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e Consumer Credit and Sales Legal Practice Series AUTOMOBILE FRAUD Odometer, Salvage, and Lemon Laundering Fraud, Title Abuses and Yo-Yo Sales Fifth Edition Carolyn L. Carter John W. Van Alst Jonathan Sheldon Contributing Author: Bernard Brown National Consumer Law Center® 7 Winthrop Square, 4th Floor Boston, MA 02110 www.nclc.org/library

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Page 1: Odometer, Salvage, and Lemon Laundering Fraud, Title ... · Legal Practice Series AUTOMOBILE FRAUD Odometer, Salvage, and Lemon Laundering Fraud, Title Abuses and Yo-Yo Sales Fifth

The Consumer Credit and Sales Legal Practice Series

AUTOMOBILE FRAUDOdometer, Salvage, and Lemon Laundering Fraud, Title Abuses and Yo-Yo Sales

Fifth Edition

Carolyn L. CarterJohn W. Van AlstJonathan Sheldon

Contributing Author: Bernard Brown

National Consumer Law Center®7 Winthrop Square, 4th Floor Boston, MA 02110 www.nclc.org/library

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About NCLC® The National Consumer Law Center®, a nonprofit corporation founded in 1969, assists con-sumers, advocates, and public policy makers nationwide who use the powerful and complex tools of consumer law to ensure justice and fair treatment for all, particularly those whose poverty renders them powerless to demand accountability from the economic marketplace. For more information, go to www.nclc.org.

Ordering NCLC Publications Order online at www.nclc.org/library, or contact Publications Department, National Con-sumer Law Center, 7 Winthrop Square, 4th Floor, Boston, MA 02110, (617) 542- 9595, FAX: (617) 542- 8028, e- mail: [email protected].

Training, Conferences, and Webinars

NCLC participates in numerous national, regional, and local consumer law trainings. Its annual fall conference is a forum for consumer rights attorneys from legal services programs, private practice, government, and nonprofit organizations to share insights into common problems and explore novel and tested approaches that promote consumer justice in the mar-ketplace. Contact NCLC for more information or see our website. NCLC offers free webinars and views of past webinars. Go to www.nclc.org/webinars.html for more information.

Case Consulting Case analysis, consulting and co- counseling for lawyers representing vulnerable consumers are among NCLC’s important activities. Administration on Aging funds allow us to provide free consulting to legal services advocates representing elderly consumers on many types of cases. Massachusetts Legal Assistance Corporation funds permit case assistance to advocates representing low- income Massachusetts consumers. Other funding may allow NCLC to provide very brief consultations to other advocates without charge. See our website for more information at www.nclc.org.

Charitable Donations and Cy Pres Awards

NCLC’s work depends in part on the support of private donors. Tax- deductible donations should be made payable to National Consumer Law Center, Inc. For more information, con-tact Gerald Tuckman of NCLC’s Development Office at (617) 542- 8010 or [email protected]. NCLC has also received generous court- approved cy pres awards arising from consumer class actions to advance the interests of class members. For more information, contact Rich Dubois ([email protected]) or Gerald Tuckman ([email protected]) at (617) 542- 8010.

Comments and Corrections Write to the above address to the attention of the Editorial Department or e- mail [email protected].

About This Volume This is the Fifth Edition of Automobile Fraud. Discard prior editions and supplements.

Cite This Volume As National Consumer Law Center, Automobile Fraud (5th ed. 2015), updated at www.nclc.org/library.

Attention This publication is designed to provide authoritative information concerning the subject matter covered. Always use the most current edition, check online for updates, and use other sources for more recent developments or for special rules for individual jurisdic-tions. This publication cannot substitute for the independent judgment and skills of an attorney or other professional. Non- attorneys are cautioned against using these materials to conduct a lawsuit without advice from an attorney and are cautioned against engaging in the unauthorized practice of law.

Copyright ©2015 by National Consumer Law Center, Inc. National Consumer Law Center and NCLC are registered trademarks of National Consumer Law Center, Inc. All rights reserved.

ISBN: 978- 1- 60248- 159- 6 (this volume)ISBN: 978- 0- 943116- 10- 5 (Series)

Library of Congress Control Number: 2015943254

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About the Authors

Carolyn L. Carter, co- author, is NCLC’s director of advocacy and was formerly co- director of Legal Services, Inc., in Gettysburg, Pennsylvania and director of the Law Reform Office of the Cleveland Legal Aid Society. She is the editor of Pennsylvania Consumer Law, editor of the first edition of Ohio Con-sumer Law, author of Repossessions, co- author of Consumer Credit Regulation, Mortgage Lending, Consumer Warranty Law, Collection Actions, and Unfair and Deceptive Acts and Practices, and contrib-uting author to other NCLC publications. She was the 1992 recipient of the Vern Countryman Consumer Law Award.

John W. Van Alst, co- author, is an NCLC staff attorney whose focus includes deceptive practices law, automobile fraud, and manufactured home issues. He formerly was an attorney at Legal Aid of North Car-olina, where he handled a broad range of consumer issues, and was also an adjunct clinical professor at the University of North Carolina School of Law. He directs the NCLC Working Cars for Working Families Project (www.workingcarsforworkingfamilies.org). He is co- author of Consumer Warranty Law and Con-sumer Rights for Domestic Violence Survivors. He is a contributing author to Consumer Credit Regulation, Mortgage Lending, Unfair and Deceptive Acts and Practices, Foreclosures and Mortgage Servicing, and Repossessions.

Jonathan Sheldon, co- author, has been an NCLC staff attorney writing and consulting on automobile fraud, deceptive practices law and other consumer law topics since 1976. Previously he was a staff attorney with the Federal Trade Commission. His publications include Unfair and Deceptive Acts and Practices, Federal Deception Law, Consumer Warranty Law, Consumer Credit Regulation, and Collection Actions.

Bernard Brown, contributing author, is an attorney in private practice in Kansas City, Missouri, whose practice since 1983 has focused primarily on litigation of automobile fraud cases in state and federal trial and appellate courts. He is a cofounder and one of the two original co- chairs of the National Association of Con-sumer Advocates, presents at continuing legal education and law enforcement training programs throughout the country, has taught consumer protection law at the University of Missouri at Kansas City School of Law as an adjunct professor, and has served for several years as a member of the U.S. Department of Justice’s Advisory Board for the National Motor Vehicle and Title Information System. He was the 2008 recipient of the Vern Countryman Consumer Law Award.

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Acknowledgments

Special thanks to Emily Green Caplan for her contributions to this edition; thanks to Elizabeth De Armond, Allen Agnitti, Mary Kingsley, and Nate Player for legal research and writing; Eric Secoy for editorial super-vision; Denise Lisio for production supervision; Shirlron Williams for assistance updating appendices and checking the citations; Shannon Halbrook for organizing the companion materials; Mary McLean for index-ing; Scribe for typesetting and composition services; and iFactory and Codearium for designing and imple-menting the website for NCLC’s online digital library version of this treatise.

We also want to thank Ron Burdge, Richard Diklich, and Robert Eppes for their advice and contributions over the years, and also to all those who assisted in the earlier editions of this volume or who contributed pleadings to those volumes.

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National Consumer Law Center • (617) 542-9595 • FAX (617) 542-8028 • [email protected]

Order online at www.nclc.org/library

What Your Library Should Contain

Subscriptions are available for individual titles or for the complete 20-title set.

NCLC no longer releases print supplements. Subscription to a print edition includes online access to the complete text, fully integrating all prior sup- plements and new updates, plus offers additional pleadings, primary sources and practice tools.

Online subscriptions without a print edition are available. Go to www.nclc.org/library for more information on subscription options and about each title—including a title’s table of contents, about the authors, and index. Go to page vii, infra, for login instructions and more about the online resource.

The Consumer Credit and Sales Legal Practice Series

DEBTOR RIGHTS

Consumer Bankruptcy Law and Practice (10th ed. 2012) (two volumes): the definitive personal bankruptcy manual, from the initial interview to final discharge, including con-sumer rights when a company files for bankruptcy.

Fair Debt Collection (8th ed. 2014) (two volumes): the basic reference covering the Fair Debt Collection Practices Act and common law, state statutory, and other federal debt collection protections.

Foreclosures and Mortgage Servicing (5th ed. 2014): exam-ines RESPA, CFPB rules, and other requirements placed on mortgage loan servicers, details loan modification and media-tion programs, and covers every aspect of foreclosure defense.

Repossessions (8th ed. 2013): a unique guide to seizures of motor vehicles, manufactured homes, and household goods, including statutory liens, leases and rent-to-own.

Student Loan Law (5th ed. 2015): loan deferments, dis-charges, consolidations and repayment plans; tax intercepts, wage garnishment, and offset of Social Security benefits; pri-vate loans, and school abuses.

Access to Utility Service (5th ed. 2011): regulated and unregulated utilities, telecommunications, terminations, bill-ing errors, low-income payment plans, subsidized housing, LIHEAP, and weatherization.

CREDIT AND BANKING

Truth in Lending (9th ed. 2015) (two volumes): all aspects of TILA, the Consumer Leasing Act, the Fair Credit Billing Act, the Home Ownership and Equity Protection Act (HOEPA), and the Credit CARD Act.

Fair Credit Reporting (8th ed. 2013): cleaning up blemished credit records, suing reporting agencies and creditors for inac-curate reports, identity theft, credit scoring, privacy issues, and the Credit Repair Organizations Act.

Mortgage Lending (2d ed. 2014): regulation (and federal preemption) of the origination and the terms of mortgage loans, including ability to pay, steering, appraisals, loan bro-kers, insurance, adjustable rates, reverse mortgages, and claims against failed banks.

Consumer Credit Regulation (1st ed. 2012): federal and state regulation (and federal preemption) concerning credit cards, payday loans, automobile finance, title pawns, rent-to-own, and other non-mortgage lending.

Consumer Banking and Payments Law (5th ed. 2013): checks and telechecks; EFT; money orders and remittances; debit, payroll, and other prepaid cards; E-Sign; and electronic transfers of benefit payments.

