fraud – Page 2

Why you never keep your car sale paperwork in your car. – Alabama Consumer Rights Lawyer Judson E. Crump

September 19, 2016 by Attorney Judson E Crump Leave a Comment

At 8:59 A.M., my office phone rings. A frantic woman answers: “My car just got repossessed.”

As she proceeds to tell me her story, it becomes clear that this isn’t a garden variety repossession. Most repossessions, I confess, are totally legal. A car was bought on an installment contract; payments are due on the 1st of the month with a 10 day grace period; the buyer misses a payment, and 2 days after the grace period ends, the car is gone. Two days later, the finance company sends a letter confirming the suspicions: Yes, we came and got the car because you didn’t make your payment. We’re going to sell it in 10 days, and if you want it back you have to pay the full balance of the loan plus repo fees of $575.

But some repossessions are not legal. There are many ways a repossession can be illegal, but that’s a different subject for a different day. Suffice it to say that there are certain types of auto financing fraud where the end result is that a car gets repossessed when it shouldn’t.

So back to the lady who called as soon as business hours started because at 4:45 AM a stranger came into her yard and hauled her car off into the street. The first thing I ask was “Is there a reason they didn’t have the right to take your car?”

“Yes.” she says, “My first payment wasn’t even due yet.”

“OK Great!” I think, because this will be an easy case to prove. We make an appointment, and I tell her to be sure to bring all of her contract documents and other evidence.

“Well the paperwork was in the truck.” she says.

“What do you mean?” I ask, “So you don’t have a copy of your contract?”

“Well it was in the truck, and they took it.”

And so was her receipt for the down payment, and her title application, and pretty much everything that could possibly prove that she had any right to that vehicle. Which is really bad, because if you ever want to take any sort of legal action and have success, you’re going to need evidence. Without evidence, you will lose your case. It doesn’t matter how bad you’ve been done wrong or how evil they are and how righteous and innocent you may be. If you don’t have evidence, you lose. That’s all there is to it.

Now, there are ways to obtain documents from the dealership or finance company once you’re in litigation. But there are two big problems with not having your own evidence from the start. First, you’re trusting a fraudulent business to follow the rules of the judicial system and not destroy or alter the evidence you need. Second, without your contract, even a good lawyer is going to have a really hard time drafting your lawsuit in a way that ensures all your rights are protected.

So if you have a car that isn’t paid for, here’s one easy tip to protect yourself: Make Copies of ALL Deal Paperwork. You should do this the instant you sign everything. If the dealer isn’t videoing the paperwork signing, have a friend snap photos of everything with a phone.

Second, keep your originals in a safe place at your home, NOT in the vehicle. If you have some odd compulsion for keeping deal paperwork in a car, keep copies in the glove box. Not the originals. Remember that under Alabama law, the only deal paperwork you are required to have in your vehicle is your registration. And if you’re still in those first three weeks where you may not have gotten your registration certificate yet, then you need your title application instead. It acts as a temporary license to use that vehicle.

“Certified” Used Cars Can Still be a Scam – Alabama Consumer Fraud Lawyer Judson E. Crump

November 24, 2015 by Attorney Judson E Crump 2 Comments

Certified Pre-Owned Vehicle Programs Sometimes Cover Past Wrecks. Beware of Trusting the “Certified” Label.

When you’re looking to purchase a car, all you want is a reliable, comfortable car that you can afford. If you either cannot or will not spend the money to buy a brand new vehicle, then a used car is your only choice. Certified Pre-Owned Vehicles can be a decent option, if you’re dealing with a manufacturer who stands behind their certification and do your diligence ahead of time.

But many times, the certified label is nothing more than a fancy sticker used to raise the price of the car. Some manufacturers have even been known to repaint wrecked cars and then push them through their “certified” process. Or more commonly, allow dishonest dealer sales personnel to conduct the “certification” and simply rubber stamp the dealer’s certification.

If you paid certified-car money for a vehicle that was previously wrecked or used as a daily rent-a-car, you should talk to your lawyer about your options for getting your money back.

