What Can You Do If A Car Dealer Deceived You?

Check out your rights under the Dealers Act

The South Carolina Regulation of Manufacturers, Distributors, and Dealers Act (“Dealers Act”)

S.C. Code Ann. §§ 56-15-10 to -600 (2006 & Supp. 2014).

The Dealers Act[1] is available to South Carolina consumers who have been harmed by unfair methods of competition and unfair or deceptive acts or practices as defined in the Act. [2]  It applies to any person who engages directly or indirectly in purposeful contacts within the state of South Carolina in connection with the offering or advertising for sale of a motor vehicle or who has business dealings with respect to a motor vehicle within this State.

Specific violations stated within the Dealers Act include

1. requiring a purchaser of a new motor vehicle to also purchase special features, appliances, equipment, parts or accessories not desired or requested—unless they were already on the car when it came to the dealership;
2. to represent and sell as a new motor vehicle one which is used, including one that has been used and operated for demonstration purposes; and
3. resorting to or using any false or misleading advertisement in connection with the dealer’s business

Sometimes advertising is not false or misleading, it’s just “puffing”.  According to Black’s Law Dictionary “puffing” is the expression of an exaggerated opinion — as opposed to a factual misrepresentation — with the intent to sell a good or service. Puffing involves expressing opinions, not asserting something as a fact. Although there is some leeway in puffing goods, a seller may not misrepresent them or say they have attributes that they do not possess.

What are some of the acts and practices that have been found to be arbitrary, in bad faith, or unconscionable?  First, S.C. Courts have defined those terms as follows:

1. Arbitrary conduct is readily definable and includes acts which are unreasonable, capricious or nonrational; not done according to reason or judgment; depending on will alone.[3]
2. Bad faith is “[t]he opposite of good faith, generally implying or involving actual or constructive fraud, or a design to deceive or mislead another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by some interested or sinister motive.” [4]

“Unconscionability has been recognized as the absence of meaningful choice on the part of one party due to one-sided contract provisions, together with terms which are so oppressive that no reasonable person would make them and no fair and honest person would accept them.”[5]

Here are some methods employed by dealers that violate the Dealers Act:

1. Collecting insurance premiums but then failing to apply them and failing to tell the purchaser they have no insurance;
2. Inaccuracies in a financing application made by a dealer such as:
   1. falsely listing the purchaser’s identity;
   1. listing the wrong motor vehicle as the collateral;
   1. misrepresenting the purchaser’s monthly income to qualify them for a loan;
3. Failure to act in good faith when a purchaser requests that the dealer correct inaccuracies in paperwork and/or assist in correcting problems caused by dealer’s bad faith actions;
4. Promising that your payment will be lower in the future;
5. Selling extended service contracts but calling them warranties;
6. Making false statements about the condition of the motor vehicle;
7. Charging closing fees that are not actual expenses incurred by the dealer.

The Dealers Act provides remedies for acts which cause damage to any of the parties or to the public.  These include a private action for money damages and injunctive relief.  In an action for money damages, the amount recovered is doubled and you can seek attorney fees and costs.  If the dealer acted maliciously, punitive damages not exceeding triple the damages can be awarded.

Under the Act, dealers are required to maintain complete and correct records of each sale transaction for at least four years and the Statute of limitations for pursuing a private action is four years. [6] 

The S.C. Attorney General has the power to investigate, issue cease and desist orders and injunctive relief on any valid abuse connected with the sale, rental or leasing of a new or used motor vehicle.  But the Act requires that reasonable attempts by the consumer have first been made with the dealer to alleviate the complaint.[7]

[1] S.C. Code Ann. §56-15-30(a)

[2] S.C. Code Ann. § 56-15-40(1) (2006).

[3] Taylor v. Nix, 307 S.C. 551, 555, 416 S.E.2d 619, 621 (1992).

[4] State v. Griffin, 100 S.C. 331, 331, 84 S.E. 876, 877 (1915) (citation omitted).

[5] Fanning v. Fritz’s Pontiac-Cadillac-Buick, Inc., 322 S.C. 399, 403, 472 S.E.2d 242, 245 (1996).

[6] S.C. Code Ann. §56-15-120.

[7] S.C. Code Ann. §56-15-40(5)