Vehicle dealers are prohibited by federal law from misrepresenting either the mechanical condition of a vehicle or the terms and conditions or the existence of a warranty for a vehicle. If an individual has relied on a false or misleading claim when purchasing a faulty vehicle, they may have a claim against the automobile dealer that sold them the vehicle.
In general, there are two types of claims which are related to deceptive automobile dealings, including:
- Fraudulent misrepresentation
- Negligent misrepresentation
Suing a car dealership for misrepresentation may be possible in certain circumstances. If an individual has already purchased a vehicle and later determines that something is wrong with it, they may have a cause of action against the car dealer.
In order to sue a car dealership for misrepresentation, the individual must show:
- The car dealer omitted or misrepresented material facts regarding the vehicle
- The individual suffered a financial loss as a result
- The individual would not have purchased the vehicle if they were aware of the material facts at issue
In order to prove these issues, the individual will need to show that they inquired about the condition of the vehicle and that the salesperson denied there were any issues with the vehicle. An eyewitness to the misrepresentation would be extremely helpful to an individual’s case.
What Are Some Common Car Dealer Lies?
There are numerous statements that car sales people and car dealers may make in order to try and entice a potential customer into making a purchase quickly.
These may include:
- The dealer can lower their monthly costs
- They are providing the lowest rate that is available
- The accident report is trustworthy
- There is another person interested in this vehicle
- Simply “sign and drive”
- The price is not negotiable
- That fee cannot be waived
- The extended warranty is needed on this purchase
- We will give a great deal on the trade-in
- This deal is only good for today
It is important for a potential customer to purchase the vehicle only when they feel comfortable doing so and when they have negotiated a price they are comfortable paying. These types of statements and tactics are often used to pressure potential customers into making purchases quickly.
What Are Some Types of Auto Dealer Misrepresentation Claims?
There are two main categories of automobile dealer misrepresentation, which include a blatant misrepresentation and a failure to disclose material facts. These types of misrepresentations often occur in the following situations:
- Bait and switch advertising
- Tampering with the odometer
- Stating that a vehicle has certain features or options when it does not
- Not honoring a warranty or claiming that the customer’s issue is outside of the warranty coverage
- Deceptively inflating the price of the vehicle if the individual paid more than the price that was advertised
- Failing to disclose information regarding the history of the vehicle, such as:
- Accidents
- Defects
- Insurance losses
- Frame damage
- Claiming that the buyer’s financing did not go through and that they need to bring the car back, referred to as yo-yo financing
What Is Fraudulent Misrepresentation?
Fraudulent misrepresentation can be defined as any type of false statement or lie that is used to trick an individual into an agreement. The misrepresentation may occur in many ways, including:
- Written words
- Spoken words
- Gestures or body motions, such as a nod
- Through silence or inaction
Fraudulent misrepresentation is often raised in connection with contract law issues. An example of fraudulent misrepresentation occurs when a party purposefully makes a statement which is false to the other party for the purpose of inducing them into signing the contract.
For example, if an automobile dealer lies regarding the accident history of a used vehicle in order to get an individual to sign a purchase contract, then it may be considered fraudulent misrepresentation.
How to Sue Your Car Dealer for Fraudulent Misrepresentation?
Fraudulent misrepresentation includes six elements. In order for a plaintiff, or an individual who files a lawsuit, to recover for fraudulent misrepresentation claims, they must prove all 6 elements. The elements a plaintiff must prove to sue a car dealership include:
- That the car dealer made a false representation
- It is important to note that representations typically involve a direct statement but any speech that is intended to communicate a fact or create an impression, illusion, or belief, may be considered a representation
- The car dealer was aware that the representation was false or made the representation recklessly without knowing if it was actually true at the time
- The car dealer make the representation with the intent that the plaintiff would rely upon it
- The plaintiff, or individual who purchased the vehicle, relied upon the representation
- It was reasonable for the plaintiff to rely upon the representation
- The plaintiff suffered economic damages as a result of relying upon the false representation
Proving all of these elements in court may be complicated and requires the aid of a skilled lawyer. A lawyer is best equipped to gather evidence of the car dealer’s deceptive trade practices, obtain witnesses to testify regarding the deception, and advocate for the plaintiff in court.
What Is Negligent Misrepresentation?
Negligent misrepresentation in a contract setting occurs when an individual states a fact without verifying whether or not it is true. Pursuant to both real estate and contract law, negligent misrepresentation is a civil wrong.
