop must be recorded on an invoice. The invoice must describe all parts supplied and state whether used parts were provided, including whether an installed component system is composed of new or used parts. If any parts are supplied for the body, the invoice must state whether the parts were manufactured as original equipment parts for the vehicle or are non-original replacement parts. A copy of the invoice must be given to the customer and a copy kept on file in the shop.

A repair shop must return all replaced parts, other than those which are subject to a warranty or normally sold on an exchange basis, if the customer made a written request for those parts before work was initiated or has authorized a repair by telephone.

Consumers have 90 days or 3,000 miles after completion of a repair to file a complaint with the DMV. If, after investigation, the DMV determines that there has been gross negligence or gross overcharging, a DMV hearing may be held whereby a civil penalty may be imposed or a repair shop's registration may be suspended or revoked. Restitution to the consumer may be substituted in lieu of any civil penalty or suspension or portion thereof. Restitution is limited to automobile repair-related damages, and/or any amount of overcharge. Neither punitive nor incidental damages may be included.77

Rustproofing

After-market rustproofing must be sold with a five year written warranty to repair the vehicle or indemnify the buyer for the cost of repairing rust damage covered by the warranty. The individual or corporation providing this warranty cannot refuse to honor it on the grounds that the rustproofing was improperly applied, if the application was done by a person they authorized. This section is enforced by the New York State Attorney General, who may seek injunctive relief and restitution for consumers. Insured consumers may also sue and receive damages, treble damages for a willful violation, and, at the court's discretion, attorney's fees.

Safety

Airbags

Passenger size, gender, and age do not determine risk of injury from airbag inflation. Rather, it is the body's position in relation to the airbag. Most people can take steps that will eliminate, or at least significantly reduce any risk of injury without turning off airbags and losing their protection. The main source of risk is proximity; an airbag needs space to inflate. Consumers should move the seat rearward, and tilt the seat back. Drivers should ride at least ten inches (measured from the center of the steering wheel to the breastbone) from the airbag cover. Passengers also need to sit at least ten inches back from the air bag. Insist that children 12 years-old and younger ride in the back seat. Consumers should never put a rear-facing child restraint in front of an airbag. Further, wearing a seatbelt will minimize injuries from airbags.


Since January 1998, automotive repair shops and dealers have been permitted, under appropriate circumstances, to install switches that allow airbags in passenger cars and light trucks to be turned on and off. Dealers and repair shops cannot perform this work without an authorization letter from the National Highway Traffic Safety Administration (NHTSA). Vehicle owners can get this authorization letter by completing a request form developed by NHTSA and sending it to the agency. Contact information for NHTSA is listed in this Manual's Appendix.

Child Car Seats

New York State requires young children and infants under the age of four riding in cars to be protected by child safety seats that meet Federal Motor Vehicle Safety Standard 213 (49 C.F.R. 571.213). Children under the age of 16 riding in the back seat are required to wear seat belts.

Choosing the correct child safety seat is very important. Children's safety depends upon their height and weight, the type and appropriate age level child safety seat, and the way the seat and child are secured in the car. There are four types of child safety seats: infant seats, convertible seats, forward-facing only seats, and booster seats. Consumers should read the child safety seat instructions and the vehicle owner's manual carefully before installing a child safety seat.

Infant seats are designed for infants weighing from 5 to 22 pounds and are less than 26 inches in height. Infant seats are always installed facing the rear of the vehicle and are designed to cushion and support babies or infants. Infants should remain in rear-facing seats until they weigh 20 pounds or are one year of age. Consumers should never put an infant in a rear-facing seat in the front seat of a car that has a passenger air bag.

Children weighing between twenty and thirty pounds and are under one year of age should use convertible seats. Convertible seats are designed to fit children weighing up to 65 pounds.

Children outgrow a convertible safety seat when they reach its weight limit. At this point, the child may be fastened in a forward-facing seat.

Booster seats are designed for forward-facing use only. They serve as a transition to using vehicle safety belts by older children who have outgrown their convertible child safety seat. There are two types of booster seats, those with shields and those without shields. Shield boosters are for children weighing between 30 and 40 pounds and are used when a vehicle's rear seat is equipped only with lap belts and no shoulder belts. However, if the lap and shoulder belts are available in the rear seat, consumers should remove the shield and use the base as a belt positioning booster. Current New York State law mandates the use of booster seats for children under the age of eight. The majority of other states recommend that a child remain in a booster seat until they are at least eight years old unless they are 4-feet-9 inches tall. Additionally, the NHTSA recommends children remain in booster seats until they reach 4-feet-9 inches tall or 80 pounds. The New York State booster law also exempts a child who is under the age of seven, but weighs more than 100 pounds, or is taller than 4-feet-9 inches, (which is the maximum weight/height for booster seats), from having to use a booster seat.

