Auto Fraud – When a New Car is actually a Used Car

The paperwork is signed, the new tags are on, and the keys are now yours.  You get in, turn the engine on, smell the new car smell, and then call Sirius radio to activate the subscription.  The Sirius representative then tells you, the subscription had already been activated… wait, what?!

When the Car Dealership Sells a Used Car as a New Car – Sad but True

That is how our clients recently discovered that their car, a “new” $50,000 SUV, had actually been sold to someone before them, and then sold to them again as a new car.  In this case of new car fraud, the first buyer had signed a contract for the same vehicle, and asked the dealership to hold a postdated check for 10 days.  The dealership agreed, but after a week got tired of holding the post-dated checked and tried to bully him into signing another finance contract.  He refused to be bullied, and returned the car after putting 400 miles on it in one week.

Our clients, who bought the car the day after the first buyer returned it, asked the sales manager where the 400 miles came from, and asked if the car was used.  The answer was a complete lie: they were told that the owner of the dealership had been driving the car as a “demo” and that the car was still brand new.  Our clients believed this story, and bought the car in reliance on the answer.  However, once they called Sirius and found out the subscription had already been activated, they began to connect the dots.  They called the office of Whitney, LLP and spoke with one of our new car auto fraud attorneys.  As part of the investigation into this claim, we identified and called the prior owner  – not only was upset at the dealership going back on his own deal, but he offered to come to court and testify for our clients’ case if needed.  

Having spoken with the prior owner, we then contacted the dealership.  A week later, their attorney wrote back and in his letter continued to claim that the vehicle had never been delivered to anyone except our clients.  This was interesting, because the dealership was flat out, 100% lying. They also raised the issue that the vehicle had never been titled, and was therefore new, but our experienced auto fraud attorneys knew that Maryland law does not require a car to be titled to consider it to no longer be new.  In fact, Maryland has specific laws that address the exact situation of when  a new car dealership needs to disclose prior sales and deliveries even the car was not previously titled.

A short phone call later, after letting their attorney know that we knew the name of the prior owner, had spoken to him, and knew the whole history, our attorney received a voicemail with  a different tone – “What can we do to make them happy?”  Within a few days, the dealership and our clients agreed to a settlement of $7,500, or 15%, of the value of the car, to compensate our client for the 400 miles on the car.  

Maryland Law on New Car Prior Sale Disclosure Requirements

In fact, Maryland has specific laws that address the exact situation of when  a new car dealership needs to disclose the prior sale and delivery of a “new” car even the car was not previously titled.  The Code of Maryland Regulations (COMAR) addresses this exact situation and requires car dealership to complete a Disclosure form and a specific section checked when a car has previously delivered but not titled. When  a dealer does not comply with the law, and fails to make the required disclosure, deceived consumers have a strong legal case.

One of Maryland’s applicable new car prior sale disclosure laws is as follows:

11.12.01.14 – Dealers’ Advertising and Trade Practices.

  1. A vehicle which has never been titled, but which has been previously delivered to a customer, may be subsequently sold as a new vehicle if the:

(1) Vehicle has not been used in a manner so as to destroy its newness; and

(2) Buyer is advised, in writing, of:

(a) The number of persons to whom the vehicle was previously delivered;

(b) The mileage accumulated on the vehicle while it was in the possession of each prior customer;

(c) The reason the prior customers returned the vehicle to the dealer;

(d) Any other information required by this regulation or any other State or federal law; and

(e) A written disclosure in 10-point type and separate from the purchase contract document which states: “PART OR ALL OF THE MILEAGE ON THE ODOMETER OF THIS VEHICLE RESULTED FROM PREVIOUS DELIVERY TO A RETAIL PURCHASER WHO NEVER TOOK TITLE TO THE VEHICLE. FEDERAL LAW REQUIRES A BUYER’S GUIDE TO BE ATTACHED TO THE SIDE WINDOW OF THIS VEHICLE. YOU ARE WELCOME TO INQUIRE AS TO THE SPECIFIC USAGE OF THE VEHICLE FROM THE DATE OF ITS DELIVERY TO THE DEALER. YOU ARE ALSO WELCOME TO CONDUCT WHATEVER INSPECTION YOU DEEM APPROPRIATE PRIOR TO ENTERING INTO AN AGREEMENT TO PURCHASE THE VEHICLE.”

Maryland Auto Fraud Consumer Lawyers for Car Dealership Problems

The scenario of a car dealership selling a new car twice, and similar scenarios of selling salvaged vehicles, water damaged vehicles, and cars with prior accidents, is an all too common occurrence in the Baltimore-Washington area.  Whitney, LLP always provides a free consultation to our potential auto fraud clients, and we have sued multiple car dealerships over bad car deals when the dealership is unwilling to reach a reasonable settlement. Contact our office now at 40 583 8000, or use our Quick Contact Form.