Credit Discrimination (6th ed. 2013): the Equal Credit Opportunity Act, Fair Housing Act, Civil Rights Acts, and state credit discrimination statutes.

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National Consumer Law Center • (617) 542-9595 • FAX (617) 542-8028 • [email protected]

Order online at www.nclc.org/library

CONSUMER LITIGATION

Collection Actions (3d ed. 2014): defenses to collection law-suits for credit card, medical, and other consumer debt, setting aside default judgments, and limitations on a collector’s post-judgment remedies.

Consumer Arbitration Agreements (7th ed. 2015): numer-ous ways to challenge the enforceability of an arbitration requirement.

Consumer Class Actions (8th ed. 2013): step-by-step approach to all aspects of class litigation, with numerous sam-ple class pleadings, and state-by-state analysis of class action rules.

Consumer Law Pleadings (online only): over 2000 notable pleadings from all types of consumer cases, ready to paste into a word processor.

DECEPTION AND WARRANTIES

Unfair and Deceptive Acts and Practices (8th ed. 2012): covering all aspects of a deceptive practices case in every state, with citations to tens of thousands of state UDAP and FTC cases.

Automobile Fraud (5th ed. 2015): title law, “yo-yo” sales, odometer tampering, lemon laundering, sale of wrecked cars, undisclosed prior use, and prior damage to new cars.

Consumer Warranty Law (4th ed. 2010): new and used car lemon laws, the Magnuson-Moss Warranty Act, UCC Article 2, manufactured home and new home warranty laws, and other state statutes.

Federal Deception Law (1st ed. 2012): FTC Holder and Telemarketing Sales Rules, other FTC and CFPB rules, limits on unwanted calls and texts, junk faxes and spam, RICO, the False Claims Act, and regulation of debt relief services.

Other NCLC Titles

Foreclosure Prevention Counseling (3d ed. 2013 with web-site): loan modifications and workouts for Fannie Mae, Freddie Mac, subprime, FHA-insured, VA, and Rural Housing Service loans, plus dealing with servicers and foreclosure defense and mediation.

Bankruptcy Basics (2d ed. 2013 with website): A Step-by-Step Guide for Pro Bono Attorneys, General Practitioners, and Legal Services Offices: how to file your first bankruptcy case.

Instant Evidence: A Quick Guide to Federal Evidence and Objections (2d ed. 2013): objections by rule number and com-mon objections and motions—all in 21 pages! Spiral-bound to lay flat, and laminated to allow use with a dry-erase pen.

The Practice of Consumer Law (2d ed. with CD-Rom): how to get started in a private or legal services consumer practice, with sample pleadings and practice pointers for even experi-enced attorneys.

NCLC Guide to Surviving Debt (2013 ed.): Everything a paralegal, new attorney, or client needs to know about home foreclosures and mortgage modifications, debt collectors, managing credit card debt, whether to refinance, credit card problems, evictions, repossessions, credit reporting, utility ter-minations, student loans, budgeting, and bankruptcy.

NCLC Guide to the Rights of Utility Consumers (1st ed.): consumer rights concerning utility services: shut-off protec-tions, rights to restore terminated service, bill payment options, weatherization tips, and rights to government assistance.

NCLC Guide to Consumer Rights for Domestic Violence Survivors (1st ed.): practical advice to help survivors get back on their feet financially and safely establish their economic independence.

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National Consumer Law Center • (617) 542-9595 • FAX (617) 542-8028 • [email protected]

Order online at www.nclc.org/library

ONLINE VERSION OF THIS TREATISE

HOW TO LOG IN TO THE ONLINE VERSION OF THIS TREATISE

The online versions of this and other NCLC treatises are found at www.nclc.org/library. There are several login options.

For first-time subscriptions starting in March 2015, you cre-ated a user name and password during the ordering process. The same user name and password is used for all your NCLC subscriptions. A link on the login page helps those who have forgotten their user name and/or password.

Those who first subscribed to NCLC treatises before March 2015 have been sent a registration number to create and link a user name and password to their existing subscription(s). Go to www .nclc.org/register and follow the instructions. That site also ex- plains how to obtain your registration number if you do not have it.

Important note for prior subscribers: Subscribers before March 2015 may have created a user name and password for our previous companion websites containing pleadings and primary sources. These subscribers must still use their new registration number to create a user name and password—it can be the same user name and password as for the old com-panion websites, if you choose.

Access without a user name or password: Organizations sub-scribing to the complete 20-title set, for an additional charge, can opt for “IP access,” allowing anyone at one location to log onto the site without a user name or password. Law school libraries with IP access may obtain a license allowing remote access for law students and certain others. Contact NCLC Pub-lications for more information. Even those who had IP access to our old companion websites of pleadings and primary sources must still contact NCLC to set up IP access to the NCLC Digi-tal Library.

Additional user names: Any user, for a small additional charge, can obtain additional user names to allow others in an organization to access existing subscriptions. Again, contact NCLC Publications for details.

Contact NCLC Publications at (617) 542-9595 or [email protected] with any further questions. Or visit www.nclc.org/library for more information.

The online site allows users to:■■ View■the■site■with■full■functionality■on■desktop■computers,■tablets,■

and■smartphones.

■■ Highlight■material■added■or■updated■since■this■print■edition.

■■ Download,■print,■email,■bookmark,■or■copy/paste■material■from■the■text.

■■ Download■additional■companion■material,■including■sample■pleadings,■hard-to-find■primary■sources,■and■unique■practice■tools.

■■ Quickly■search■this■treatise■or■any■of■the■other■NCLC■treatises—even■without■a■subscription.

■■ Search■any■combination■of■chapters,■appendices,■pleadings,■primary■sources,■or■practice■tools.

■■ Pinpoint■the■exact■pleading■needed■using■the■“advanced■pleadings■search,”■which■enables■searches■by■pleading■type,■subject,■or■legal■claims.

■■ Rapidly■navigate■through■the■treatise■using■a■detailed■table■of■contents,■index,■bookmarks,■and■a■“recently■viewed”■list.

■■ Link■from■references■in■the■text■to■other■of■the■treatise’s■subsections,■to■subsections■in■other■NCLC■treatises,■to■pleadings,■primary■sources,■and■other■companion■material,■and■to■external■web■addresses.

Active subscribers to this treatise have free access to its online version at www.nclc.org/library for as long as the subscription remains active. The online versions of all twenty NCLC treatises are found at this site, comprising the “NCLC Digital Library.”

Subscribers will find online the full text of this print edition, including the chapters, appendices, and index. Periodic updates to this print edition will also be found online, fully integrated into the online text. In addition, the online version includes sample pleadings and discovery, the full text of primary sources, and practice tools not found in the print edition.

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Summary Contents

Online Version of This Treatise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Summary Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Chapter 1 Introduction and Practice Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Chapter 2 Investigatory Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Chapter 3 Automobile Title Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Chapter 4 Yo- Yo (Spot- Delivery) Abuses and Sublease Scams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Chapter 5 Federal and State Odometer Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Chapter 6 Remedies for MVICSA and State Odometer Act Violations . . . . . . . . . . . . . . . . . . . . . . 157

Chapter 7 Other Statutes Specifically Relating to Automobile Fraud . . . . . . . . . . . . . . . . . . . . . . . 175

Chapter 8 Common Law Fraud, Deceit, and Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

Chapter 9 Warranty, Mistake, UDAP, RICO, Unconscionability, Negligence, and Contract Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283

Chapter 10 Litigating Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335

Appendix A Federal Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429

Appendix B Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441

Appendix C State Laws Relating to Automobile Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475

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Automobile Fraud

Appendix D State Statutes and Regulations Relating to Yo- Yo Sales . . . . . . . . . . . . . . . . . . . . . . . . . 511

Appendix E State- by- State Information on Requesting Title Histories . . . . . . . . . . . . . . . . . . . . . . . . . . . 517

Appendix F State Automobile Dealer Licensing Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525

Appendix G Sample Pleadings Available Online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531

Appendix H Websites Related to Automobile Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539

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Contents

Online Version of This Treatise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Chapter 1 Introduction and Practice Checklist1.1 About This Treatise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

1.1.1 Nature of Automobile Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.1.2 About This Treatise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

1.1.2.1 Print and Online Versions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.1.2.2 Structure of the Chapters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.1.2.3 The Appendices and Indexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21.1.2.4 Additional Pleadings, Primary Sources, and Practice Tools . . . . . . . . . . . . . . . . . . .21.1.2.5 Clearinghouse and Other Unreported Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

1.2 Types of Automobile Frauds Addressed in This Treatise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31.3 Automobile Frauds Analyzed in Other NCLC Treatises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

1.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31.3.2 Automobile Warranties and Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31.3.3 Deceptive Pricing and Sales Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31.3.4 Trade- Ins, Yo- Yo Sales, and Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31.3.5 Credit Insurance, GAP Insurance, and Service Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41.3.6 Documentary Fees, Other Charges, Add- Ons and Options . . . . . . . . . . . . . . . . . . . . . . . . . . . .41.3.7 Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41.3.8 Automobile Subleases and Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51.3.9 Repossessions and Collection Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51.3.10 Forced- Placed Automobile Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51.3.11 Credit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51.3.12 Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

1.4 Practice Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51.4.2 Odometer Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51.4.3 Salvage Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61.4.4 Undisclosed Flood or Hurricane Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71.4.5 Other Undisclosed Wreck Damage to Used Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71.4.6 Undisclosed Damage to New Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81.4.7 Lemon Laundering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81.4.8 Other Failures to Disclose Preexisting Mechanical Problems . . . . . . . . . . . . . . . . . . . . . . . . .91.4.9 Misrepresentations Concerning Demonstrators, Program Cars, and Other Low- Mileage Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91.4.10 Misrepresentation of Number or Nature of Prior Users . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101.4.11 Stolen Vehicles and Defective Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111.4.12 Gray Market Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111.4.13 Used Cars Sold with Missing Airbags . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Chapter 2 Investigatory Techniques2.1 Automobile Frauds Described . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

2.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132.1.2 Odometer Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