If you live in Alabama and would like a free consultation regarding your rights with certified pre-owned vehicles, call us at 251.272.9148 today.

What is Fraud? – Alabama Consumer Fraud Attorney Judson E. Crump

October 1, 2015 by Attorney Judson E Crump 2 Comments

Fraud.

noun | \frȯd\

An intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury…

Black’s Law Dictionary, 6th Ed. (1992).

Fraud can be hard to define. Even the good editors of Black’s Law Dictionary have a hard time with it. But you know it when you see it. When you have been defrauded.

So how do you get a fraud case to court?

In Alabama, there are 4 elements to a fraud case – elements you have to prove in order to win.

Misrepresentation. In other words, a lie. They told you something that was false. Keep in mind that the statement must be demonstrably false at the time it was said. A false promise of future conduct is not fraud. It may be breach of contract, but it isn’t fraud.
So if a merchant says “I will sell you this autographed 1995 Ozzie Smith baseball card for $50,” and the baseball card is not actually autographed by Ozzie Smith, then it is fraud. However, if he says “If you pay me $50, I will get Ozzie Smith to autograph this baseball card for you,” and he takes the money and never gets that autograph, then he has not defrauded you. He just breached his agreement.
Of a material fact. The false statement has to be about something important.
Example: the card dealer says “I’ll sell you this signed Ozzie Smith baseball card for $50 and put it in this blue envelope for safekeeping.” And he sells it to you for the agreed price, but the envelope is a red, equally safe envelope, then it is not fraud. The color of the envelope was not part of the basis of the bargain. You pay for the baseball card, not the color.
Reliance. You acted in reliance upon the false statement. Basically, the deception had to have caused you to act. In other words: if you had been told the truth, would you have acted any differently? If not, then there is no fraud.
Example: The card dealer says “This baseball card has been autographed by Ozzie Smith.” But your wife is a handwriting expert intimately familiar with the handwriting of Ozzie Smith. She tells you “No, that’s not a real autograph.” You buy the card anyway. There is no fraud, because you did not rely on the dealer’s false statement. You knew he was lying.

Reliance is the trickiest part of a fraud case, and it is the one area where fraudulent businesses most often get off the hook. Why? Because in Alabama, it isn’t enough to show that you relied on a false statement. You have to show that your reliance was reasonable. In other words, in relying on the false statement, were you applying common sense? But Alabama law goes farther than that. Our courts have decided that if there is a written contract that does state the truth, then you have a duty to read the contract. If the the dealer promises on his mother’s grave that the card is autographed, but the contract says in fine print “None of the baseball cards we sell are autographed,” then your reliance on the dealer’s statements will be deemed unreasonable, and the dealer is off the hook. Even though he is a liar, cheat, scoundrel, and blasphemer, you won’t get any money out of him. This is why businesses love fine print. Because they have paid a lot of money to elect judges who uphold the illusion that everyone who has purchased anything in the past 50 years has no children and no job, and and spends all day reading and deciphering fine print.
Damages. The fraud has cost you something. It may be money. It may be time. It may be a a 20% off coupon at a local oil change shop. But whatever it is, you have to prove not only that someone lied to you, but that your reliance upon their lies has cost you something.
Example: You’re at a baseball card shop, and you see a 1995 Ozzie Smith card with a signature on it. The label says “Price: $5. Not a real autograph.” The card dealer says “That’s not really his autograph. It’s a forgery.” You buy the card, and when you take it home, your wife (the handwriting expert) looks at it and confirms that it is, actually a genuine Ozzie Smith autograph. The dealer told you a lie. About a very important aspect of any baseball card. You paid $5 in reliance upon that lie. So there’s a misrepresentation of material fact, with reasonable reliance on your part. But there is still no fraud, because you have not been damaged. You paid $5 for a card that is worth at least $50.