Consumers should never use a child safety seat that has been in a crash. Even if the seat looks suitable, it may have been damaged and might not adequately protect a child. Also, consumers should make sure that the safety seat has all of its parts. If there are missing parts, do not use the seat. Consumers can get replacement parts from the manufacturer. Furthermore, do not use safety seats that are worn, bent, or have cracks in the plastic shell or metal frame.

Rental car companies are required to make child car seats available to consumers.78 Depending upon the company, these child car seats may be available for free or for an additional charge.

School buses are subject to federal safety standards such as high backed, padded seats, compartmentalized passenger areas and higher structural standards for crash worthiness.79 New York's only requirement for school buses is that passengers under the age of four must be in booster seats.80

Repossession

Unless otherwise agreed, upon a consumer's default, the "secured party" (usually a finance company) may repossess the vehicle without prior notice to the consumer, even without going to court to obtain permission. However, any repossession must be done without a "breach of the peace" (e.g., violence, or unlawful entry of the consumer's property, etc.).81 Consumers are also encouraged to read through the contract thoroughly with respect to defaulting on payments and the subsequent consequences of doing so.

After repossessing the vehicle, the secured party has to send a notice to the debtor a reasonable time before disposing of it.82 This notice must include the telephone number of the person who has to be paid in order to redeem and retrieve the vehicle.83 To redeem the vehicle, the consumer must pay whatever is owed under the contract, as well as the reasonable expenses of repossession and, if agreed, attorney's fees.84 Consumers should be aware of the terms of the contract before signing. The contract may attempt to get consumers to agree to other default terms.

A secured party may, and generally does, sell the car after the consumer's default. The sale may be public or private, but every aspect of the sale, including the method, manner, time, place and terms must be commercially reasonable.85

Please Note: Given the complex legal rights of the parties, legal representation is recommended for repossession cases.

Common Scams

‘Cash For Clunkers' Scam

A program called the Car Allowance Rebate Systems (CARS), or "Cash for Clunkers" was a plan set up by Congress to help save buyers up to $4,500 per vehicle on a new car if certain requirements were met. The targeted victims were consumers who were searching to trade their less fuel efficient vehicle for a more fuel efficient vehicle. To trade their vehicles, consumers had to present a vehicle that:

  1. Is drive-able;
     
  2. Was built after 1984; and,
     
  3. Has an EPA average of less than 18 miles to the gallon.

The scam: Unofficial "cash for clunkers" websites were requesting identifiable information and directing consumers to pre-register for the program. These websites were using this identifiable information to commit identity theft.

What can be done: The National Highway Traffic Safety Administration (NHTSA) stated that dealers and consumers did not have to pre-register for CARS. Consumers were warned to not give out personal identifiable information on any Cash for Clunkers website. For more information, visit the official NHTSA CARS website.

Odometer Fraud Scam

"Title washing" omits the history of an automobile that has been restored. Odometer rollbacks are being covered up by scammers through "title washing." Vehicles branded with salvage titles have lower market values and are difficult to sell. Once the branding is eliminated, the car's value goes up and it is easier to sell. The targeted victims are consumers looking to purchase a used or pre-owned car.

The scam: Correct mileage is being withheld from consumers while new titles are being obtained from the Department of Motor Vehicles (DMV). The "washed" title can be used to cover up odometer fraud and other vehicle issues. Mileage is used as a reading of how much wear and tear a used car has suffered, translating into profit for dealers. For example, the difference between a car with 40,000 miles and one with 70,000 miles can be about $3,600.

What can be done: Get a free CARFAX Odometer Check to help uncover potential odometer rollback. Consumers should check reports, such as this one, and do research on the vehicle and the seller before buying.

Used Car Buyer Scam

Many consumers have become victims of used-car dealers claiming to be from Africa, or from some other foreign country. Consumers are enthusiastic to sell their vehicles for a good price and after complicated email exchanges, the victim ends up with a worthless cashier's check, a diminished bank account and a car to sell.

The scam: A consumer, who is enthusiastic to sell, advertises a car that may be in less-than-perfect condition. The consumer is contacted by a buyer from a foreign country who is willing to pay full price. The scam artist explains that an agent will pick up the vehicle and that a cashier's check in the amount that is agreed-upon will be issued. The consumer receives a check in excess of the amount agreed upon, which is explained as a mistake. The consumer is now contacted by the scam artist requesting a check in the amount of the discrepancy. The consumer sends the check and in doing so becomes responsible for the check deposited and the check issued in addition to still having to sell their vehicle.

What can be done: Be aware. If you are selling a used car and a buyer from a foreign country claims to want your car, for your full asking price, with some complicated scheme for payment that involves you sending money to someone else, then the chances of this being a scam are good.