2.1.2.1 Extent and History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

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2.1.2.2 What Is an Odometer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142.1.2.3 Odometer Mechanical Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152.1.2.4 Rollbacks and Disconnects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152.1.2.5 Collusion by Subsequent Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162.1.2.6 More Subtle Forms of Odometer Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162.1.2.7 Most Common Forms of Odometer Fraud Today . . . . . . . . . . . . . . . . . . . . . . . . . .16

2.1.3 Undisclosed Flood Damage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162.1.4 Undisclosed Prior Wreck Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172.1.5 Hurricane Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .182.1.6 Undisclosed Prior History of Mechanical Problems and Lemon Laundering. . . . . . . . . . . . .182.1.7 Misrepresentations About Prior Owners or Prior Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .192.1.8 Undisclosed History As Stolen Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202.1.9 Undisclosed Damage to New Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202.1.10 Undisclosed Canadian or Other Foreign Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

2.1.10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202.1.10.2 Odometer Discrepancies in Canadian Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . .202.1.10.3 Warranty and Other Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .212.1.10.4 Identifying a Vehicle As Not Manufactured for the United States Market . . . . . . .21

2.2 Investigating Fraud Based on Information Within the Consumer’s Control . . . . . . . . . . . . . . . . . . . .222.2.1 Interview with the Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .222.2.2 Stickers and Paperwork Found on and in the Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .222.2.3 The Car’s Tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .232.2.4 The Vehicle Identification Number (VIN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

2.2.4.1 Use of VINs in Automobile Fraud Investigations . . . . . . . . . . . . . . . . . . . . . . . . . .232.2.4.2 How to Check a VIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

2.2.5 Cursory Physical Inspection of the Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .242.2.6 A Haywire Odometer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252.2.7 Checking the Odometer History with a Franchised Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . .252.2.8 Checking a Motor Home’s Engine Hour Meter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262.2.9 Expert Inspection of the Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

2.2.9.1 Finding an Expert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262.2.9.2 What the Expert Should Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .272.2.9.3 Inspection Procedures and Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .282.2.9.4 Defense Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

2.2.10 Looking at the Consumer’s Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .282.2.10.1 The New Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .282.2.10.2 Other Documents Relating to Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .292.2.10.3 Repair Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

2.2.11 Used Car Pricing Guides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .292.2.12 Advertisements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

2.3 Summary Title History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302.3.1 When and When Not to Use Summary Title Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302.3.2 Carfax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312.3.3 AutoCheck . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322.3.4 The National Motor Vehicle Title Information System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .332.3.5 Information Sources for Canadian Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .332.3.6 Insurance Databases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342.3.7 Other Quick Search Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

2.4 Detailed Title Histories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .352.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .352.4.2 How a Chain of Title Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

2.4.2.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .352.4.2.2 Information Found on the Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362.4.2.3 Powers of Attorney, Registrations, Title Applications, and Other Information Available Through a Title Search . . . . . . . . . . . . . . . . . . . . . . .362.4.2.4 How the DMV Stores Title Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

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2.4.3 Electronic Titling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .372.4.4 How to Obtain Detailed Title Histories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .382.4.5 How to Use Title Information to Uncover Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

2.4.5.1 Reviewing the Consumer’s Own Signature on the Old Title . . . . . . . . . . . . . . . . .382.4.5.2 Names and Addresses of Prior Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .392.4.5.3 Odometer Discrepancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .392.4.5.4 Flood- Damaged, Wrecked, Rebuilt, and Other Salvage Vehicles . . . . . . . . . . . . . .40

2.4.5.4.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .402.4.5.4.2 Understanding salvage brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .402.4.5.4.3 When salvage brand still on the new title . . . . . . . . . . . . . . . . . . . . . .412.4.5.4.4 When salvage brand is removed from title . . . . . . . . . . . . . . . . . . . . .412.4.5.4.5 When insurance company or body shop is a transferor, but no title brand was applied for . . . . . . . . . . . . . . . . . . . . . . . . . . . .422.4.5.4.6 When insurance company or body shop is not listed in salvage vehicle’s chain of title . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

2.4.5.5 Lemon Laundering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .422.4.5.6 Number of Prior Owners; Demonstrators; Lease or Rental Cars, Taxis, Police Cars, and Other Unusual Prior Owners . . . . . . . . . . . . . . . . . . . . . . .432.4.5.7 Duplicate Titles; Laundered Titles; Powers of Attorney . . . . . . . . . . . . . . . . . . . . .432.4.5.8 Suspicious Mileage on a Fleet Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

2.5 Obtaining Information from Others Involved in Car’s History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .442.5.1 Contacting the Prior Consumer Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .442.5.2 Automobile Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

2.5.2.1 Records Dealers Are Required to Keep . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .442.5.2.2 Other Dealer Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

2.5.2.2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .452.5.2.2.2 Deal files and file jackets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .452.5.2.2.3 The worksheet, purchase order, and retail installment sales contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .452.5.2.2.4 Recap sheets and charge backs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .462.5.2.2.5 Finance facsimiles, finance reserves, credit application and the business manager’s summary . . . . . . . . . . . . . . . . . . . . . . . . .462.5.2.2.6 Log books, cash draw files, and business manager’s penetration and performance reports . . . . . . . . . . . . . . . . . . . . . . . . . .472.5.2.2.7 Payroll records, policy and procedure manuals, training manuals, advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .472.5.2.2.8 Dealer contracts with third parties; association files . . . . . . . . . . . . . .482.5.2.2.9 Repair records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

2.5.2.3 Present Dealer Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .492.5.2.4 Former Dealer Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .492.5.2.5 Speaking the Dealer’s Language on Odometer Rollbacks . . . . . . . . . . . . . . . . . . .492.5.2.6 Contacting the Selling Dealer and Prior Servicing Dealers Concerning Mechanical Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .492.5.2.7 When New Car Damaged Before Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

2.5.3 Wholesalers and the Vehicle’s Other Dealer Transferors . . . . . . . . . . . . . . . . . . . . . . . . . . . .502.5.4 Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .502.5.5 Secured Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .512.5.6 Floor Plan Financers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .522.5.7 Lessors and Lessees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .532.5.8 Rental Car Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .532.5.9 Insurance Companies and Body Shops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .532.5.10 Manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .542.5.11 Service Contract Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .542.5.12 Information About Whether the Dealer Obtained a Vehicle History Report . . . . . . . . . . . . . .542.5.13 Absence of Information from Vehicle History Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .552.5.14 Records of Insurance Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

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2.5.15 Information Available from Government Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .552.5.16 Trade Associations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .562.5.17 Online Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57

2.6 Uncovering a Party’s Special Culpability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .582.6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .582.6.2 The Culpability of the Selling Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

2.6.2.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .592.6.2.2 Title Documents Known to the Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .592.6.2.3 The Car’s Physical Appearance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .592.6.2.4 Dealer’s Inspection or Duty to Inspect Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .602.6.2.5 Price Paid by Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .602.6.2.6 Dealer Knowledge of Carfax Report; Other Title Searches . . . . . . . . . . . . . . . . . .612.6.2.7 Wholesaler or Other Seller’s Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .612.6.2.8 A Pattern of Misconduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .622.6.2.9 Warnings from Dealer Associations or State Regulators . . . . . . . . . . . . . . . . . . . .622.6.2.10 Dealer Knowledge of Service and Warranty History . . . . . . . . . . . . . . . . . . . . . . .622.6.2.11 When Dealer Informed Service Contract or Warranty Is Void . . . . . . . . . . . . . . . .622.6.2.12 Access to Computer Read- Out of True Mileage . . . . . . . . . . . . . . . . . . . . . . . . . . .63

2.6.3 Wholesalers and Other Dealers Transferring the Car to Dealers . . . . . . . . . . . . . . . . . . . . . .632.6.4 Automobile Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64

2.6.4.1 Dealer- Only Automobile Auctions Described . . . . . . . . . . . . . . . . . . . . . . . . . . . .642.6.4.2 Salvage Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .652.6.4.3 Public Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .652.6.4.4 Auction Culpability for Car Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

2.6.5 Insurance Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .672.6.6 Manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .682.6.7 Secured Creditors in the Chain of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .692.6.8 Creditor Financing the Sale to the Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .692.6.9 Prior Private Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

2.7 A Special Case: Cloned and Retagged Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .692.7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .692.7.2 Falsifying the VIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .702.7.3 Falsifying the Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .712.7.4 Investigatory Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

2.7.4.1 Examining the VIN on the Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .712.7.4.2 Checking Title History and Other Paperwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72

2.8 Another Special Case: Used Cars Sold Without Airbags . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72

Chapter 3 Automobile Title Law3.1 What Every Consumer Lawyer Needs to Know About Automobile Titles . . . . . . . . . . . . . . . . . . . . .753.2 How Automobile Titles Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

3.2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .753.2.2 Titling a New Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .753.2.3 Obtaining a New Title After Purchasing for Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .753.2.4 Title Transfers to Dealers and Others Purchasing for Resale . . . . . . . . . . . . . . . . . . . . . . . . .763.2.5 Transfers Not Requiring Assignment of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .763.2.6 Applicability of Federal Exemption for Certain Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . .773.2.7 Vehicle Registration and License Plates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

3.3 Transferee Must Sign Title Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .773.3.1 Importance of the Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .773.3.2 Consumer’s Signature When New Vehicle Is Transferred . . . . . . . . . . . . . . . . . . . . . . . . . . .783.3.3 Standard Procedure When Used Vehicle Is Transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . .783.3.4 When Transferee Signature Allowed to Be on Reassignment Form Instead of on Title . . . . .793.3.5 When Transferee Signature Allowed to Be on Power of Attorney Instead of on Title . . . . . .79

3.3.5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79

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Contents

3.3.5.2 Form of a Valid Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .803.3.5.3 State Law Must Allow Use of Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . .803.3.5.4 Consumer Must Consent to Use of Power of Attorney . . . . . . . . . . . . . . . . . . . . . .803.3.5.5 Part A of the Power of Attorney Must Already Be Completed . . . . . . . . . . . . . . . .803.3.5.6 Use of Part A Allowed in Only Two Situations . . . . . . . . . . . . . . . . . . . . . . . . . . .813.3.5.7 Further Requirements for a Valid Power of Attorney . . . . . . . . . . . . . . . . . . . . . . .81