Now in real life, most people know when they’ve been screwed. When people call my office after learning that they have been cheated, there usually is no question that they were told a lie, and that they’ve been damaged by it. Otherwise they wouldn’t be calling me. The real challenge for a lawyer is proving that reliance was reasonable and that damages were attributable to the false statements.

But fortunately, we are up to that challenge, and we have more weapons in our arsenal than just fraud. Deceitful statements in commercials or print ads could be false advertising. Incorrect statements in lending documents could violate the Truth in Lending Act. And false, deceptive, or misleading statements by debt collectors are prohibited by the Fair Debt Collection Practices Act.

If you believe you have been defrauded, give us a call at 251.272.9148.

What Is False Advertising? – Alabama Consumer Protection Lawyer Judson E. Crump

August 10, 2015 by Attorney Judson E Crump 11 Comments

“False Advertising” happens all the time. What Can You Do About It?

You Can't Believe Everything You See on TV. But False Advertising is Illegal. — You Can’t Believe Everything You See on TV. But False Advertising is Illegal.

Scenario 1: You open the mailbox. Tucked in with all the junk mail you see a great offer: a discount on something you’ve been wanting for months, available only for a limited time. You go to the store to buy the advertised special. But you get there, and the price advertised isn’t what is being charged.

Scenario 2: An online retailer’s website lists a color printer at $199. You buy it. 4 days later, the package arrives in the mail, and you open it only to find that the printer is a black and white printer.

Scenario 3: Autotrader.com has a truck listed for $16,990. You go to the dealership and when you sign the paperwork, you realize that the real price has been jacked up to $18,500.

Scenario 4: You take the family out to dinner at “The Red Crawfish,” where you order a fillet of red snapper. But it doesn’t taste like snapper. In fact, the underside of the fillet has some small black scales. Turns out, you’ve been served mullet instead.

All these scenarios have something obvious in common: they involve false advertising. False advertising can come in many forms, and new ones are invented every day, it seems. The reasons are obvious: businesses will do almost anything to get you to buy their products. And while some exaggeration is harmless and expected, are merchants allowed to lie about the products they sell? Absolutely not. And if they do, then they can be taken to court and held responsible.

Like most states, Alabama has a specific statute prohibiting false advertising: the Alabama Deceptive Trade Practices Act, or “ADTPA,” as we lawyers call it.

The ADTPA, which can be found at Ala. Code Title 8, Section 19, contains a list of specific prohibitions. Here are a few:

“Causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services.”
“Causing confusion or misunderstanding as to the affiliation, connection, or association with, or certification by another.”
“Using deceptive representations or designations of geographic origin in connection with goods or services.”
“Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.”
“Advertising goods or services with intent not to sell them as advertised.”
“Disparaging the goods, services, or business of another by false or misleading representation of fact.”
“Making a false or misleading statement of fact concerning the reasons for, existence of, or amounts of, price reductions.”
“Engaging in any other unconscionable, false, misleading, or deceptive act or practice in the conduct of trade or commerce.”

Translated to normal English, here are some examples of what the Alabama Deceptive Trade Practices Act means:

They can’t say a product is “Made in the USA” if in fact most of it was made elsewhere.
If you sell Grade A Angus Beef, then you can’t serve Grade B Beef, or Grade A Pork/Beef Mix, or Grade A Beef made from any cow other than an Angus. It must be Grade A, and Angus, and Beef.
You cannot advertise that your product has a 2 year warranty if you only provide a 1 year warranty.
They cannot put “red snapper” on the menu if what they sell people is something other than a Lutjanus campechanus (a.k.a. Red Snapper).
They can sell “Grouper” even if the grouper comes from Madagascar.
If a label says “Certified Organic,” then the food must be organic and certified.
If a restaurant brags that it was “Voted Best Hamburgers in Alabama,” then it must have some good reason for saying that.
If a price is advertised as “25% Off,” then the non-discounted price should be 33% higher than the “discount” price. (Because (3/4 of A) x 4/3 = A).

