Kick the Tires, Read the Fine Print
VIEWPOINT
by Rob Cohen
Perhaps Congress and the California Legislature will not be satisfied until there are so many laws designed to protect consumers that a car dealer will have to hire lawyers instead of salespeople.
Now there’s a frightening thought! What if, instead of having to deal with pushy salespeople, car buyers had to contend with loquacious lawyers? Let’s see what that might be like.
Salesperson/Attorney: Hello, and welcome to Compliance Chevrolet. My name is Rob and I will be assisting you today. Please note that I am a licensed attorney, however, I am not your attorney. Should you require any legal assistance throughout this transaction, please contact your own legal counsel.
Customer: Great, I was wondering if you had any SUVs I could look at?
S/A: Certainly, however, please be aware that the Department of Transportation has issued various warnings concerning increased rollover risk of certain sport utility vehicles.
C: Are you saying that your SUVs are unsafe?
S/A: Absolutely not! In fact, all of our vehicles have been safety-checked to ensure compliance with Vehicle Code section 11713(i), which incorporates by reference the entire Division 12.
C: What does that mean?
S/A: Division 12 of the Vehicle Code contains hundreds of equipment requirements pertaining to motor vehicles. And, although we cannot guarantee our vehicles will be trouble-free, we can assure you we are in compliance with this division.
C: OK. So can you show me the SUVs?
S/A: No problem. But first, would you care to review the Environmental Protection Agency’s Fuel Economy Guide? We are required by Title 40 of the Code of Federal Regulations section 600.405-77 to provide copies of this publication at no charge.
You should probably know that SUVs are not generally considered to have the best fuel economy.
C: No, I do not want to look at a fuel economy guide. I just want to look at some cars.
S/A: Certainly. We are also required to provide free copies of the National Highway Transportation Safety Agency’s Comparison of Insurance Costs booklets.
You do know that insurance premiums are often higher on SUVs? But please note that I am not a licensed property and casualty agent and, therefore, cannot offer you any advice as to insurance coverage you may currently have or wish to acquire.
C: Would you rather I leave?
S/A: Not at all. Let me show you our selection of SUVs now. Of course, you know that you are free to leave at anytime.
I would like to call your attention to several notices on this vehicle. First and foremost is the manufacturer’s label, otherwise known as the “Monroney.” This label is required by Title 15 of the United States Code, sections 1231-1233, written by Sen. Mike Monroney in 1958, but I digress.
This label sets forth a full description of this vehicle and also contains EPA mileage estimates. Most important, however, is the MSRP, which stands for manufacturer’s suggested retail price. Although this is a recommended price, please note that a considerable number of our sales are made below this price.
C: Can I look inside?
S/A: Of course. But first you should note the bumper safety level as well as the parts content labels required by Vehicle Code section 24011.3 and Title 49 of the Code of Federal Regulations, part 583, respectively.
C: Do you have a key?
S/A: Right here. I would like to advise you prior to entering the vehicle to read this Proposition 65 label which warns you that automobiles contain and emit chemicals that are known by the state of California to cause cancer and reproductive harm. Are you sure you want to get in?
C: I’ll take the risk.
S/A: OK. While sitting in the car, please notice that this vehicle meets all federal labeling and equipment standards.
Please pay particular attention to the air bag warning label which states, “Children can be killed or seriously injured by the air bag.” Do you have any children?
C: No.
S/A: Well, that’s a relief.
C: Can I take this for a test drive?
S/A: Only if you are licensed to operate a motor vehicle.
C: I am.
S/A: Great. Please allow me to verify your driver’s license by swiping it through our electronic reader and to make a photocopy prior to our departure. I assure you that your driver’s license will be treated as non-public, personal information and protected pursuant to our Customer Information Safeguards Policy.
And, pursuant to Civil Code section 1798.90.1, we are not allowed to use information obtained by swiping your driver’s license for marketing purposes. Would you care for a copy of our privacy policy at this time?
C: No.
S/A: OK, we will be sure to give you one later on. We are required by the Vehicle Code to affix dealer plates on any vehicle prior to taking a test drive. So, please wait while I have someone attach the proper license plates.
(The test drive begins.)
C: This feels pretty good. What’s this baby got under the hood?
S/A: An engine.
C: What size engine?
S/A: The Vehicle Code as well as numerous other laws prohibit me from making any statement that is untrue or that I should know is untrue.
Therefore, to avoid any potential misunderstanding, I would like to know whether by “size” you mean engine displacement, the number of cylinders or the horsepower rating?
C: How about the horsepower?
S/A: At what RPM?
C: Come again?
S/A: Horsepower ratings vary at different engine speeds. However, I can offer pursuant to Vehicle Code section 9950, the SAE J1349 standard for horsepower ratings, which for this vehicle is 190.
C: My head hurts.
S/A: If you believe you are unable to safely operate this vehicle, I must ask that you pull over when it is safe to do so.
(The sale nears a close.)
S/A: How will you be paying? Both federal and state law preclude us from charging you more for this vehicle if you choose to finance it. Therefore, please note that your decision will not affect the price of this vehicle.
C: I would like to apply for a loan.
S/A: We cannot offer you a loan, as we are not licensed as a finance lender in the state of California. However, we do offer vehicle financing.
C: What’s the difference?
S/A: Our vehicle financing is made pursuant to a conditional sale or “credit sale” whereas a loan is an actual disbursement of money pursuant to a promissory note or other loan agreement.
Since we are the initial creditor, we are able to set the interest rate ourselves and then ultimately sell your contract to a third party financial institution, sometimes at a premium. This premium is often referred to as “dealer reserve” or “dealer participation.”
The recent appellate court decision of Kunert vs. Mission Financial Services confirmed the legality of reserve payments to dealers. If we were to arrange for a loan rather than conduct a conditional sale, we would not be able to legally receive any reserve payment or commission from a lender pursuant to Civil Code section 2982.5(d)(5).
C: I shouldn’t have asked.
S/A: Please fill out this credit application. You will be happy to know that by filling out this credit application, you are offered the protection of the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Gramm-Leach-Bliley Act, and the Motor Vehicle Sales and Finance Act, not to mention a whole host of federal regulations which implement these acts, including Regulation B and the Federal Trade Commission’s Safeguards Rule.
C: I feel very safe. So what is your best price for this vehicle?
S/A: I am unable to give you a “best price” insofar as that term contains no temporal restrictions.
C: Temporal what?
S/A: In other words, there is no way to determine whether any price I give you will be at least as low as prices in the past or prices offered in the future.
However, I am happy to offer you a price of $25,999. This is the price of this vehicle as advertised in the Korea Times Los Angeles newspaper more than two months ago. We forgot to include an expiration date in the ad, so pursuant to section 11713.1(e) of the Vehicle Code, the offer is still good.
We must sell the vehicle to you at or below this price regardless of whether you were aware of the ad.
C: That seems like a good price. What will my payments be?
S/A: I cannot quote you a payment at this time. An attorney in the finance department will have to do that.
C: You mean I have to deal with another attorney?
S/A: Oh yes. The finance department is where things get complicated.
C: On second thought, maybe I’ll just keep driving my old car for a little while longer.
S/A: No problem. Just keep us in mind when you are ready to buy.
Cohen, a car salesman-turned-lawyer, is managing partner of Auto Advisory Services in Tustin.
