For Immediate Release

Wednesday, March 7, 2007

Contact:  Rosemary Shahan, CARS, 530-759-9440
               Joe Ridout, Consumer Action, 415-777-9648

California’s Car Buyers Bill of Rights
A Sour Deal for Consumers

California’s consumers are getting a sour deal under the Car Buyers Bill of Rights, according to the first major report evaluating the new law, which made headlines nationwide when it took effect last July 1.

“Some of the tires on the new law have already gone flat,” said Rosemary Shahan, President of Consumers for Auto Reliability and Safety (CARS), the Sacramento-based non-profit consumer advocacy group that compiled the report, “Looking Under the Hood” of the new law. 

The law requires dealers to offer used car buyers at least a two-day return option for used vehicles priced below $40,000. 1  But dealers have made the two-day option into a trap for consumers. To get the option, dealers demand that buyers sign new, standardized forms that give the dealers “sole discretion” to decide whether a vehicle is eligible to be returned, or not.

“This is a ‘Catch-22’ scenario for car buyers,” said Norma Garcia, Senior Attorney, Consumers Union. “Even if you pay extra for the return option because you don’t trust the dealer, the dealer still gets to decide if you can get your refund, or not.”  That defeats the whole purpose of the return option. Some experts believe that the forms violate the law.

Auto dealers also fail to provide disclosures in languages commonly used by millions of Californians when they negotiate for a car. California law requires dealers to provide contracts in Spanish, Chinese, Tagalog, Vietnamese, and Korean, so they can understand the terms of the contract before they sign.  However, a crucial standardized form regarding the return option is not even available in languages other than English. 2  According to legislative findings in AB 309, more than 12 million Californians speak languages other than English in their homes.

“Many dealerships are drawing up English-only contracts that were negotiated by the buyer in another language. These contracts are illegal in California because they take advantage of consumers who may not understand exactly what they're signing," said Joe Ridout, spokesman for the non-profit Consumer Action, based in San Francisco and Los Angeles. Consumer Action provides a hotline for consumers in English, Spanish, and Chinese.

"Some car dealers and their lawyers are playing a new game called 'How to get around the intentions of the Car Buyer's Bill of Rights,'" said Steve Blackledge, legislative director for CALPIRG. "The new research by CARS and Consumer Action shows that dealers are violating both the law and the spirit of the law, and collectively we're going to shine a light on their misdeeds until they stop."

A low-income consumer who decided not to get the return option because he could not afford the extra $75, plus the restocking fee, recounted his nightmarish experience with a van equipped with an engine that blew up within approximately 20 miles of the dealership where he bought it. 

A consumer from Marina Del Rey described her ordeal attempting to get relief after a dealership sold her and her husband a used Toyota, while giving them far less than agreed for their traded-in truck and charging them over $1900 for an unwanted service contract. She said that the dealership failed to provide a separate disclosure for the price for the service contract, as required by the Car Buyers Bill of Rights. They finally succeeded in getting more for their trade-in and canceling the service contract. 

The key provisions of the Car Buyers Bill of Rights are:

• Dealers must offer at least a two-day return option for purchasers of used vehicles priced below $40,000 (with some exceptions), including vehicles sold “as-is”

• Dealers are prohibited from engaging in “loan packing” of add-ons commonly “packed” into loans, while deceiving customers about the cost. 3

• Dealers must provide detailed disclosures about the price to purchase items commonly deceptively “packed” into auto loans, including anti-theft devices, GAP insurance, and extended service contracts

• Dealers must disclose consumers’ credit scores, in writing

• The amount dealers may be compensated in return for raising the interest rate on auto loans is capped at 2.5% for loans up to 60 months, and 2% for longer loans

• Dealers are prohibited from selling lemon law buybacks, vehicles with frame damage, or other problem vehicles as “certified” used cars

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view preliminary report