The Alabama Deceptive Trade Practices Act also forbids false advertising of services in many instances. For example:

If a debt settlement company claims it can cut your debt by 50%, and you pay them to do so, but they don’t perform, then they’re false advertising.
If a credit repair service claims to be able to boost your score by 100 points, then they better be able to do it.
A car finance company or dealer who says that “If you have a job and $500, you can get a new car!” must have new cars that they are actually willing to sell to anyone who has a job and $500.

How to Prepare A False Advertising Case

There are a few things you need to cover before you rush to a lawyer’s office, though.

First, you must get proof of the actual advertised terms.

If advertisements are written, then they are usually allowed to have footnotes and fine print that “explain” the terms they are advertising. You must obtain a copy or printout of any written, TV, or internet advertisement. Read the whole thing. Make sure you paid attention to it before you went to buy the advertised product. If a “disclaimer” or “Explanation” was hidden, it may not have any legal effect.

Oral or radio advertisements may have a similar explanation at some point during the advertisement. If you have been cheated or scammed by a radio advertisement, you need to listen for the advertisement that fooled you and record it.

Second, you must show that you bought the falsely advertised product or service.

This is pretty easy. If you have a receipt, bill of sale, credit card statement, or any other record of your purchase, then you can show that you were in fact the victim of the false advertising.

If you’ve been cheated by false advertising, it is important to take action quickly. The Alabama Deceptive Trade Practices Act only has a 1 year statute of limitations, which means that you have 1 year to take them to court once you’ve discovered (or should have discovered) the false advertising. Furthermore, you have to write a letter demanding compensation at least 15 days before you sue them.

The content of this letter should be drafted with the assistance of a consumer protection attorney, because if not drafted properly, it will not have legal effect.

We take false advertising seriously. It hurts real people and the entire economy. If you’ve been the victim of false advertising in Alabama, call us today at 251.272.9148.

Dealer Didn’t Pay Off Your Trade-In? What To Do About It – Alabama Consumer Protection Lawyer Judson E. Crump

July 7, 2015 by Attorney Judson E Crump 18 Comments

“My Trade-In Vehicle wasn’t paid off by the Dealer. Now it’s still on my credit report as past due. What can I do?”

Believe it or not, this question comes up fairly often. You go car shopping, and you find a car you like, negotiate a value for your trade-in vehicle, sign the papers and drive off in your new ride. You start making your new payments and all is well. Until you find out that your old car loan – the one that the dealer was supposed to pay off – hasn’t been paid off. And now you’re getting collection calls, and past due negative marks on your credit report.

Sometimes, it is a (mostly) honest mistake. Your old car note information got lost in a stack of other deals and the dealer didn’t send the check to the old lien holder until a couple of months had gone by. They eventually pay, but not before your credit takes a hit.

Other times, it is a regular practice of shady dealers. They gladly take your trade-in, and they give you credit for its value, minus the previous lien, and they’re supposed to pay off the old lien. But sometimes they don’t pay off anything for a couple of months, because they are waiting to see if they can obtain financing for your deal. Even though you’ve signed the papers and already driven off in the car. In the worst cases, they may not pay it off at all.

Regardless of their reasons, and even if they did it by mistake, a dealer’s failure to promptly pay off the lien on your trade-in vehicle can have serious negative consequences for you. See, the lienholder will blame you for their late payment. Your previous lienholder doesn’t care whose fault it is – all they know is that your payment is due on the first of the month, and if it is 30 days late, they’re going to report that to the credit bureaus, and it’s not going on the dealer’s credit report. It’s going on yours.

If you have otherwise clean recent credit history, this can have a serious impact on your ability to obtain a mortgage and can increase the cost of things like credit cards and other loans.

To make matters worse, the credit bureaus don’t care whose fault it is either. The Fair Credit Reporting Act only requires that the information they publish be as accurate as possible – not that it be a fair reflection of who is to blame for your negative credit marks. So if you dispute a “Past Due” amount on a car loan that was only past due because the dealer screwed up, they don’t have to fix it. And therefore they probably won’t.

