This was submitted in an American Arbitration Association hearing:
FINANCING – CONSUMER FRAUD
The next area of inquiry is the financing, the payoff of the initial contract and the financing of the ‘second deal’. Again, it is not contradicted and admitted by the respondent that the plaintiff signed two retail installment sales contracts, both with differing terms. The differing terms were the cash down on the transaction. The execution of two contracts was self-serving: they wanted to protect themselves if the check bounced. This was premeditated and admittedly so. This was the reason they had two contracts executed.
They admitted that they did not provide the plaintiffs with a copy of the second contract since we actually reviewed the original ‘customer copy’ on the day of the hearing. The defendant submitted that the first contract was approved, money was sent and they paid off the finance company on the first transaction and submitted the second contract for approval, for which they received financing.
The defendants admitted that they ‘assigned’ the contract and received money from the finance company on contract number one. Once the defendant assigns the contract, it is clear that they no longer have any rights in the initial contract. Therefore, they are without justification or any right in ‘paying off’ the first contract, forwarding the $9,250 to the finance company and receiving a return of the assignment.
Thus, the defendants interfered with the contractual relationship between the plaintiff and the bank. The PLAINTIFF did not consent to the payoff of the first contract or even the submission of the second contract for financing. Thus, ultimately, the method by which the defendants protected their own investment in the vehicle on the transaction was to act on their own behalf and contrary to the interest of the plaintiff. The defendants continued to process the second transaction despite instructions to the contrary (after the plaintiff returned to the dealer and expressly canceled the transaction).
Apparently, the defendants decided to cancel it but reinstated another transaction despite interfering with the contractual relationship with the bank and the plaintiff. To what extent could the defendants really legitimize their subsequent submission of the contract when the plaintiffs requested to cancel the entire transaction? Thus, the defendants were aware that the plaintiff canceled the transaction, and continued to process it over their objections.
This must be deemed an unconscionable, deceptive and inherently illegal practice under the New Jersey Consumer Fraud Act and under the Truth in Lending Act. It might have been a different story if the plaintiffs never agreed to rescind the transaction, cancel, and agreed to continue with the transaction. However, in this case, the plaintiffs canceled the transaction the next day, which inherently prohibits the defendants from taking any other action, especially one which was contrary to the requests to rescind the transaction by the plaintiffs.