NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTIONS

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INTRODUCTION

This page discusses New Jersey used car fraud frequently asked questions.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #1

WHAT IS USED CAR FRAUD?

A significant amount of consumer fraud is committed in the used car sales industry. The average used car buyer is exposed to simply too much incorrect information about used cars. The purchase of a car is a major investment for many New Jersey customers. Used car buyers need protection from misleading information. To attempt to combat this consumer fraud and to promote the purposes of the New Jersey Consumer Fraud Act, the Division of Consumer Affairs adopted regulations regarding automotive advertising and automotive sales.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #2

WHAT LAWS AND REGULATIONS PROTECT USED CAR BUYERS FROM FRAUD?

The New Jersey Used Car Lemon Law, the New Jersey Car Sale Regulations or the New Jersey Automotive Advertising Regulations:

  • identify prohibited car sales practices.
  • require mandatory disclosure of certain information in car sales.
  • require mandatory disclosures about whether a used car is sold as is or with warranties.
  • require mandatory disclosures about the terms of used car warranties.
  • require mandatory disclosures about the presale condition of used cars.
  • require used car dealers to provide mandatory Used car warranties for certain vehicles.

A used car dealer’s failure to follow the New Jersey Used Car Lemon Law, the New Jersey Car Sale Regulations or the New Jersey Automotive Advertising Regulations may result in a violation of the New Jersey Consumer Fraud Act.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #3

WHAT ARE SOME EXAMPLES OF CAR FRAUD CASES?

Car fraud cases take many forms. The following are some examples of these types of cases:

  • Advertising agency violated regulations prohibiting sale of a used auto failing to disclose the bona fide odometer reading.
    Dealer failed to disclose to the consumer the price of the pre-delivery services & failed to itemize such services in the final sales agreement.
  • Vehicle purchasers bought vehicles meant to last up to 20 years but which contained emergency response systems that would allegedly become useless at the end of 2007.
  • Customer agreed to buy automobile at one price & thereafter, seller increased the price.
  • Customer purchased vehicle represented as new with only 10 miles on its odometer, when in fact it was a demonstrator with 9,800 miles.
  • Dealer overcharged consumer $350 for “equipment & services plus sales tax”.
  • Dealer represented vehicle driven 59,586 miles & gave consumer certified statement to that effect, when in fact vehicle was driven over 100,000 miles & its odometer was tampered with.
    Dealer: (1) raised vehicle price from $20,535 to $24,735 to include the cost of sealant & service contract, while customers approved neither of these additional features nor received any explanation thereof; (2) initiated finance contract which customers deny knowingly executing & notwithstanding that customers wanted to pay cash; (3) lost checks; (4) failed to provide customers a list of all charges; (5) failed to prove that bank acknowledged the vehicle loan’s existence or issued payment book.
  • Customer gave dealer $500 deposit for the privilege of driving a vehicle for a few days before deciding whether to purchase. Customer returned vehicle but dealer failed to return the deposit, despite repeated calls & requests. 13 days after customer filed suit & 24 days after the vehicle’s return, dealer returned the deposit.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #4

WHAT ARE UNLAWFUL PRACTICES INVOLVING THE PRESALE CONDICTION OF CARS?

Under the New Jersey Used Car Lemon Law, the following conduct by a used car dealer is a violation of the New Jersey Consumer Fraud Act:

  • To misrepresent the mechanical condition of a used car.
  • To fail to disclose, prior to sale, any material defect in the mechanical condition of used car which is known to the dealer.
  • To represent that a used car, or any component thereof, is free from material defects in mechanical condition at the time of sale, unless the dealer has a reasonable basis for this representation at the time it is made.