So What Can You Do About It?

You’re not without hope, though. By taking your trade-in and adding the balance of your previous lien to the cost of your new vehicle, the Dealer is being entrusted with your property. They are taking your property partially for your benefit: to be liquidated to pay off your old lien. And they have a contractual duty to do just that. When they do not do so, they can be held liable to you for the damages caused by that failure.

The most common problem facing a buyer in these cases is proving that the dealer’s irresponsibility caused you damages, and proving the amount of those damages. Most often, the only financial harm that is caused by a dealer’s failure to pay off a trade-in is in the form of credit denials and increased cost of credit. While there have been cases of buyers who were unable to buy a home because of a dealer’s failure to promptly pay off a trade-in, this usually is not the case. Credit reports contain lots of information, and unless you can obtain evidence from a lender that you were denied credit, or your interest rate was higher primarily due to the unpaid previous car loan, then obtaining significant compensation from the dealer is going to be hard.

So where the dealer simply waited a month or two to pay off a trade-in, it may not be worth the money of filing a lawsuit unless you can show specific harm. You may simply want to file a small claims lawsuit or post a few negative reviews and BBB complaints against the seller.

However, if several months go by and the debt remains unpaid, then the dealer’s failure to pay the lien may be a sign of serious fraud, and you should talk to a lawyer immediately. Particularly if the previous lien holder begins pursuing you to collect the unpaid debt. Yes, this can happen.

This situation often involves two victims – you and the person that the fraudulent dealer sold your old car to. I’ve had clients who were sold vehicles that the dealer didn’t even own. If a dealer sells you a car that has a valid lien on it, then the previous lien holder may repossess the car from you – even though you never owed them a dime!

This can be immensely frustrating and disruptive to your whole life. The loss of your transportation can cause you to miss work and family commitments, not to mention the money that you’ve paid in good faith for the car. If you suspect that you’ve been sold a vehicle without clear title, then you need to call a lawyer immediately.

Don’t sign a waiver when you retrieve your belongings from a repossessed automobile. – Alabama Consumer Credit Attorney Judson E Crump

April 3, 2015 by Attorney Judson E Crump Leave a Comment

If you have had a vehicle repossessed recently and the repo man or towing company refuses to let you access your vehicle, they have to give you your property back. This means they must either mail it to you or give you a chance to come and get it. But what if they want to impose conditions on your getting your property back? What if they want you to sign a waiver or release?

Don’t do it.

Imagine if I came into your house and took your wallet. You come to me and try to get it back, and rather than just handing it over, I say: “OK sure, you can have your wallet, but only if you sign this release where you promise not to sue me for theft or if I’ve damaged anything.” Would you sign it? Or would you think I was crazy?

You’d think I was crazy. Because it is crazy to steal someone’s property and then demand a signed release as a condition for returning something that you never had any right to take in the first place!

Yet this happens all the time. Consider the case of Underwood v. First Alabama Bank of Huntsville. 453 So.2d 742 (Ala. Civ. App. 1983).

There, a man’s vehicle was repossessed after he quit making payments. That’s fine. But he had some valuable property in the car that they had taken as well. He came to get it, but before they gave it back, they had him sign a waiver of his right to notice of disposition of collateral. What does that mean? Basically, if someone repossesses your car, they have to dispose of it in a commercially reasonable manner. They can’t just trash it or let it sit collecting rust for years. They have a duty to get a decent price for it when they sell it. If they sell it for more than you owe, then they have to write you a check for the surplus. If they sell it for less than you owe, they have to either forgive the deficiency or give you a complete and detailed itemization of the charges.

In the Underwood case, the bank had him sign away his right to know what was going on with his car. That means that when the sold it, he had no idea where or to whom. Which means that he was unable to attend the auction or anything else to possibly recover the car or have a friend bid at auction for him. Worse, when he was liable for a deficiency, he never got a list of the charges to ensure that he wasn’t being charged for bogus amounts. Normally, if a bank fails to send you a notice of disposition before and after the sale, they have to either forfeit their right to collect anything from you or pay a stiff penalty of the finance charge plus 10% of the sale price.