Complaints

All dealers, whether selling new or used cars, must be registered by the DMV. The DMV can investigate complaints of dealer fraud, improper repairs, and ensure that warranties are honored, and can hold hearings to suspend or revoke a dealer's registration. DMV complaints can be submitted by mail or phone:

NYS Department of Motor Vehicles
Bureau of Consumer Facility Services
P.O. Box 2700
Empire State Plaza
Albany, NY 12220-0700
518-474-8943

For information or complaints regarding motor vehicle and child safety or recalls contact the:

National Highway Traffic Safety Administration
Department of Transportation
400 7th Street, SW
Washington, D.C. 20590
1-888-327-4236

Or

Center for Auto Safety
1825 Connecticut Ave, NW, Suite 330
Washington, D.C. 20009-5708
202-¬328-7700

Customer Assistance Lines for Major Automobile Manufacturers:

 

Buick 1-800-521-7300
Cadillac 1-800-333-4223
Chevrolet 1-800-222-1020
Chrysler 1-800-992-1997
Dodge 1-800-992-1997
Ford 1-800-392-3673
Geo/Chevrolet 1-800-222-1020
Honda 1-800-999-1009
Hyundai 1-800-243-7766
Jeep/Eagle 1-800-992-1997
Lincoln 1-800-521-4140
Mazda 1-800-222-5500
Mercury 1-800-521-4140
Nissan 1-800-647-7261
Oldsmobile 1-800-442-6537
Plymouth 1-800-992-1997
Saturn 1-800-553-6000
Subaru 1-800-782-2783
Suzuki 1-800-934-0934
Toyota 1-800-331-4331
Volkswagen 1-800-822-8987
Volvo 1-800-458-1552

 

 