Under the New Jersey Car Advertising Regulations, the following conduct by a used car dealer is a violation of the New Jersey Consumer Fraud Act:

  • The failure to disclose that the used car had been previously damaged and that substantial repair or body work has been performed on it when such prior repair or body work is known or should have been known by the advertiser; for the purposes of this subsection, "substantial repair or body work" shall mean repair or body work having a retail value of $ 1,000 or more.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #5

WHAT MANDATORY DISCLOSURES ARE REQUIRED ABOUT NEW JERSEY USED CAR WARRANTY REQUIREMENTS

Under the New Jersey Used Car Lemon Law, the following conduct by a used car dealer is a violation of the New Jersey Consumer Fraud Act:

  • To fail to disclose, prior to sale, the existence and terms of any written warranty, service contract or repair insurance currently in effect on a used car provided by a person other than the dealer, and subject to transfer to a consumer, if known to the dealer;
  • To misrepresent the terms of any written warranty, service contract or repair insurance currently in effect on a used car provided by a person other than the dealer, and subject to transfer to a consumer;
  • To fail to disclose, prior to sale, the existence and terms of any written warranty, service contract or repair insurance offered by the dealer in connection with the sale of a used car;
  • To misrepresent the terms of any warranty, service contract or repair insurance offered by the dealer in connection with the sale of a used car;
  • To represent, prior to sale, that a used car is sold with a warranty, service contract or repair insurance when the vehicle is sold without any warranty, service contract or repair insurance;
  • To fail to disclose, prior to sale, that a used car is sold without any warranty, service contract, or repair insurance;
  • To fail to provide a clear written explanation, prior to sale, of what is meant by the term "as is," if a used car is sold "as is"; and
  • As to certain vehicles meeting the minimum requirements of the New Jersey Used Car Lemon Law, to sell a used motor vehicle to a consumer without giving the consumer a New Jersey used car warranty which takes the form of a written warranty meeting specific minimum requirements.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #6

WHAT PARTS OF A VEHICLE DOES A NEW JERSEY USED CAR WARRANTY COVER?

For certain cars, a used car dealer must give the buyer of the car a warranty. To qualify for a mandatory New Jersey used car warranty, the vehicle and sale must meet the following requirements:

  • sold by a person selling or offering for sale the car, truck or SUV selling or offering for sale 3 or more used vehicles in the previous 12 month period or a lessor who is a dealer and who sells or offers for sale a used passenger motor vehicle, subject to a motor vehicle lease agreement which was in effect for more than 90 days, to a consumer who is not the lessee, or a family member or employee of the lessee upon the termination of the lease agreement.
  • not purchased for the purpose of resale.
  • the subject of a “sale” (the transfer of title of a used vehicle from the owner-seller to the purchaser-consumer) and not one where the owner-seller obtained title to or was granted the right to sell a used vehicle by operation of law.
  • not sold by a public entity or unit of the government.
  • the type normally used for personal, family or household purposes
  • passenger motor vehicles and are not motorcycles, motor homes or off road vehicles.
  • transferred from the person who first acquired it from the manufacturer or dealer and so used as to become what is commonly known as “secondhand” within the ordinary meaning thereof.
  • purchased for over $3,000.
  • less than 7 model years old at time of sale.
  • never declared a total loss by an insurance company.
  • not equipped with an odometer that registered over 100,000 miles at time of sale.
  • not the subject of a written waiver of the buyer’s right to a warranty from the selling dealer (if the vehicle had over 60,000 miles). 

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #7

WHAT ARE THE REQUIREMENTS FOR A NEW JERSEY USED CAR WARRANTY?

For those cars that qualify for a New Jersey used car warranty, a used car dealer must give the buyer of the car a warranty that meets the following minimum requirements:

  • The New Jersey used car warranty must be in writing.
    If the used motor vehicle has 24,000 miles or less, the warranty shall be, at a minimum, 90 days or 3,000 miles, whichever comes first;
  • If the used motor vehicle has more than 24,000 miles but less than 60,000 miles, the warranty shall be, at a minimum, 60 days or 2,000 miles, whichever comes first; or
  • If the used motor vehicle has 60,000 miles or more, the warranty shall be, at a minimum, 30 days or 1,000 miles, whichever comes first, except that a consumer may waive his right to a warranty as a result of a price negotiation for the purchase of a used motor vehicle with over 60,000 miles.
  • The New Jersey used car warranty shall require the dealer, upon failure or malfunction of a covered item during the term of the warranty, to correct the malfunction or defect, provided the used motor vehicle is delivered to the dealer, at his regular place of business, and subject to a deductible amount of $50 to be paid by the consumer for each repair of a covered item.
  • The written warranty shall exclude repairs covered by any manufacturer's warranty, or recall program, as well as repairs of a covered item required because of collision, abuse, or the consumer's failure to properly maintain such used motor vehicle in accordance with the manufacturer's recommended maintenance schedule, or from damage of a covered item caused as a result of any commercial use of the used motor vehicle, or operation of such vehicle without proper lubrication or coolant, or as a result of any misuse, negligence or alteration of such vehicle by someone other than the dealer.

NEW JERSEY USED CAR LEMON LAW FREQUENTLY ASKED QUESTION #8

WHAT PARTS OF A USED VEHICLE ARE COVERED BY A NEW JERSEY USED CAR WARRANTY?

Not all parts of a used vehicle are covered by a New Jersey used car warranty. Instead, those warranties only cover defects in one of the following parts of the car, truck or SUV:

  • Engine:  all internal lubricated parts, timing chains, gears and cover, timing belt, pulleys and cover, oil pump and gears, water pump, valve covers, oil pan, manifolds, flywheel, harmonic balancer, engine mounts, seals and gaskets, and turbo-charger housing. Note that housing, engine blocks and cylinder heads are covered only if damaged by failure of an internal lubricated part.
  • Transmission Automatic/Transfer Case:  all internal lubricated parts, torque converter, vacuum modulator, transmission mounts, seals and gaskets.
  • Transmission Manual/Transfer Case:  all internal lubricated parts, transmission mounts, seals and gaskets, but excluding a manual clutch, pressure plate, throw-out bearings, clutch master or slave cylinders.
  • Front-Wheel Drive:  all internal lubricated parts, axle shafts, constant velocity joints, front hub bearings, seals and gaskets.
  • Rear-Wheel Drive:  all internal lubricated parts, propeller shafts, supports and U-joints, axle shafts and bearings, seals and gaskets.
  • Possibly any other component (if any) specifically covered by the used car dealer’s warranty for the car, truck or SUV.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #9

WHAT ARE BAIT AND SWITCH SALES TACTICS?

The following used car advertising practices are unlawful "bait and switch" sales tactics under the New Jersey Automotive Advertising Regulations:

  • The advertisement of a used car as part of a plan or scheme not to sell or lease it or not to sell or lease it at the advertised price. Without limiting other means of proof, the following shall be prima facie evidence of a plan or scheme not to sell or lease a used car as advertised or not to sell or lease it at the advertised price:
    • Refusal to show, display, sell, or lease the advertised used car in accordance with the terms of the advertisement, unless the vehicle has been actually sold or leased during the period of publication; in that case, the advertiser shall retain records of that sale or lease for 180 days following the date of the transaction, and shall make them available for inspection by the Division of Consumer Affairs.
    • Accepting a deposit for an advertised used car, then switching the purchaser to a higher-priced used car, except when the purchaser has initiated the switch as evidenced by a writing to that effect signed by the purchaser.
    • The failure to make delivery of an advertised used car, then switching the purchaser to a higher-priced used car; except when the purchaser has initiated the switch as evidenced by a writing to that effect signed by the purchaser.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #10

WHAT ARE THE NEW JERSEY CAR SALE REGULATIONS?

Certain types of used car sales practices are illegal under the New Jersey used Car Sale Regulations for Used car dealers – which includes professional used car sellers or their legal representative, partnership, corporation, company, trust, business entity or association and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, trustee or cestuis que trustent thereof who, in the ordinary course of business, is engaged in the sale of used cars at retail or who in the course of any 12 month period offers more than 3 used cars for sale, lease, or rental or who is engaged in the brokerage of used cars whether for sale, lease or rental.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #11

WHAT PRACTICES DO THE NEW JERSEY USED CAR SALE REGULATIONS COVER?