But the bank had him waive his notice rights. He didn’t have to, but he didn’t know that he had a right to get his stuff back without signing a waiver. So he got screwed. Don’t let that happen to you.

When a car is repossessed, can you get back your belongings that were left in the vehicle? Yes. – Alabama Consumer Finance Attorney Judson E Crump

February 23, 2015 by Attorney Judson E Crump 88 Comments

Repo companies often try to extort money from debtors. Don’t let them.

People come to me often looking for help dealing with debt left over after a car has been repossessed by a dealer, bank, or auto finance company. When I ask about the repossession itself, I very frequently hear something like this:

“They wouldn’t even let me get my stuff out of the car. Can they do that?”

No. They cannot.

If you bought a car on credit, then you took ownership of the vehicle subject to a security interest held by the dealer. A security interest basically means that you’re part-owner of the collateral. Your contract with them gives them certain rights regarding the collateral (the vehicle). The most important right they have is the right to repossess the vehicle when you default on the contract. And as you probably can guess, if you do indeed default on the contract, then they can indeed repossess the vehicle.

But there’s an important thing to remember: they have a security interest in the vehicle, not the items inside the vehicle.

This means that if your car is repossessed, and the repo man, dealer, or finance company has no right to take the property inside the vehicle. For example, if you left your purse in the car and the vehicle is repossessed, they have to give your purse back. They can either mail it to you or give you the opportunity to come and get it. If you call them and ask for your property, they have to make it available to you. It’s that simple. Also:

They cannot require you to pay a fee in order to come get your property.
They cannot require you to sign a waiver in order to get your property.
They cannot take anything out of the vehicle – including any loan, sale, or warranty documents that you left in the vehicle after the sale. Your copies of the transaction documents are your copies. They cannot steal them.
They can require you to schedule in advance a time to come retrieve your belongings, as long as their requirement is reasonable.
They don’t have to hold onto your stuff forever. If you want your property back, call them as soon as you know they have it and demand it back immediately. If they refuse, write them a letter and send it certified mail.
They can require you to sign a receipt that identifies the property that was returned. This is different from a release or a waiver of notices.
They can charge you a storage fee for holding the goods if you don’t get them as soon as possible after the repossession.

Very often, subprime car dealers will utterly ignore the law. Dealers who are accustomed to customers who are ignorant of their rights and cannot afford an attorney know the law perfectly well, but also know from experience that they can usually steal their customers’ belongings without getting caught. Don’t be a willing victim. If you have tried to get your property back and they say something like “We can’t let you onto the premises” or “You’ll have to pay a $25 storage fee” or “You’ll have to sign a release.” That’s all bullshit. Call them on it.

Adverse Action: What it means, Why it matters. (VIDEO) Alabama Consumer Credit Attorney Judson E Crump

December 12, 2014 by Attorney Judson E Crump Leave a Comment

Whenever you Apply for Credit or any sort of Installment Loan, you are supposed to receive a written notice from the creditor telling you if you were approved, denied, or given a counter-offer. This is more important than you think. Here’s why.

There’s this thing called the Adverse Action Notice. It’s a letter that anyone who receives a consumer credit application must send to the applicant if they do anything but approve their application on the terms requested. Here’s what they look like:

This one complies with FCRA and ECOA - it tells the applicant that he doesn't have enough credit history to get approved for the loan he wanted. — This one complies with FCRA and ECOA – it tells the applicant that he doesn’t have enough credit history to get approved for the loan he wanted.

This letter was sent to a client who had no idea that she'd ever applied for a loan with Cap One. She went with another finance company because the car dealer didn't tell her about Cap One's offer. — This letter was sent to a client who had no idea that she’d ever applied for a loan with Cap One. She went with another finance company because the car dealer didn’t tell her about Cap One’s offer.

Both the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act require adverse action notices, but the same letter can serve both purposes, and the ECOA requirements are more important.

