New Jersey Lemon Law Lawyer Blog

The next level up would be the sales manager, the finance managers who are responsible for the back end or the financing and the extras on the transaction. Once the transaction is finalized, meaning the consumers agreed to purchase the particular type of car, they are turned over, handed off or otherwise processed through middle- or upper-level management, who is responsible for the financing, selling addition products. Many times the selling of these finance products or aftermarket items saps money from the front-end of the transaction. This means that if there was a $1,000 profit on the sale of the vehicle from the salesman’s perspective, this profit might be funneled or focused into aftermarket items, warranties or financing. Under some circumstances, finance managers would “pack” products into this $1,000 profit margin for the salesman, then making it difficult for a salesman to realize their fair share of the profit on the automobile.

With regard to the back end, the middle- and upper-level management also have issues because they are unsure as to the nature and extent of the “packs” that the upper level management and ownership are putting on the car. This means that if they sell an aftermarket product, what happens if this company is owned, operated or controlled by the ownership? Moreover, what if there are unknown packs or costs put into the price of the vehicle which reduce the upper level management’s commissionable gross proceeds? In short, each employee in this chain, from the salesman to the ownership, has particular answers and methods by which they can reduce the profit of those beneath them.

This is a follow-up on my previous posts and the basic underlying concepts of suing car dealerships. Previously, I addressed the concerns with regard to insurance and whether or not to file a case. Once you decide to file a case, you need to understand how a car dealership works to fully understand the concept of the fraud or the deceptive practice. In order to examine this, the best thing to do is to start from the bottom and work your way to the top. This means that you need to examine the workings of the salesmen, how their compensation and pay plan works, how their job works, how they interact with their superiors – which would be the finance and insurance managers and sales managers – and then how this upper-level management, finance and insurance managers and sales managers, deal with the ownership and the general manager.

You need to understand that the salesmen are paid solely on the profit on the vehicle. This means that if the auto dealership acquires a vehicle for $5,000 and it sells for $6,000, the salesman receives profit on the $1,000 difference. Usually, this is a 20% to 25% commission rate. This sounds simple, but it is not. These salesmen are usually nickel-and-dimed by the upper management, forcing them to implement these deceptive practices. Hypothetically, if a dealer were to acquire a vehicle for $3,000 at auction but felt it was worth $5,000 and had to put money into this vehicle to recondition it even though the dealership acquired it for $3,000, it might go on the books at $6,000 or $7,000. This makes the salesman’s job that much more difficult to make an honest living and an honest profit. Many times sales representatives only make a “flat” (set fee) for selling a vehicle. This means that there is no or little profit and they get a set amount for a car which ranges from $100 to $200. This is one of the reasons for the turnover in the industry and the reason that salesmen are not particularly concerned with the method by which they use to sell these cars. Since they have a good idea they are not going to be around at the same dealership long enough, they are just mostly concerned with maximizing the number of cars they sell, regardless of the method they use.

In this case the defendant is alleged to have sold a damaged certified car to the plaintiff who sued them in New Jersey. The dealership was not incorporated in New Jersey and was not physically located in New Jersey.

PROCEDURAL HISTORY/SUMMARY OF THE CASE

This claim arises out of the plaintiff’s purchase of a $40,000 ‘certified used Porsche Cayenne‘ from the defendant, XXXX that was significantly damaged, despite representations to the contrary. Soon after the plaintiff’s complaint was filed in or about April 2009, the defendant, XXX., filed a motion to dismiss alleging that there were insufficient contacts in the State of New Jersey to require XXX to defend the case in the State of New Jersey. In the initial motion for dismissal, the defendant, XXX, asserted the following:

Legal argument submitted in a wrongful repossession lawsuit:

LEGAL ARGUMENT

POINT I THE DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT ON THE CLAIMS FOR FRAUD SHOULD BE DENIED SINCE THE DEFENDANTS’ AGENTS IMPERSONATED LAW ENFORCEMENT WITH BADGES TO GAIN COMPLIANCE

In this case the dealer allegedly asserted that the dealer submitted a contract for approval after he canceled the transaction.

TRUTH IN LENDING ACT

The dealer cannot present conflicting contracts to the plaintiff for signature. The implementation of the Truth In Lending Act is very straightforward. There is strict liability for any violations. There are no minor or technical violations. Upon a showing of a violation there is the right to statutory damages, recession and actual damages. There is no requirement that the debtor be misled.

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.