The New Jersey Car Sale Regulations cover the charging of the following types of fees by used car dealers:

  • “Documentary service fee" -- any monies or other thing of value which a used car dealer accepts from a consumer in exchange for the performance of certain documentary services which include, but are not limited to, the preparation and processing of documents in connection with the transfer of license plates, registration, or title, and the preparation and processing of other documents about the sale of a used car to said consumer.
  • "Pre-delivery service fee" -- any monies or other thing of value which a used car dealer accepts from a consumer in exchange for the performance of pre-delivery services upon a used car, and includes, but is not limited to, items which are often described or labeled as dealer preparation, vehicle preparation, predelivery service, handling and delivery, or any other term of similar import.

The New Jersey Car Sale Regulations apply to a "sales document" -- the first document a used car dealer utilizes to evidence an order for, deposit towards, or contract for the purchase of a used car by a consumer, and includes but is not limited to, retail orders, sales invoices, sales contracts, retail installment contracts, and other documents of similar import.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #12

WHAT DO THE NEW JERSEY USED CAR SALE REGULATIONS PROHIBIT USED CAR DEALERS FROM DOING?

The following practices involving pre-delivery service fees in the sale of used cars by automotive dealers are violations of the New Jersey Car Sale Regulations:

  • Accepting, charging, or obtaining from a consumer monies, or any other thing of value, in exchange for the performance of any pre-delivery service for which the automotive dealer receives payment, credit, or other value from any person or entity other than a retail purchaser of the used car;
  • Accepting, charging, or obtaining from a consumer monies, or any other thing of value, in exchange for the performance of any pre-delivery service without first itemizing the actual pre-delivery service which is being performed and setting forth in writing on the sales document the price for each specific pre-delivery service;
  • Except in connection with the sale of used cars, failing to conspicuously place upon the front of the sales document which contains a pre-delivery service fee, in ten-point bold face type, the following statement: "You have a right to a written itemized price for each specific pre-delivery service which is to be performed. The automotive dealer may not charge for pre-delivery services for which the automotive dealer is reimbursed by the manufacturer."

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #13

WHAT TYPE OF REMEDIES ARE AVAILABLE TO USED CAR FRAUD VICTIMS?

Any violation of the New Jersey Used Car Lemon Law, New Jersey Car Sales Regulations or New Jersey Automotive Repair Regulations is also a violation of the New Jersey Consumer Fraud Act, which may allow the consumer to recover the following remedies against the dealer:

  • Treble damages for an ascertainable loss of money or property caused by the New Jersey Consumer Fraud Act Violation.
  • Attorney’s fee award for prosecuting the claim.
  • Cancellation of fraudulent debts.
  • Refund of money lost due to the New Jersey Consumer Fraud Act Violation.

NEW JERSEY USED CAR FRAUD FREQUENTLY ASKED QUESTION #14

WHAT IF THE MISCONDUCT COMMITTED BY THE USED CAR DEALER ISN’T COVERED BY THE REGULATIONS?

New Jersey used car fraud can take many forms. Laws and regulations covering car sales and car warranties are not intended to point out each and every situation that might result in a court finding that a used car dealer committed fraud. For example, any of the following affirmative acts committed by a used car dealer might support a New Jersey Consumer Fraud claim against the dealer:

  • “Unconscionable commercial practice” - an activity which is basically unfair or unjust which materially departs from standards of good faith, honesty in fact and fair dealing in the public marketplace. To be unconscionable, there must be factual dishonesty and a lack of fair dealing.
  • “Deception” - conduct or advertisement which is misleading to an average consumer to the extent that it is capable of, and likely to, mislead an average consumer. It does not matter that at a later time it could have been explained to a more knowledgeable and inquisitive consumer. It does not matter whether the conduct or advertisement actually have misled the customer. The fact that the dealer may have acted in good faith is irrelevant. It is the capacity to mislead that is important.
  • “Fraud” - a perversion of the truth, a misstatement or a falsehood communicated to another person creating the possibility that that other person will be cheated.
  • “False pretense” - an untruth knowingly expressed by a wrongdoer.
  • “False promise” - an untrue commitment or pledge, communicated to another person, to create the possibility that that other person will be misled.
  • “Misrepresentation” - an untrue statement made about a fact which is important or significant to the sale/advertisement, communicated to another person to create the possibility that other person will be misled. A “misrepresentation” is a statement made to deceive or mislead.