3.3.6 Fallacious Argument That Buyer Cannot Legally Review All Information on the Title . . . . .823.4 Information That Must Be Provided to Transferee on Title Document . . . . . . . . . . . . . . . . . . . . . . . .82

3.4.1 Risk of Forgery and Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .823.4.2 Information on the Title Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .823.4.3 Title Brands and Salvage Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .833.4.4 Duplicate Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83

3.5 Title Information That Dealers Must Retain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .833.6 How Soon Must Transfer Be Completed on Title Documents? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84

3.6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .843.6.2 Federal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .843.6.3 Explicit State Requirements As to Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .843.6.4 No Ownership Change Until Title Documents Transferred . . . . . . . . . . . . . . . . . . . . . . . . . .853.6.5 Requirement That Dealer Possess the Title at the Time of Sale . . . . . . . . . . . . . . . . . . . . . . .853.6.6 Timing Requirements for Temporary Tags and Registrations . . . . . . . . . . . . . . . . . . . . . . . . .85

3.7 Electronic Liens and Titling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .853.8 Privacy of Title Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

3.8.1 The Driver’s Privacy Protection Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .873.8.2 DPPA Allows DMV to Release Names and Addresses in Selected Circumstances . . . . . . . .873.8.3 DPPA Requires DMV to Release Data When Safety Is at Stake . . . . . . . . . . . . . . . . . . . . . .893.8.4 Constitutional Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .893.8.5 State Restrictions on Release of Identity of Former Owners . . . . . . . . . . . . . . . . . . . . . . . . .89

3.9 Remedies for Title Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .893.9.1 Scope of This Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .893.9.2 MVICSA Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

3.9.2.1 Utility of a MVICSA Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .893.9.2.2 Must “Intent to Defraud” Relate to Odometer Violation? . . . . . . . . . . . . . . . . . . .903.9.2.3 Older Case Law No Longer Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .913.9.2.4 Situations in Which a MVICSA Claim May Be Available . . . . . . . . . . . . . . . . . . .913.9.2.5 When Court Finds Intent Must Relate to Mileage Requirements . . . . . . . . . . . . . .92

3.9.3 Remedies Under the State Motor Vehicle Title Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .923.9.4 MVICSA and State Motor Vehicle Title Statute Violations As UDAP Violations . . . . . . . . .923.9.5 Common Law Claims and Title Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .933.9.6 Securities Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93

Chapter 4 Yo- Yo (Spot- Delivery) Abuses and Sublease Scams4.1 Getting Started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95

4.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .954.1.2 Yo- Yo Transactions Explained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .954.1.3 Organization of This Chapter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .964.1.4 State Yo- Yo Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97

4.2 Dealer’s Right to Cancel the Yo- Yo Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .974.2.1 Absent Valid Contingency Clause, No Right to Cancel . . . . . . . . . . . . . . . . . . . . . . . . . . . . .974.2.2 Contingency Must Be in Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .984.2.3 Cancellation Allegedly Based on Credit Application Misstatements . . . . . . . . . . . . . . . . . . .984.2.4 Absence of Dealer Signature Does Not Create a Valid Contingency . . . . . . . . . . . . . . . . . . .984.2.5 Does Contingency Clause Comply with State Law? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .994.2.6 When Contingency Placed in a Separate Document or Conflicts with Other Financing Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .994.2.7 Have the Exact Conditions Allowing Cancellation Occurred? . . . . . . . . . . . . . . . . . . . . . . .100

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Automobile Fraud

4.2.8 When Dealer Knows in Advance That the Contingency Will Not Be Met . . . . . . . . . . . . . .1014.2.9 Misrepresentations That the Sale Is Final . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1014.2.10 UDAP and Other Consumer Remedies When Cancellation Not Valid . . . . . . . . . . . . . . . . .102

4.3 Federal Disclosure and Notice Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1024.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1024.3.2 The Truth in Lending Disclosure Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1034.3.3 ECOA and FCRA Notice Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105

4.3.3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1054.3.3.2 Is the Dealer a Covered Creditor Under the ECOA? . . . . . . . . . . . . . . . . . . . . . .1064.3.3.3 The Counteroffer Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1064.3.3.4 Other Dealer Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1074.3.3.5 ECOA Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107

4.4 Dealers Almost Always Improperly Structure the Yo- Yo Transaction . . . . . . . . . . . . . . . . . . . . . . . .1074.4.1 Dealers Improperly Mix and Match Two Different Types of Transactions . . . . . . . . . . . . . .1074.4.2 Is the Sale an Illegal Condition Precedent or an Illegal Condition Subsequent Yo- Yo Transaction? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1084.4.3 Dealer Practices Inconsistent with a Condition Precedent Transaction . . . . . . . . . . . . . . . .108

4.4.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1084.4.3.2 Earning Interest Before the Financing Is Extended . . . . . . . . . . . . . . . . . . . . . . .1084.4.3.3 TILA Disclosure of Loan Term and APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1094.4.3.4 Service Contract’s Term and Excessive Finance Charges Relating to That Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1094.4.3.5 Excess Insurance Premiums and Related Finance Charges . . . . . . . . . . . . . . . . .1094.4.3.6 Improper Treatment of the Consumer’s Trade- In . . . . . . . . . . . . . . . . . . . . . . . . .1104.4.3.7 Improper Use of Temporary Tags . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1104.4.3.8 Improper Use of Dealer Plates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1104.4.3.9 Dealer Misrepresentation As to Consumer’s Cancellation Rights . . . . . . . . . . . .110

4.4.4 Dealer Practices Inconsistent with a Condition Subsequent Transaction . . . . . . . . . . . . . . .1104.4.4.1 Titling Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1104.4.4.2 Repossession Titles When Dealer Transferred Title . . . . . . . . . . . . . . . . . . . . . . .1124.4.4.3 Condition Subsequent Sales Must Comply with UCC Article 9 . . . . . . . . . . . . .1124.4.4.4 Truth in Lending Violations in a Condition Subsequent Sale . . . . . . . . . . . . . . . .113

4.5 Illegal Practices Accompanying a Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1134.5.1 Refusing to Return Trade- Ins and Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1134.5.2 Malicious Prosecution When Consumer Does Not Return the Vehicle . . . . . . . . . . . . . . . .116

4.6 Misrepresentations Involving a Second Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1164.6.1 Renegotiation Misrepresentations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1164.6.2 Backdating Documentation of a Subsequent Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116

4.7 Yo- Yo Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1174.7.1 Must the Consumer Arbitrate Yo- Yo Sale Claims? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1174.7.2 Discovery in Yo- Yo Sale Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1174.7.3 Consumer Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119

4.8 Automobile Subleases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1194.8.1 Described . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1194.8.2 Consumer Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119

Chapter 5 Federal and State Odometer Requirements5.1 First Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121

5.1.1 Scope of This Chapter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1215.1.2 Overview of the Federal Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1215.1.3 1994 Recodification Did Not Change the Act’s Substance . . . . . . . . . . . . . . . . . . . . . . . . . .1215.1.4 NHTSA Interpretations of the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1225.1.5 State Odometer Acts and Their Relationship to the Federal Act . . . . . . . . . . . . . . . . . . . . . .122

5.2 Scope of the Federal Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1235.2.1 Persons Who Must Comply with the Federal Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123

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5.2.2 Covered Motor Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1235.2.3 What Is an Odometer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123

5.3 Restrictions on Odometer Tampering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1245.3.1 Disconnecting, Resetting, or Altering Odometers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1245.3.2 Operating a Motor Vehicle with Knowledge the Odometer Is Disconnected or Nonfunctional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1255.3.3 Selling of Unlawful Odometer Devices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125

5.4 Repair or Replacement of an Odometer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1265.5 False Statements Made Outside the Disclosure Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1275.6 Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127

5.6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1275.6.2 Parties Responsible for Making Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128

5.6.2.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1285.6.2.2 Transferor and Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1285.6.2.3 Lessees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129

5.6.3 Transfers for Which Disclosures Must Be Made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1295.6.3.1 Transfers Broadly Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1295.6.3.2 Repossessions, Transfers to Insurers, and Other Involuntary Transfers . . . . . . . .1295.6.3.3 When Vehicle Sold at Auction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1305.6.3.4 Transfer of Component Parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1315.6.3.5 Exclusion for Transfers of New Cars to Rental Car Companies. . . . . . . . . . . . . .131

5.6.4 Transfers NHTSA Exempts from Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . .1315.6.4.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1315.6.4.2 Relation of NHTSA Exemptions to State Law . . . . . . . . . . . . . . . . . . . . . . . . . . .1325.6.4.3 Can the Transferor Waive the Exemption? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1325.6.4.4 Exemption for Vehicles over Ten Years Old . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1325.6.4.5 Exemption for Transfers of New Cars to Dealers . . . . . . . . . . . . . . . . . . . . . . . . .1335.6.4.6 Exemptions for Heavy Trucks and Motor Homes, Trailers, Manufactured Homes, and Government Vehicles . . . . . . . . . . . . . . . . . . . . . . . . .133

5.6.5 Method of Making Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1335.6.5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1335.6.5.2 Disclosure Procedure for New Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1335.6.5.3 Used Car Transfers Typically Make Odometer Disclosures on the Old Title . . . .1345.6.5.4 Use of Separate Disclosure in Transfer of Used Vehicle . . . . . . . . . . . . . . . . . . .1355.6.5.5 Dealer to Dealer Transfers and the Use of Reassignment Forms . . . . . . . . . . . . .1355.6.5.6 Disclosures When Old Title Unavailable— Use of Power of Attorney . . . . . . . . .135

5.6.5.6.1 When powers of attorney are allowed . . . . . . . . . . . . . . . . . . . . . . . .1355.6.5.6.2 Requirements for “first” powers of attorney . . . . . . . . . . . . . . . . . . .1375.6.5.6.3 Requirements for “second” powers of attorney . . . . . . . . . . . . . . . . .1385.6.5.6.4 Subsequent purchaser’s access to first power of attorney . . . . . . . . .138

5.6.5.7 Alternative State Disclosure Systems for Electronic Titles . . . . . . . . . . . . . . . . .1395.6.6 Content of Mileage Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139