Negligence involves an individual’s duty to act reasonably under a given set of circumstances. If an individual is a victim of negligent misrepresentation, they may be able to sue for money damages in a court of law.
In order to prove negligent misrepresentation, the plaintiff must show:
- The defendant, or individual being sued, made a representation in a contract
- That representation was false
- That representation was made either without reasonable grounds to believe it was true or carelessly
- The plaintiff reasonably relied on that representation
- The plaintiff’s reliance on that representation was the legal cause of the plaintiff sustaining damages
A representation is a statement, such as “the brakes work just fine,” that can be proven to be true or false. Reasonable reliance is how an individual with ordinary intelligence and common sense would believe upon hearing or reading the representation. If the individual would not believe the representation, there was no reasonable reliance.
Although fraudulent misrepresentation and negligent misrepresentation may seem similar, they are slightly different. With fraudulent misrepresentation, an individual knowingly makes an incorrect or false statement which is intended to mislead or deceive.
A negligent misrepresentation, on the other hand, only requires that the individual fail to exercise reasonable care or competence to obtain or communicate information which is true. In other words, they fail to verify information which an individual relies upon.
How to Sue Your Car Dealer for Negligent Misrepresentation?
If an individual is unable to establish the required elements for fraud, they may still have a claim against the car dealer for making negligent misrepresentations. The advantage of a negligent misrepresentation claim is that the plaintiff is not required to show that the seller was actually aware that the representation was false at the time it was made.
Instead, the plaintiff must only show that the car dealer made a representation or representations under circumstances which indicate a reckless disregard for the truth or that they ought to have known that the representations they made were not true. In order to prove a car dealer made negligent misrepresentations, the plaintiff must show:
- A representation was made by the car dealer
- That representation was false
- The car dealer knew or should have known that the representation was false
- The plaintiff relied on the representation made by the car dealer
- It was reasonable for the plaintiff to rely on the representation made by the car dealer
- The plaintiff suffered damages as a result of relying on that representation
It is much easier to prove that the car dealer should have known that the representation was false than to prove that the car dealer actually knew that the representation was false. If an individual is a victim of negligent misrepresentation in a contract, they may sue for the recovery of damages caused by that misrepresentation.
For example, if an individual purchases a bicycle with brakes that do not work, they may sue the seller for the cost of the brake inspection. In a breach of contract case that deals with a negligent misrepresentation, damages are typically limited to financial damages. Typically, a court does not award damages for personal injury, emotional injury, or pain and suffering in these types of cases.
The plaintiff may also be entitled to an equitable remedy. An equitable remedy is a type of remedy which is non-monetary.
One example of an equitable remedy is contract rescission. A contract rescission occurs when the court orders a contract to be canceled, terminating the contract and treating it as though it never existed.
With a contract rescission, the buyer receives a refund and the property that was sold is returned to the seller. The purpose of a rescission is to put both parties back in the position they were prior to the formation of the contract.
Should I Consult an Attorney?
Yes, it is essential to have the assistance of an auto lawyer to help with any misrepresentation issues you may have if you purchased a vehicle based on your reliance upon misrepresentations of the car dealer or seller. Your attorney can review your case and determine if you have a claim for fraudulent misrepresentation or negligent misrepresentation.
In addition, if you have sold a vehicle and you are now being accused of making misrepresentations regarding that vehicle, your attorney can advise you regarding any defenses that may be available and how to avoid liability. There are both federal and state laws that prohibit dealers from engaging in fraud and misrepresentation.
Some laws will apply to new cars and some to used cars. Due to the many different laws and possible situations, it is important to have a lawyer evaluate your issue and see what laws will apply in your specific case.
Lemon laws may cover a defective vehicle but, in some states, they only apply to new cars. In other states, they will also apply to used cars.
Your lawyer can explain the lemon laws in your specific state and advise you whether they will apply in your situation. If they do not, your lawyer can provide you with alternative legal avenues to recover compensation for your losses.
Dealership fraud laws also provide protections for you if you purchase motorcycles, trucks, and vans. It is important to have a lawyer helping you with these types of claims, especially against dealerships, as they will likely have the financial means to strongly defend themselves against any type of claim that you make against them. Your lawyer will ensure that you take advantage of all available means for compensation and the best case is presented on your behalf in accordance with your state’s laws.