  1. N.Y. Gen. Bus. Law   396-p (1) (2010). ↑
  2. N.Y. Gen. Bus. Law   396-p (3) (2010). ↑
  3. N.Y. Gen. Bus. Law   396-q (2) (2010). ↑
  4. N.Y. Gen. Bus. Law   396-p (4) (2010). ↑
  5. N.Y. U.C.C.   2-601 (2010). ↑
  6. N.Y. Pers. Prop. Law   302(2) (2010). ↑
  7. N.Y. Pers. Prop. Law   302 (2010). ↑
  8. N.Y. Pers. Prop. Law   302 &, 314 (2010). ↑
  9. N.Y. Pers. Prop. Law   302(13) (2010). ↑
  10. N.Y. Pers. Prop. Law   314 (2010). ↑
  11. N.Y. Pers. Prop. Law    302 (14) & 314 (2010). ↑
  12. N.Y. Pers. Prop. Law   302 (12) (2010). ↑
  13. N.Y. Pers. Prop. Law   304 (2010). ↑
  14. N.Y. Pers. Prop. Law   302 (7) (2010). ↑
  15. N.Y. Pers. Prop. Law   305 (2010). ↑
  16. N.Y. Pers. Prop. Law   307 (2010). ↑
  17. N.Y. Pers. Prop. Law   307 (3) (2010). ↑
  18. N.Y. Vehicle & Traffic Law 417-a (2010). ↑
  19. N.Y. Gen. Bus. Law   736 (2010). ↑
  20. N.Y. Gen. Bus. Law   738 (2010). ↑
  21. N.Y. Gen. Bus. Law   739 (2010). ↑
  22. N.Y. Gen. Bus. Law   738 (2010). ↑
  23. Id. ↑
  24. N.Y. Gen. Bus. Law   737 (2010). ↑
  25. N.Y. Gen. Bus. Law   740 (2010). ↑
  26. N.Y. Gen. Bus. Law   743 (2010). ↑
  27. N.Y. Gen. Bus. Law   742 (2010). ↑
  28. N.Y. Pers. Prop. Law   301 (2010). ↑
  29. N.Y. Pers. Prop. Law   302 (2010). ↑
  30. 15 U.S.C.    1681 - 1681(t) (2010). ↑
  31. 15 U.S.C. 1681b(a)(3)(F)(i) (emphasis in original). ↑
  32. Federal Trade Commission's Staff Opinion Letter on the Fair Credit Reporting Act to Karen Coffey (February 11, 1998). ↑
  33. 15 U.S.C.   1681g (2010). ↑
  34. 15 U.S.C.   1681s (2010). ↑
  35. 15 U.S.C.    1681n, 1681o (2010). ↑
  36. 15 U.S.C.    1681s-2, 1681n, 1681o (2010). ↑
  37. Federal Trade Commission's Staff Opinion Letter on the Fair Credit Reporting Act to Karen Coffey (February 11, 1998). ↑
  38. 15 U.S.C.   1232 (2010). ↑
  39. 15 U.S.C.   1233 (2010). ↑
  40. 49 U.S.C.   32701(a) (2010). ↑
  41. 49 U.S.C.   32705(a) (2010). ↑
  42. 49 U.S.C.   32710 (2010). ↑
  43. N.Y. Vehicle and Traffic Law 301 (2010). ↑
  44. 15 U.S.C. 57b. ↑
  45. 15 U.S.C. 1667(c). ↑
  46. 15 U.S.C. 1640(a). ↑
  47. See Bouck v. Ross Leasing Corporation, 559 N.Y.S.2d 428, 431 (City Ct. of Auburn 1990). ↑
  48. N.Y. Gen. Bus. Law   198-a (b) (2010). ↑
  49. Id. ↑
  50. Stephen Mindell, Review of 1989 Consumer Legislation-Part I, N.Y.L.J. (Aug. 20, 1990). ↑
  51. N.Y. Gen. Bus. Law   198-a(b)(2) (2010).N.Y. Gen. Bus. Law   198-a (b)(1) (2010). ↑
  52. N.Y. Gen. Bus. Law   198-a (c)(1) (2010). ↑
  53. Even if this requirement is met, financial institutions, businesses selling used motor vehicles to their employees, regulated public utilities selling vehicles at public auction vehicles used in its operations disclosing the "AS IS" nature of the sale, lessors selling leased vehicles to the lessee or his or her family member or employee and New York State are not "dealers" under the Used Car Lemon Law. See N.Y. Gen. Bus. Law   198-b (2010). ↑
  54. 15 U.S.C.   2308 (2010). ↑
  55. 15 U.S.C.   2301 (2010). ↑
  56. 15 U.S.C.   2308 (2010). ↑
  57. Cunningham v. Fleetwood Homes of Georgia, Inc., 253 F.3d 611, 622 (11th Cir. 2001). But see Jones v. General Motors Corp., 640 F. Supp. 2d 1124, 1143 (D. Ariz. 2009). ↑
  58. Brown v. Kline Tyson Imports, Inc., 190 F. Supp. 2d 827, 831 (E.D. Va. 2002); Walton v. Rose Mobile Homes, L.L.C., 298 F.3d 470, 478 (5th Cir. 2002) (collecting cases). ↑
  59. Shuldman v. Daimler Chrysler Corp., 1 A.D.3d 343, 344-45 [2d Dept. 2003]. ↑
  60. 15 U.S.C.   2304 (2010). ↑
  61. 15 U.S.C.   2304 (2010). ↑
  62. 15 U.S.C.   2310(a)(3)(C) (2010). ↑
  63. 15 U.S.C.   2310(d) (2010). ↑
  64. N.Y. Gen. Bus. Law   198-a (n)(4) (2010). ↑
  65. N.Y. Gen. Bus. Law   198-a (g). ↑
  66. N.Y. Gen. Bus. Law   198-a (h) (2010); Mountcastle v. Volvoville, U.S.A. Inc., 494 N.Y.S.2d 792, 794 (Nassau Cty. 1985). ↑
  67. http://www.ag.ny.gov/bureaus/consumer_frauds/pdfs/cns006_newcar.pdf ↑
  68. N.Y. Civ. Prac. & Rules   7511. ↑
  69. N.Y. Vehicle & Traffic Law   417 (2010). ↑
  70. N.Y. Vehicle & Traffic Law    418, 155, 225 (2010). ↑
  71. N.Y. Gen. Bus. Law   391-g (2010). ↑
  72. N.Y. Gen. Bus. Law   398-b (2010). ↑
  73. N.Y. Gen. Bus. Law  391-l (2010); knowing violations of section 391-l may be subject to penalties of up to $500. ↑
  74. 15 N.Y.C.R.R.   82.3 (2010). ↑
  75. http://www.nydmv.state.ny.us/broch/c17.htm. ↑
  76. N.Y. Vehicle & Traffic Law   398-d (2010). ↑
  77. 15 N.Y.C.R.R.   82.6 (2010). ↑
  78. N.Y. Gen. Bus. Law   396-z(10)(c) (2010). ↑
  79. 49 C.F.R.   571.220-22 (2010). ↑
  80. N.Y. Vehicle & Traffic Law   1229-c(4) & (11) (2010). ↑
  81. N.Y.U.C.C.   9-609 (2010). ↑
  82. N.Y.U.C.C.    9-611-12 (2010). ↑
  83. N.Y.U.C.C.   9-614 (2010). ↑
  84. N.Y.U.C.C.   9-623, 615(a)(1) (2010); N.Y. Pers. Prop. Law   337(8) (2010); N.Y. Pers. Prop. Law   302 (13) (2010). ↑
  85. N.Y. U.C.C.   9-610 (2010). ↑
Last Modified: April 28, 2011