5.6.6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1395.6.6.2 Disclosure When Odometer Has “Turned Over” . . . . . . . . . . . . . . . . . . . . . . . . .1405.6.6.3 Disclosure of Odometer’s Reading When Transferor Indicates That Reading Is Inaccurate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1405.6.6.4 Dealer Must Have Sufficient Basis to Claim That Odometer Is Not Accurate . . .1415.6.6.5 When Lessor Transfers Ownership Without First Recovering Possession from the Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1425.6.6.6 Cars Sold for Salvage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1435.6.6.7 When a Used Vehicle Is Assembled from Parts or Restored . . . . . . . . . . . . . . . .1445.6.6.8 When a Repair Shop Resets the Odometer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1445.6.6.9 When Vehicles Have Been Towed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1445.6.6.10 When Odometer Formerly Measured Kilometers Instead of Miles . . . . . . . . . . .145

5.6.7 Non- Mileage Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1455.6.7.1 Content of Non- Mileage Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .145

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5.6.7.2 Signature Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1455.6.7.3 NHTSA Authority to Require Non- Mileage Disclosures . . . . . . . . . . . . . . . . . . .146

5.6.8 Acceptance of Incomplete Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1465.6.9 Record Retention Requirements for Dealers, Distributors, Auction Companies, and Lessors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146

5.7 Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1475.8 The Intent Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .148

5.8.1 When Intent Must Be Shown Under the Federal Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1485.8.2 Need Intent Be Proven Under State Odometer Statutes? . . . . . . . . . . . . . . . . . . . . . . . . . . .1485.8.3 General Standards Concerning Proof of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1495.8.4 Inferring Intent from Proof of Odometer Tampering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1505.8.5 Inferring Intent When Disclosure Conflicts with Prior Disclosures . . . . . . . . . . . . . . . . . . .1505.8.6 Inferring Intent from Failure to Disclose or from Dealer’s Circumvention of Disclosure Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1515.8.7 Inferring Intent When Inaccurate Disclosure Made Based on Incomplete Prior Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1525.8.8 Inferring Intent from Dealer’s Failure to Investigate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1525.8.9 Does a Repossessing Creditor’s Lack of Investigation Show Intent? . . . . . . . . . . . . . . . . . .1535.8.10 When There Is a Pattern of “Clerical Errors” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1545.8.11 Did the Dealer Attempt to Correct the Error? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1545.8.12 Reliance on Invalid NHTSA Advice Makes Proof of Intent Difficult . . . . . . . . . . . . . . . . .1545.8.13 Examples of Dealers Overcoming Presumption of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . .1545.8.14 Courts Are Less Likely to Infer a Consumer’s Intent to Defraud . . . . . . . . . . . . . . . . . . . . .155

5.9 Consumer’s Waiver of Rights Under the Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155

Chapter 6 Remedies for MVICSA and State Odometer Act Violations6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1576.2 Standing in Private Actions; No Privity Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157

6.2.1 Federal Act Does Not Restrict Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1576.2.2 Transferee Can Sue Prior Transferors; No Privity Required . . . . . . . . . . . . . . . . . . . . . . . . .1586.2.3 Plaintiff Need Not Be Current Title Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1586.2.4 Parties Indirectly Affected by Odometer Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1586.2.5 Lessor and Lessee Suits Against Each Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1596.2.6 Can Wrongdoer Sue Its Transferee or Transferor Under the Act? . . . . . . . . . . . . . . . . . . . .159

6.3 Do All Disclosure Violations Lead to a Private Right of Action? . . . . . . . . . . . . . . . . . . . . . . . . . . .1596.4 Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159

6.4.1 The Two- Year Rule Under the Federal Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1596.4.2 Statute of Limitations Under State Odometer Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1606.4.3 Use of Counterclaim or Recoupment When Statute of Limitations Has Run . . . . . . . . . . . .160

6.5 Jurisdiction, Venue, and Right to Jury Trial Under the Federal Act . . . . . . . . . . . . . . . . . . . . . . . . . .1616.5.1 Federal Court Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1616.5.2 Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1616.5.3 Right to Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161

6.6 Choosing Between State and Federal Claims and Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1616.6.1 Claim Selection Largely Determines Court Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1616.6.2 Factors in Choosing Between State and Federal Claims and Courts . . . . . . . . . . . . . . . . . .1626.6.3 Benefits of Adding a State Odometer Claim to a Federal Act Claim . . . . . . . . . . . . . . . . . .163

6.7 Drafting the Complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1636.8 Private Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164

6.8.1 Treble Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1646.8.1.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1646.8.1.2 Diminished Value of the Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1646.8.1.3 Computing Diminished Value When True Mileage Cannot Be Determined . . . .1666.8.1.4 Availability of Treble Damages When Consumer Seeks to Rescind the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166

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6.8.1.5 Cost of Service Contracts, Other Voided Coverages . . . . . . . . . . . . . . . . . . . . . . .1676.8.1.6 Costs to Determine Odometer Discrepancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1676.8.1.7 Repair Costs and Substitute Transportation Expenses . . . . . . . . . . . . . . . . . . . . .1676.8.1.8 Financing Costs and Other Charges That Are Higher Than Warranted Because of Vehicle’s Diminished Value . . . . . . . . . . . . . . . . . . . . . . .1686.8.1.9 Other Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1686.8.1.10 Prejudgment Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .168

6.8.2 Minimum Statutory Damages Awards Under the Federal Act . . . . . . . . . . . . . . . . . . . . . . .1686.8.2.1 $10,000 Minimum Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1686.8.2.2 Prerequisites for Minimum Damage Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1696.8.2.3 Statutory Damages Awarded Against Each of Multiple Defendants . . . . . . . . . .1696.8.2.4 Each Transferee of a Vehicle Can Obtain Statutory Damages . . . . . . . . . . . . . . .1696.8.2.5 Multiple Statutory Damages Awards to One Plaintiff for One Defendant’s Multiple Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170

6.8.3 Statutory Damages Awards Under State Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1706.8.4 Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1706.8.5 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1716.8.6 Class Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172

6.9 Government Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1726.9.1 Federal Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172

6.9.1.1 Inspections, Impoundments, and Investigations . . . . . . . . . . . . . . . . . . . . . . . . . .1726.9.1.2 Civil Penalties Sought by the United States Department of Transportation . . . . .1726.9.1.3 Federal Criminal Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1736.9.1.4 Injunctive Relief Sought by United States Attorney General . . . . . . . . . . . . . . . .173

6.9.2 State Attorney General Enforcement of the Federal Act . . . . . . . . . . . . . . . . . . . . . . . . . . . .1746.9.3 State Attorney General Enforcement of State Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174

Chapter 7 Other Statutes Specifically Relating to Automobile Fraud7.1 Introduction; Enforcement of State Automobile Fraud Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . .1757.2 Statutes Dealing with Disclosure of Vehicle’s Prior Physical Damage . . . . . . . . . . . . . . . . . . . . . . .176

7.2.1 State Salvage Vehicle Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1767.2.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1767.2.1.2 Constitutionality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1767.2.1.3 Persons Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1767.2.1.4 Definition of Salvage Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1767.2.1.5 Requirement That Title Be Exchanged for Salvage Certificate . . . . . . . . . . . . . .1777.2.1.6 Titling, Resale, and Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1787.2.1.7 Buyer’s Waiver of Statutory Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1807.2.1.8 State Vehicle Identification Number Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1807.2.1.9 Interstate Transfers of Salvage Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1807.2.1.10 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181

7.2.2 Used Car Damage Disclosure Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1827.2.2.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1827.2.2.2 Requirements and Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1837.2.2.3 Remedies for Violations of Used Car Damage Disclosure Statutes . . . . . . . . . . .1867.2.2.4 Used Vehicles Such As Demonstrator Vehicles Covered by New Car Damage Disclosure Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .186

7.2.3 New Car Damage Disclosure Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1867.2.3.1 Practices Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1867.2.3.2 Threshold Amounts of Damage Requiring Disclosure . . . . . . . . . . . . . . . . . . . . .1867.2.3.3 Type of Damage That Must Be Disclosed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1877.2.3.4 Timing of Disclosure Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1877.2.3.5 Actual Knowledge Precondition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1887.2.3.6 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1887.2.3.7 Statutes Shield Dealers from Consumer Remedies When Threshold Damage Amount Is Not Reached . . . . . . . . . . . . . . . . . . . . . . . . . . . .188

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7.2.4 Special Requirements for Water- Damaged Vehicles from Gulf Coast . . . . . . . . . . . . . . . . .1897.2.5 Dealer Responsibility to Inspect Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189

7.3 Statutes Dealing with Disclosure of Vehicle’s Prior Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1907.4 State Laws Requiring Disclosure of Gray Market Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1927.5 State Airbag Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1937.6 State Lemon Laundering Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193

7.6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1937.6.2 Application to “Goodwill” and Other “Voluntary” Buybacks . . . . . . . . . . . . . . . . . . . . . . .1947.6.3 Must the Manufacturer Be the Entity Buying Back the Vehicle? . . . . . . . . . . . . . . . . . . . . .1947.6.4 Lack of Privity Should Not Be a Defense to a Lemon Laundering Claim . . . . . . . . . . . . . .1957.6.5 Application of Lemon Laundering Statutes to Multistate Transactions . . . . . . . . . . . . . . . .1957.6.6 Remedies for Violations of Lemon Laundering Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .195

7.7 Dealer Licensing Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1967.7.1 Relevance of Dealer Licensing Statutes to Consumer Claims . . . . . . . . . . . . . . . . . . . . . . .1967.7.2 Liberal Interpretation of Licensing Statutes and Regulations . . . . . . . . . . . . . . . . . . . . . . . .1977.7.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1977.7.4 Compliance with State Title Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1977.7.5 Performance of Sales Contracts, Violations of Odometer Laws, and Fraud . . . . . . . . . . . . .1977.7.6 Recordkeeping Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .198

7.8 Statutes Regulating Automobile Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1987.8.1 Recordkeeping Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1987.8.2 Disclosure and Title- Branding Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1997.8.3 Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1997.8.4 Private Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200