Just like the name says, the Equal Credit Opportunity Act was originally intended to prevent credit discrimination by forcing creditors to tell people the real reason why they were denied a loan or offered a 12% interest rate when everybody else got a 7% interest rate. It’s really hard to discriminate against divorcees or blacks if you’re not allowed to just deny without an explanation. It still does this, though I like to think that our society has progressed beyond the point of people being mistreated solely because of their color, sex, religion, or whatever.

But the Adverse Action Notice has two very important functions that Congress probably didn’t foresee back in 1974.

1. It alerts you to problems with your credit report. Because the adverse action notice has to tell you why you were denied, (i.e. “You have too much debt already.”), it can alert you to credit problems that you didn’t know you had. For instance, if you get a denial letter that says your auto loan application was denied because you had “Too many recent inquiries,” and you know for a fact that you haven’t applied for any sort of credit in 2 years, then you know that something is wrong, and you’ve been alerted to a possible identity theft issue that you need to take care of ASAP.

2. It warns you of fraud by potential creditors and salespeople. This happens most often in the context of auto sales, but it can just as easily happen with mortgage lending (where there are much bigger consequences). How? I’ll use an example to show you why. You go to a car dealer shopping for a car. You pick one or two models you’re interested in and you offer a $3,000 down payment and you ask to finance the remaining $18,000 at 8% APR over 48 months. You fill out a credit application and you hand it to the dealer. He uploads it to his computer system and submits the loan to potential finance companies.

What’s supposed to happen next is this: he sends your application to a four potential lenders, and they respond. Whichever one gives you the best deal gets the contract. You get the car. The dealer sells a car. The finance company gets a new customer paying them 8% APR for their loan.

But what can (and sometimes does) happen is this: three lenders reply, two of them offer you financing at 9%, and the other offers you financing at 12%, but is willing to finance a bunch of junk charges like a $1800 service contract that cost the dealer $600 and pay the dealer a bonus $500 for sending you their way. The dealer then tells you that you’ve been approved for 12%, and that’s all they can do. You believe him and you take the deal.

30 days later, you get two letters from finance companies you never heard of, announcing that they got your applications, but only offered you 9%, and that they haven’t heard from you since then. You think WTH? I signed up for 12% when I could have gotten 9%? So now you know you’ve been screwed. That’s what is supposed to happen. Now you can do something about it. Like calling a lawyer in Alabama who can help you take action to defend your rights.

Credit Acceptance Judgment Vacated for Fraud upon the Court – Alabama Consumer Finance Attorney Judson E. Crump

December 8, 2014 by Attorney Judson E Crump 82 Comments

Default Judgment Vacated for Fraud & Misrepresentation

This case was a particularly important one, in my opinion. I’ve written before about cases where I was able to reverse a default judgment after it had been entered because the Defendant was never served with the complaint. That is by far the most common way to reverse a default. But not the only way.

My client bought a car in 2007. It had a 24% APR and she reliably made her payments for about four years. Then the car broke down and since it was sold to her “AS IS – No Warranty,” she had to pay for the repairs out of pocket. The repairs would have cost $4,000. The car wasn’t even worth that much. So she gave it back to the finance company – Credit Acceptance Corp.

Three years go by. She gets sued by Credit Acceptance – they say the balance on the loan is $11,071.61. She calls the collection lawyer to try and make payment arrangements, but they wouldn’t accept any offer she could afford.

So she didn’t answer within the 30 days allowed by Alabama law. Credit Acceptance moves for a default judgment. They knew that they were in the superior position – my client hadn’t defended herself, so they were going to get a judgment without having to really prove their case. That’s how default judgments work.

But when the judgment was entered, it was not for the $11,071 she’d been sued for, but for over $19,000! How? They had asked for interest at 24% APR beginning January 1, 2012.

But the car hadn’t even been sold at a post-repo auction until July 2013! You can’t calculate a deficiency balance until you have sold the car. It just isn’t possible.