For any of the above affirmative acts, it is not necessary for liability under the New Jersey Consumer Fraud Act that a person actually be misled or deceived by another’s conduct. It is not necessary for the customer to show that the dealer intended to deceive. What is important is that the affirmative act must have had the potential to mislead or deceive when it was performed. The capacity to mislead is the prime ingredient of affirmative consumer fraud claims Proof of intent is not necessary an essential element for these affirmative acts

A used car dealer may also be found liable for violating the New Jersey Consumer Fraud Act if the dealer knowingly concealed, hid/suppressed, kept something from being known/omitted, or left out or did not mention an important or significant fact purposely or with the intent that others would rely on that concealment/suppression/omission in connection with the sale/advertisement of any merchandise. For these acts of omission, a person acts “knowingly” if he/she is aware that his/her conduct is of a nature that it is practically certain that his/her conduct will cause a particular result. He/She acts with knowledge, consciously, intelligently, willfully or intentionally. To “conceal” is to hide, secrete, or withhold something from the knowledge of others or to hide from observation, cover or keep from sight or prevent discovery of. “Concealment” is a withholding of something which one is bound or has a duty to reveal so that the one entitled to be informed will remain in ignorance. To “suppress” is to put a stop to a thing actually existing, to prohibit or put down, or to prevent, subdue, or end by force. “Suppression” is the conscious effort to control or conceal unacceptable impulses, thought, feelings or acts. A person acts “purposely” if it is his/her conscious object to engage in conduct that of a certain nature or cause a particular result and he/she is aware of hopes or believes that the attendant circumstances exist. “Intent” is a design, resolve, or determination with which a person acts. It refers only to the state of mind existing when an act is done or omitted. It is not necessary that any person be, in fact, misled or deceived by another’s conduct. What is important is that the dealer must have meant to mislead or deceive when he/she/it/they acted. The fact that the dealer acted knowingly or with intent is an essential element of acts of omission and knowledge or intent must be shown. Where the alleged consumer fraud can be viewed as either an omission or an affirmative act, the dealer is liable for the conduct as an omission only where defendant committed a consumer fraud by omission and intent is shown.

TO LEARN MORE, GET A NO OBLIGATION CONSULT

Call Perlman DePetris Consumer Law for a no obligation phone consultation. Handling your case wrong from the beginning may only cost you more money and time in the end!! Try to do it right the first time by seeking legal advice from a competent lawyer! You might be entitled to be represented on a contingent basis, meaning that the attorney won’t get paid unless the case is successful and that the lawyer gets paid from your recovery instead of requiring you to pay attorney’s fees out of your own pocket up front. Other cases can be handled for a relatively small one-time payment of an up-front fixed attorney’s fee and with a contingent fee at the end of the case. Filing a claim yourself is very risky, since businesses often hire experienced defense attorneys to fight your case. Also, if you try to negotiate a settlement yourself, you may get less money than you deserve. You should always speak with an attorney before coming to any conclusions about your claim. Do not try to interpret the law by reading a website! Even if the facts of your case do not fit the requirements of a Lemon Law, you may be entitled to sue the manufacturer or its selling dealer for a breach of your warranties under other state and federal laws.  If the manufacturer or selling dealer breached the warranties that came with your vehicle, you may be able to recover money damages, attorney’s fees and court costs.

DISCLAIMER

While this page gives some general background information, there is the danger that relying on this information alone could lead you to lose your claim. Laws and regulations frequently change and the law may have changed since the posting of this webpage. Factual differences between your case and cases described on this webpage can affect your chance of success. Don’t attempt to rely on the internet as the only source of information for your claim! Instead, get competent legal advice from a New Jersey licensed attorney. Call Perlman DePetris Consumer Law for a no obligation phone consultation.