7.9 Special Statutory Causes of Action for Automobile Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200

Chapter 8 Common Law Fraud, Deceit, and Misrepresentation8.1 Advantages and Disadvantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2058.2 Basic Elements of a Fraud Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2068.3 Material Misrepresentations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .206

8.3.1 Representation Must Have Been Misleading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2068.3.2 Representation Must Have Been Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2078.3.3 Fraud by Affirmative Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .207

8.3.3.1 General; What Is a Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2078.3.3.2 Fact Versus Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2088.3.3.3 Examples of Actionable Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .209

8.3.4 Fraud by Active Concealment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2108.3.5 Fraud by Silence (Nondisclosure) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210

8.3.5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2108.3.5.2 Half- Truths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2118.3.5.3 Seller’s Superior Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2128.3.5.4 Statutory Duty to Disclose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214

8.3.6 Automobile Fraud Precedent Listed by Type of Misrepresentation . . . . . . . . . . . . . . . . . . .2158.4 Scienter— the Seller’s Knowledge That the Representation Is Misleading . . . . . . . . . . . . . . . . . . . .219

8.4.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2198.4.2 Whose Knowledge? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2198.4.3 Degree of Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .220

8.4.3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2208.4.3.2 Actual Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2218.4.3.3 Recklessness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2228.4.3.4 Duty to Inspect As Aid to Finding of Recklessness . . . . . . . . . . . . . . . . . . . . . . .2238.4.3.5 Negligent Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2258.4.3.6 Innocent Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .227

8.5 Intent to Induce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2278.5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2278.5.2 Remote Sellers and Others Not in Privity with Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .227

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Contents

8.6 Justifiable Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2298.6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2298.6.2 Proving Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2308.6.3 When Is Reliance Justifiable? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2318.6.4 Puffery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .233

8.7 Proof of the Fraud Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2348.7.1 Standard of Proof: Clear and Convincing Evidence Versus Preponderance of Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2348.7.2 Parol Evidence Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .234

8.8 Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2358.8.1 Effect of Merger Clause or Disclaimer of Oral Representations . . . . . . . . . . . . . . . . . . . . .2358.8.2 Effect of “As Is” Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2378.8.3 Disclosure of the Existence or Possibility of Defects or Repairs . . . . . . . . . . . . . . . . . . . . .2388.8.4 Custom of Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2388.8.5 Preemption by Other Statutes and Election of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . .2398.8.6 Fraud by the Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .240

8.9 Actual Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2408.9.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2408.9.2 Measure of Actual Damages: Benefit- of- the- Bargain Versus Out- of- Pocket Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2428.9.3 Causation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2428.9.4 Plaintiff’s Duty to Mitigate Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .243

8.10 Punitive or Exemplary Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2438.10.1 Availability of Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2438.10.2 Actual Damages As Precondition to Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . .2448.10.3 Are Punitive Damages Available When the Plaintiff Seeks Rescission? . . . . . . . . . . . . . . .2448.10.4 State Criteria for Award of Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2468.10.5 Liability of Principals for Punitive Damages Due to the Conduct of Their Agents . . . . . . .2488.10.6 State Statute May Limit Size of Punitive Damages Award . . . . . . . . . . . . . . . . . . . . . . . . . .2488.10.7 Effect of Treble Damages Provision of State Odometer Statute . . . . . . . . . . . . . . . . . . . . . .2528.10.8 Examples of Punitive Damages Awards in Automobile Fraud Cases . . . . . . . . . . . . . . . . . .253

8.11 Constitutional Limits on Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2558.11.1 Overview of the Supreme Court’s Decisions on Substantive Limits on Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2558.11.2 Reprehensibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .256

8.11.2.1 Factors to Determine Reprehensibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2568.11.2.2 Physical Versus Economic Harm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2568.11.2.3 Risks to Health or Safety of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2578.11.2.4 The Vulnerability of the Plaintiff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2588.11.2.5 Evidence of Repetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .258

8.11.2.5.1 Relevance of evidence of repetition . . . . . . . . . . . . . . . . . . . . . . . . .2588.11.2.5.2 Limits on use of evidence of repetition . . . . . . . . . . . . . . . . . . . . . . .259

8.11.2.6 Intent, Malice, Trickery, or Deceit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2608.11.2.7 Reprehensibility When There Are Multiple Claims . . . . . . . . . . . . . . . . . . . . . . .260

8.11.3 The Ratio of Punitive Damages to Compensatory Damages . . . . . . . . . . . . . . . . . . . . . . . .2608.11.3.1 The Supreme Court’s Ratio Rulings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .260

8.11.3.1.1 Gore, State Farm, and Philip Morris . . . . . . . . . . . . . . . . . . . . . . . . .2608.11.3.1.2 Exxon Shipping Co. v. Baker as interpreting maritime law . . . . . . .261

8.11.3.2 Justifying a High Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2618.11.3.3 Increasing the Ratio When Previous Awards Have Not Achieved Deterrence . . .2668.11.3.4 Including All Actual and Potential Harm to the Plaintiff in the Ratio . . . . . . . . .267

8.11.3.4.1 Potential harm to the plaintiff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2678.11.3.4.2 What can be included in the compensatory damages award to which punitive damages are compared? . . . . . . . . . . . . . . .2688.11.3.4.3 Harm that the plaintiff suffers but that cannot be included in the compensatory award . . . . . . . . . . . . . . . . . . . . . . . . .269

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8.11.3.4.4 Treatment of multiple claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2708.11.3.4.5 Using the right ratio for the right defendant . . . . . . . . . . . . . . . . . . .271

8.11.4 Presenting Evidence of Other Penalties for the Specific Conduct at Issue . . . . . . . . . . . . . .2728.11.4.1 The Supreme Court’s Description of This Guidepost . . . . . . . . . . . . . . . . . . . . . .2728.11.4.2 Comparable Penalties in Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . .273

8.11.4.2.1 Revocation of business license . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2738.11.4.2.2 Civil penalties under UDAP statutes and FTC Act . . . . . . . . . . . . . .2738.11.4.2.3 Statute that caps punitive damages can give defendant fair notice of potential liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2748.11.4.2.4 Criminal penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .274

8.11.5 Presenting Evidence of Defendant’s Wealth When Appropriate . . . . . . . . . . . . . . . . . . . . . .2748.11.6 Framing Jury Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2768.11.7 Trial Court and Appellate Review of Punitive Damages Awards . . . . . . . . . . . . . . . . . . . . .2778.11.8 Gore Standards Do Not Limit Statutory or Multiple Damages . . . . . . . . . . . . . . . . . . . . . . .278

8.11.8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2788.11.8.2 The Supreme Court Has Upheld the Constitutionality of Statutory Damages Without Regard to Their Ratio to Actual Harm . . . . . . . . . . .2788.11.8.3 Fair Notice Is Provided by Statutory Damage Provisions . . . . . . . . . . . . . . . . . .2798.11.8.4 Comparison of Actual Harm to Punitive Damages May Be Impossible . . . . . . . .2798.11.8.5 Many Statutory and Multiple Damages Provisions Are Compensatory Rather Than Punitive in Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2798.11.8.6 Statutory Damages Are Not Decided in an “Imprecise Manner” . . . . . . . . . . . . .280

8.12 The Rescission Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2808.12.1 Advantages and Disadvantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2808.12.2 Consumer’s Slowness in Responding, Other Conduct May Preclude Rescission . . . . . . . .2818.12.3 Election of Damages Versus Rescission Remedy After Case Is Filed . . . . . . . . . . . . . . . . .282

Chapter 9 Warranty, Mistake, UDAP, RICO, Unconscionability, Negligence, and Contract Claims

9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2839.2 Warranty Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .283

9.2.1 Advantages and Disadvantages in Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . .2839.2.2 Dealer’s Breach of Warranty of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .284

9.2.2.1 Nature of Warranty of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2849.2.2.2 Application of Warranty of Title to Automobile Fraud Cases . . . . . . . . . . . . . . .2859.2.2.3 Disclaimer of Warranty of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2869.2.2.4 Remedies for Breach of Warranty of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .287

9.2.2.4.1 UCC remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2879.2.2.4.2 Application of Magnuson- Moss Act . . . . . . . . . . . . . . . . . . . . . . . . .2879.2.2.4.3 Potential defendants; bond claims . . . . . . . . . . . . . . . . . . . . . . . . . . .288

9.2.2.5 Obtaining Clear Title for the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2889.2.2.6 Practical Tips in Warranty of Title Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .288

9.2.3 Express Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2899.2.3.1 Creation and Breach of Express Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2899.2.3.2 Express Warranties in Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . . . .289

9.2.3.2.1 Odometer reading and statements as express warranties . . . . . . . . .2899.2.3.2.2 Express warranties by description . . . . . . . . . . . . . . . . . . . . . . . . . . .2909.2.3.2.3 Warranties for “certified” used cars . . . . . . . . . . . . . . . . . . . . . . . . . .2909.2.3.2.4 Absence of title brand as express warranty . . . . . . . . . . . . . . . . . . . .2919.2.3.2.5 Other express warranties on used cars. . . . . . . . . . . . . . . . . . . . . . . .291

9.2.3.3 Disclaimers and Parol Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2919.2.4 Implied Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .292

9.2.4.1 Creation and Breach of Implied Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2929.2.4.2 Implied Warranties in Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . . . .2939.2.4.3 Disclaimers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .294

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9.2.4.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2949.2.4.3.2 Magnuson- Moss restrictions on disclaimers . . . . . . . . . . . . . . . . . . .2949.2.4.3.3 State law restrictions on disclaimers . . . . . . . . . . . . . . . . . . . . . . . . .2949.2.4.3.4 UCC restrictions on disclaimers . . . . . . . . . . . . . . . . . . . . . . . . . . . .2959.2.4.3.5 Effect of the FTC Used Car Rule . . . . . . . . . . . . . . . . . . . . . . . . . . .2959.2.4.3.6 UCC duty of good faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .295

9.2.5 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2969.2.6 Privity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2969.2.7 Revocation of Acceptance As a UCC Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .296

9.2.7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2969.2.7.2 When May a Consumer Revoke Acceptance? . . . . . . . . . . . . . . . . . . . . . . . . . . .2979.2.7.3 Consumer Options After Revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2979.2.7.4 Returning the Car to the Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2979.2.7.5 Holding the Car for Dealer Pick- Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2979.2.7.6 Consumer Sale of Car After Revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .298