So how did a judgment get entered that was so obviously wrong? Because Credit Acceptance had one of their employees file a false affidavit with the court. Their affidavit stated that the amount owed on New Year’s Day 2012 was $11,071.61, when in fact that was the highest amount the debt could have been in July of 2013! So that is 19 months of interest (at 24% interest!) that they had no right to claim, yet in a sworn affidavit, they were seeking. In other words, Credit Acceptance blatantly lied to the court to try to steal over $4,200 from my client.

I filed a motion to set this judgment aside, and it was granted. Even the collection lawyer, to his credit, realized that something was way off with the affidavit.

Car Repossessed After a Spot Delivery Sale went Wrong? A few Defenses – Alabama Consumer Fraud Attorney Judson E. Crump

December 3, 2014 by Attorney Judson E Crump 1 Comment

Spot Delivery Sales are Often Illegal. But even when they’re not, you still have rights.

If you have credit problems in your past, then there is a chance you have been subject to a spot delivery auto sale scheme. Spot Delivery? What is spot delivery? A spot delivery is a certain type of car deal where the buyer enters into a tentative or conditional sales agreement to buy a specific vehicle on agreed upon terms, but subject to final approval by a third-party finance company.

Basically, here’s how they work:

You find a car you like and negotiate the terms of purchase with the dealer.
You sign a conditional sales agreement – the condition being that if the dealer cannot find financing for the transaction, the deal is off.
The dealer sends your credit application to several finance companies, hoping one of them will buy it.
If one of them accepts your contract, then the deal is final and you’re good.
If none of them accept your contract, the dealer will do one of two things: either a) they’ll try to rewrite the contract on worse terms to get a lender to accept it (like, maybe they wouldn’t approve you at 18% but they’ll approve you at 22%), or b) the deal is cancelled.
If the deal is cancelled, then the entire contract is void. You have to return the vehicle in good condition; they have to give you all your money back and give you your trade in (or the exact trade-in value) back. They cannot deduct from your down payment except for a reasonable charge for the miles you put on the vehicle. Which should never be more than a couple hundred bucks.
If they try to rewrite your contract, you need to know why, and you need to be sure that the contract had an enforceable spot delivery clause. I recommend contacting an experienced consumer protection lawyer to review such a deal.

Seems simple, right? Not really, and the more complex a deal is, the more opportunities there are for fraud. Particularly in car sales. So here are a few things to watch out for:

EVERY FINANCE COMPANY AND DEALERSHIP WHO DENIES YOU CREDIT MUST PROVIDE YOU A WRITTEN NOTICE OF DENIAL WITHIN 30 DAYS OF RECEIVING YOUR APPLICATION. THE NOTICE MUST TELL YOU WHY YOU WERE DENIED. If you didn’t get a notice within 30 days of them receiving your application, they are violating the Equal Credit Opportunity Act, and you need to talk to a lawyer about that.
Even if you applied for the loan in person, they still have to give you a written notice of their decision.
If they don’t approve you FOR THE PRICE, FINANCE CHARGES, AND INTEREST RATE you requested, then it’s a counteroffer and they have to send you the notice telling you why they didn’t grant the credit you asked for. Unless you accept their counter. If you go with another lender, then they still have to tell you why.
The Spot Delivery Agreement (it may be called a “bailment agreement”) should be clear and conspicuous and part of the sales contract. If it’s on a separate piece of paper, you should have an attorney review them.
If they take the vehicle back, they have to give you your down payment and trade-in back. If they’ve sold your trade-in, make sure that they properly acquired title and that they give you a check for the full amount of the contract trade-in value.
If they repossess the vehicle, they have to let you get your property out of the vehicle. They can’t keep your stuff.
If they repossess the vehicle, they cannot hold you liable for any deficiency balance on the contract (because there was no contract, remember!).

It is possible for a Bailment Agreement/Spot Delivery sale to be done in a manner that is 100% legal. But they usually aren’t. If you think that something was done wrong, you need to talk to an attorney ASAP.