9.2.7.6.1 The consumer’s right to sell the car. . . . . . . . . . . . . . . . . . . . . . . . . .2989.2.7.6.2 Dealing with liens on the title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2989.2.7.6.3 Precautions when selling a car after revocation of acceptance . . . . .299

9.2.7.7 Consumer’s Continued Use of the Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2999.2.8 Withholding Payments As a UCC Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2999.2.9 The Damage Remedy and Limitations on Remedies Clauses . . . . . . . . . . . . . . . . . . . . . . . .300

9.2.9.1 Actual and Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3009.2.9.2 Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3009.2.9.3 Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3029.2.9.4 Limitations on Remedies Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302

9.2.10 Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3039.2.11 Application of Magnuson- Moss Warranty Act to Automobile Fraud Claims . . . . . . . . . . . .304

9.2.11.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3049.2.11.2 Magnuson- Moss Claims Based on Written Warranties . . . . . . . . . . . . . . . . . . . .3049.2.11.3 Implied Warranty Claims Under the Magnuson- Moss Warranty Act . . . . . . . . . .3049.2.11.4 Service Contract Claims Under the Magnuson- Moss Warranty Act . . . . . . . . . .3059.2.11.5 Magnuson- Moss Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .305

9.3 Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3059.3.1 Benefits of a Claim of Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3059.3.2 Elements of a Claim of Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .305

9.4 UDAP Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3079.4.1 Advantages and Disadvantages in Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . .307

9.4.1.1 Strengths and Benefits of UDAP Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3079.4.1.2 Comparison to Warranty Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3079.4.1.3 Disadvantages of UDAP Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3079.4.1.4 Combining UDAP Claims with Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . .3079.4.1.5 Misrepresentation Claim Under Federal Odometer Statute As Alternative to UDAP Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .308

9.4.2 Scope Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3089.4.3 Deception Standard; Unaffected by Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3099.4.4 Failure to Disclose As Deceptive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3109.4.5 Unfairness and Unconscionability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312

9.4.5.1 Unfairness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3129.4.5.2 Unconscionability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312

9.4.6 Violation of Another Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3139.4.6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3139.4.6.2 Precedent Finding Statutory Violations to Be Automatic UDAP Violations . . . .3139.4.6.3 Arguing That a Statutory Violation Is a Per Se UDAP Violation . . . . . . . . . . . . .314

9.4.7 Specific Standards for Vehicle Sales in UDAP Statutes and Regulations . . . . . . . . . . . . . . .3159.4.8 Application of UDAP Standards to Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . .315

9.4.8.1 Odometer Rollbacks and Mileage Misrepresentations . . . . . . . . . . . . . . . . . . . . .315

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9.4.8.2 Salvage and Collision History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3179.4.8.3 Lemon Laundering and Nondisclosure of History of Mechanical Problems . . . .3199.4.8.4 Nature of Prior Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3209.4.8.5 Sale of Used Cars As New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322

9.4.8.5.1 Deceptive to represent used cars as new . . . . . . . . . . . . . . . . . . . . . .3229.4.8.5.2 Distinguishing new cars from used cars . . . . . . . . . . . . . . . . . . . . . .3239.4.8.5.3 Investigating whether a car is new or used . . . . . . . . . . . . . . . . . . . .3259.4.8.5.4 Implications of FTC Used Car Rule . . . . . . . . . . . . . . . . . . . . . . . . .325

9.4.8.6 Misrepresentations Concerning Clear Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3259.4.8.7 Gray Market Vehicle Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .325

9.4.9 Limitations on UDAP Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3269.4.10 UDAP Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .327

9.5 Federal RICO Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3289.5.1 Advantages and Disadvantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3289.5.2 Elements of a RICO Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3299.5.3 Application to Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .330

9.6 State RICO and Civil Theft Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3319.6.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3319.6.2 Advantages of State RICO Claims over UDAP and Federal RICO Claims . . . . . . . . . . . . .332

9.7 Lease Unconscionability Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3329.8 Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3339.9 Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .333

Chapter 10 Litigating Automobile Fraud Cases10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33510.2 Advising the Automobile Fraud Client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .335

10.2.1 Need for Expert Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33510.2.2 Client Must Decide Whether to Withhold Payments and Whether to Return the Car . . . . .33510.2.3 How to Return the Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33610.2.4 Withholding Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33610.2.5 Asking the Client to Perform Preliminary Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33610.2.6 Placing the Attorney- Client Relationship on a Sound Footing . . . . . . . . . . . . . . . . . . . . . . .33710.2.7 Documenting Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .337

10.3 Pleading and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33710.3.1 Selecting Claims to Plead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33710.3.2 Drafting the Complaint to Preserve Consumer’s Choice of Forum . . . . . . . . . . . . . . . . . . .33810.3.3 Federal Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .339

10.3.3.1 Advantages and Disadvantages of Federal Court . . . . . . . . . . . . . . . . . . . . . . . . .33910.3.3.2 Supplemental Jurisdiction over State Law Claims . . . . . . . . . . . . . . . . . . . . . . . .33910.3.3.3 Framing Misrepresentation Claims As Federal Odometer Claims . . . . . . . . . . . .340

10.3.4 Personal Jurisdiction over Out- of- State Defendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34010.3.4.1 General Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34010.3.4.2 Long- Arm Jurisdiction over Out- of- State Vehicle Sellers . . . . . . . . . . . . . . . . . .34110.3.4.3 Internet Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342

10.3.5 Mandatory Arbitration Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34310.3.5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34310.3.5.2 Arbitration Agreement’s Existence and Application to the Parties and the Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34410.3.5.3 Unconscionability Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34410.3.5.4 Are Magnuson- Moss Act Claims Subject to Arbitration? . . . . . . . . . . . . . . . . . .34510.3.5.5 If the NAF Is Designated As the Sole Arbitration Forum . . . . . . . . . . . . . . . . . . .34510.3.5.6 Other Grounds to Find an Otherwise Consummated Arbitration Agreement Unenforceable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34610.3.5.7 Who Decides Arbitrability— the Court or the Arbitrator? . . . . . . . . . . . . . . . . . .34610.3.5.8 Class Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .346

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10.3.5.9 Individual Arbitration Seeking Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . .34710.3.5.10 Treble Damages Under the Federal Odometer Statute and RICO . . . . . . . . . . . .347

10.4 Liability of Potential Defendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34710.4.1 Strategic Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34710.4.2 Potential Defendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34810.4.3 Ratification, Acceptance of Benefits, Civil Conspiracy, and Aiding and Abetting . . . . . . . .348

10.4.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34810.4.3.2 Ratification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34810.4.3.3 Knowing Acceptance of Benefits of Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34910.4.3.4 Civil Conspiracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34910.4.3.5 Aiding and Abetting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .350

10.4.4 Recovering from the Creditor for the Dealer’s Misconduct . . . . . . . . . . . . . . . . . . . . . . . . .35010.4.5 Liability of Automobile Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .351

10.4.5.1 Liability for Its Own Acts and the Acts of an Undisclosed Principal . . . . . . . . . .35110.4.5.2 Liability Under Federal Odometer Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35210.4.5.3 Online Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .352

10.4.6 Liability of Notaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35310.4.7 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .353

10.4.7.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35310.4.7.2 Concerted Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35410.4.7.3 Concurring or Consecutive Individual Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35410.4.7.4 Punitive Damages When There Are Multiple Defendants . . . . . . . . . . . . . . . . . .355

10.5 Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35510.5.1 Discovery Should Begin Before Suit Is Filed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35510.5.2 Items to Seek in Formal Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35610.5.3 Pattern Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35610.5.4 Making the Most of Available Discovery Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35810.5.5 Preparing for Discovery Battles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35910.5.6 Deposing the Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35910.5.7 The Defendant’s Deposition of the Consumer Plaintiff . . . . . . . . . . . . . . . . . . . . . . . . . . . .35910.5.8 Videotaping the Deposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .360

10.5.8.1 Right to Record the Deposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36010.5.8.2 Advantages and Disadvantages of Videotaping the Deposition . . . . . . . . . . . . . .361

10.5.9 Dealing with Missing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36110.6 Res Judicata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .361

10.6.1 Prior Collection Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36110.6.2 Prior Fraud Suit or Criminal Prosecution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362

10.7 Class Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36210.7.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36210.7.2 Shaping the Class Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36310.7.3 Claims to Assert in Automobile Fraud Class Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36410.7.4 Naming Appropriate Defendants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36410.7.5 Class Pleadings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36510.7.6 Preventing Defendants from Settling Against Individual, Unrepresented Class Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .365

10.8 Evidentiary Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36510.8.1 Evidence of Other Bad Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .365

10.8.1.1 Overview of Admissibility of Other Acts Evidence . . . . . . . . . . . . . . . . . . . . . . .36510.8.1.2 To Show Intent or Motive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36710.8.1.3 To Show Preparation or Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36810.8.1.4 To Show Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36810.8.1.5 To Show Absence of Mistake or Accident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36910.8.1.6 To Show Habit or Routine Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36910.8.1.7 To Support Punitive Damages Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36910.8.1.8 Acts That Are Intertwined with Main Transaction; Multiple Claims; Conspiracies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .370

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10.8.1.9 Admissibility Under RICO and UDAP Statutes . . . . . . . . . . . . . . . . . . . . . . . . . .37110.8.1.10 Impeachment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37110.8.1.11 Practice Tips for Admission of Other Acts Evidence . . . . . . . . . . . . . . . . . . . . . .371

10.8.2 Evidence of Other Consumer Complaints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37210.8.3 Evidence of Wholesaler’s or Auction Company’s Bad Reputation . . . . . . . . . . . . . . . . . . . .37310.8.4 Evidence of Defendant’s Settlement or Settlement Offers in This or Other Cases . . . . . . . .37310.8.5 Admissibility of Evidence of Other Defendants’ Settlements; “Empty Chair” Effect . . . . .37410.8.6 Parol Evidence Rule and Merger Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37510.8.7 Witness Testimony. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .375

10.8.7.1 Previous and Subsequent Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37510.8.7.2 Testimony and Statements of Adverse Parties and Persons Associated with Adverse Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37510.8.7.3 Mechanic Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37610.8.7.4 Questioned Document Examiners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37710.8.7.5 Other Expert Witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37810.8.7.6 Meeting Daubert Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37910.8.7.7 Witnesses Who Have Received Use Immunity for Previous Testimony. . . . . . . .38010.8.7.8 Defendants’ Assertion of Fifth Amendment Privilege . . . . . . . . . . . . . . . . . . . . .380

10.8.8 Documentary Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38210.8.8.1 Title and Registration Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38210.8.8.2 Summary Title History Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38310.8.8.3 Records of Dealer, Manufacturer, Auction House, Repair Shop, and Other Business Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38410.8.8.4 Simplifying Admission of Documentary Evidence . . . . . . . . . . . . . . . . . . . . . . .384

10.8.9 Use of Criminal Conviction to Establish Liability by Collateral Estoppel . . . . . . . . . . . . . .38410.9 Trial of Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .385

10.9.1 Preparing for Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38510.9.2 Motions in Limine 38510.9.3 Voir Dire 38610.9.4 Conduct of the Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38710.9.5 Use of Exhibits at Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38810.9.6 Countering Defense Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38910.9.7 Arguing for Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39010.9.8 Helping Fraud Victims Prepare to Testify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39110.9.9 Opening Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39210.9.10 Order of Witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39210.9.11 Defense Attempts to Limit Use of the Word “Lemon” . . . . . . . . . . . . . . . . . . . . . . . . . . .39210.9.12 Should the Jury Be Told That Actual Damages Will Be Trebled? . . . . . . . . . . . . . . . . . . .39210.9.13 Closing Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .394

10.10 Damage Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39510.10.1 Direct Actual Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395

10.10.1.1 Benefit of the Bargain Versus Out- of- Pocket Damages . . . . . . . . . . . . . . . . .39510.10.1.2 Proving Diminished Value of Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39610.10.1.3 When to Utilize Used Car Valuation Guides . . . . . . . . . . . . . . . . . . . . . . . . .39810.10.1.4 Introduction of Used Car Guides into Evidence . . . . . . . . . . . . . . . . . . . . . .398

10.10.2 Cancellation and Recovery of Amount Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39910.10.2.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39910.10.2.2 Relation to Recovery for Diminished Value . . . . . . . . . . . . . . . . . . . . . . . . . .40010.10.2.3 Treble Damages and Restitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400

10.10.3 Incidental and Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40010.10.3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40010.10.3.2 Emotional Distress Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .402

10.10.4 Damages in Lease Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40510.10.5 Statutory Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40510.10.6 Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .405

10.11 Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .407

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10.11.1 Settlement Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40710.11.1.1 Negotiation Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40710.11.1.2 Settlement with Financially Shaky Defendants . . . . . . . . . . . . . . . . . . . . . . .40810.11.1.3 Last- Minute Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40810.11.1.4 Seeking Partial Summary Judgment to Speed Settlement . . . . . . . . . . . . . . .40810.11.1.5 Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40810.11.1.6 Dealing with Multiple Defendants and the Dealer’s Insurer . . . . . . . . . . . . .40910.11.1.7 Settlements Without Adequate Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . .410

10.11.2 Settlement Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41010.11.2.1 Prompt Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41010.11.2.2 Dealer’s or Consumer’s Subsequent Resale of Suspect Vehicle . . . . . . . . . .41110.11.2.3 Protecting the Consumer’s Credit Report . . . . . . . . . . . . . . . . . . . . . . . . . . .41110.11.2.4 Confidentiality Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41110.11.2.5 Other Terms and Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41210.11.2.6 Court Costs and Financing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41210.11.2.7 Protecting Against the Defendant’s Bankruptcy . . . . . . . . . . . . . . . . . . . . . .412

10.12 Attorney Fees in Automobile Fraud Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41310.12.1 Availability of Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41310.12.2 Pleading Attorney Fees and Other Initial Steps to Obtain Fees . . . . . . . . . . . . . . . . . . . . .41310.12.3 Standards for Determining Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41410.12.4 Procedure for Requesting Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41510.12.5 Attorney Fees When Case Is Settled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .415

10.13 Collecting the Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41510.13.1 Collecting Against the Defendant’s Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .415

10.13.1.1 Locating Dealer Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41510.13.1.2 Collecting from Debts Owed to the Dealer . . . . . . . . . . . . . . . . . . . . . . . . . .41610.13.1.3 Finding Hidden Dealer Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .416

10.13.1.3.1 Information from and payments owed by manufacturer . . . . . . .41610.13.1.3.2 Dealer assets on the premises . . . . . . . . . . . . . . . . . . . . . . . . . . .41610.13.1.3.3 Information from dealer’s former and current employees . . . . . .41710.13.1.3.4 Information held by auction houses . . . . . . . . . . . . . . . . . . . . . .41710.13.1.3.5 Information from public agencies . . . . . . . . . . . . . . . . . . . . . . . .418

10.13.1.4 Collecting Against Manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41810.13.2 Effect of Defendant’s Appeal on Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41810.13.3 Reaching the Dealer’s Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41810.13.4 Collecting on a State- Mandated Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .419

10.13.4.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41910.13.4.2 What Claimants Does the Dealer’s Bond Protect? . . . . . . . . . . . . . . . . . . . . .41910.13.4.3 Necessity to Prove Fraud or Specific Type of Conduct . . . . . . . . . . . . . . . . .42010.13.4.4 Recovery of Different Types of Damages Under a Bond . . . . . . . . . . . . . . . .42210.13.4.5 Attorney Fees Collectable Under a Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . .42310.13.4.6 Bond Limitations on the Size of a Recovery . . . . . . . . . . . . . . . . . . . . . . . . .42410.13.4.7 Surety’s Liability After a Bond Has Expired . . . . . . . . . . . . . . . . . . . . . . . . .42510.13.4.8 Statute of Limitations for Claims on a Bond . . . . . . . . . . . . . . . . . . . . . . . . .42510.13.4.9 Other Limitations on a Bond’s Applicability . . . . . . . . . . . . . . . . . . . . . . . . .42510.13.4.10 Recovery Against a Bond When Dealer Files Bankruptcy . . . . . . . . . . . . . .42610.13.4.11 Tips for Recovering Against a Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .426

10.13.5 Consumer Recovery Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .426

Appendix A Federal StatutesA.1 The Motor Vehicle Information and Cost Savings Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .429

A.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .429A.1.2 Text of the Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .429A.1.3 Conversion Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .433

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A.1.3.1 15 U.S.C. Sections to 49 U.S.C. Sections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .433A.1.3.2 49 U.S.C. Sections to 15 U.S.C. Sections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .433

A.1.4 Legislative History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .434A.1.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .434A.1.4.2 1972 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .434A.1.4.3 1976 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .434A.1.4.4 1986 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .435A.1.4.5 1988 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .435A.1.4.6 1990 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .435A.1.4.7 1994 Recodification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .435A.1.4.8 1996 Appropriations Bill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .436A.1.4.9 1998 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .436A.1.4.10 2012 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .436

A.2 Driver’s Privacy Protection Act, 18 U.S.C. §§ 2721– 2725 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .436A.3 National Motor Vehicle Title Information System, 49 U.S.C. §§ 30501– 30505 . . . . . . . . . . . . . . . .438

Appendix B Federal RegulationsB.1 Regulations Under the Motor Vehicle Information and Cost Savings Act (Odometer Disclosures) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .441

B.1.1 Odometer Disclosure Requirements, 49 C.F.R. §§ 580.1– 580.17 . . . . . . . . . . . . . . . . . . . .441B.1.2 Selected Excerpts from Supplementary Information to Odometer Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .447

B.1.2.1 Supplementary Information to Proposed Revisions of Odometer Disclosure Requirements, 52 Fed. Reg. 27,022 (July 17, 1987) . . . . . . . . . . . . .447B.1.2.2 Supplementary Information to 1988 Final Rule, 53 Fed. Reg. 29,464 (Aug. 5, 1988) (amending 49 C.F.R. Part 580) . . . . . . . . . . . . . . . . . . . . . . . . . . .448B.1.2.3 Final Regulatory Evaluation for Truth in Mileage Act (Nat’l Highway Traffic Safety Admin. (Aug. 1988)) . . . . . . . . . . . . . . . . . . . . . .453B.1.2.4 Supplementary Information to 1989 Final Rule, 54 Fed. Reg. 35,879 (Aug. 30, 1989) (amending 49 C.F.R. Part 580) . . . . . . . . . . . . . . . . . . . . . . . . . .458B.1.2.5 Supplementary Information to 1991 Final Rule, 56 Fed. Reg. 47,681 (Sept. 20, 1991) (amending 49 C.F.R. Part 580) . . . . . . . . . . . . . . . . . . . . . . . . . .461B.1.2.6 Supplementary Information to Interim Final Rule on Exemptions, 62 Fed. Reg. 47,763 (Sept. 11, 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .462B.1.2.7 Supplementary Information to Final Rule on Exemptions, 63 Fed. Reg. 52,630 (Oct. 1, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .462

B.1.3 Administrative History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .463B.2 Vehicle Identification Number (VIN) Requirements, 49 C.F.R. §§ 565.1– 565.26 . . . . . . . . . . . . . .464B.3 National Motor Vehicle Title Information System, 28 C.F.R. §§ 25.51– 25.57 . . . . . . . . . . . . . . . . .471

Appendix C State Laws Relating to Automobile Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475

Appendix D State Statutes and Regulations Relating to Yo- Yo Sales . . . . . . . . . . . . . . . . . . . . . . . . . 511

Appendix E State- by- State Information on Requesting Title Histories . . . . . . . . . . . . . . . . . . . . . . . . . . . 517

Appendix F State Automobile Dealer Licensing Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525

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Contents

Appendix G Sample Pleadings Available Online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531G.1 Sample Complaints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .531G.2 Sample Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .531G.3 Sample Jury Trial Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .531G.4 Sample Motions and Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .532G.5 Sample Class Action Pleadings for Odometer Rollback Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .532G.6 Sample Attorney Fee Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .533

Appendix H Websites Related to Automobile Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539

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