Car Buyer Received Default Judgment Against Dealer for Violations of TILA, Connecticut Retail Installment Sales Financing Act, and State Unfair Trade Practices Act | Hudson Cook, LLP


A consumer saw a 2012 BMW 750i for sale for $15,900. After visiting the dealership, testing the BMW, and completing a credit application, the salesperson told her the price of the car was $16,500 and explained that the price increase was due to the consumer’s credit rating. The consumer agreed to purchase the car and make a down payment of $6,500. Without the buyer’s knowledge, the dealer prepared a retail installment contract, electronically forged the buyer’s signature, and presented the forged contract to a finance company.

The contract included a down payment of $6,250, even though the buyer hadn’t yet paid the down payment and agreed to pay $6,500, and a $395 GAP policy that he hadn’t applied for. Three days later, the buyer returned to the dealership to pay the down payment, finalize the purchase, and sign the contract. The buyer signed the contract together with the forged electronic signature. When he questioned the GAP charge, the dealer told him that the lender required GAP. The dealer asked the buyer to pay the $6,500 down payment, even though the contract mentioned a down payment of only $6,250, explaining that the additional $250 would be applied to registration costs and his first payment.

The buyer experienced problems with the car almost immediately and paid $3,429 to fix it. He notified the dealer that he was terminating the transaction and demanded the return of all sums paid under the contract. The finance company agreed to terminate the contract, returned all amounts paid to it under the contract, and agreed to release the title if ordered by a court. However, the dealer did not return any amount paid by the buyer. The buyer then sued the dealer for violations of the Truth in Lending Act, the Connecticut Retail Installment Sales Financing Act, and the Connecticut Unfair Trade Practices Act. When the dealer failed to respond to the lawsuit, the buyer filed for a default judgment.

The U.S. District Court for the District of Connecticut first addressed buyer claims that the dealer violated TILA by inflating the car’s sales price to account for finance company fees, listing the charge GAP as part of the amount financed rather than as part of the financing. charge, incorrectly listing the down payment amount, failing to provide you with disclosures prior to misrepresenting your name on the contract, incorrectly listing the payment schedule, and failing to correctly disclose the actual APR.

The court agreed with the buyer that the dealer incorrectly included the finance company fee in the price of the car rather than as part of the finance charge, incorrectly listed the GAP charge as part of the financed amount rather than the finance charge because the buyer failed to sign and initial an affirmative application for coverage after receiving disclosures about the option and the cost of purchasing GAP, incorrectly listed the down payment amount, incorrectly listed the first payment due date, and incorrectly disclosed the APR due to undisclosed finance charge and time of first payment.

However, the court found that the dealership made the financial disclosures on time. According to the court, the buyer was not contractually bound by the contract until he signed it, not when it was allegedly falsified, and because the dealer made the required disclosures before the buyer signed the contract, those disclosures were made before the contract was signed. consummation of the contract. the transaction.

The court then addressed the buyer’s claims that the dealer violated CRISFA by violating TILA, failing to include all essential provisions in the contract, and charging an APR in excess of 19%. The court agreed with the buyer that the dealer’s TILA violations constituted CRISFA violations, the dealer should have included in the contract the parties’ agreement that $250 of the $6,500 the buyer paid would be applied to registration costs and their first payment, and, when properly calculated to include the GAP charge and finance company fees, the APR exceeded the CRISFA maximum. Ultimately, the court addressed the buyer’s claims that the dealer violated CUTPA by understating the finance charge and including other inaccurate information in the contract and agreed, without much discussion, that those failures were unfair practices that violated CUTPA.

The court terminated the contract but refused, without further instructions, to require the finance company to release the title to the buyer so that the buyer could sell the car and apply the proceeds to trial in this case. The court referred the case to a trial judge for a hearing on the issue of damages. See Conley v. 1008 Bank Street, LLC2020 US District LEXIS 152507 (D. Conn. Aug 22, 2020).

Dealers should pay special attention to the case of the previous month. The Federal Trade Commission and the Consumer Financial Protection Bureau have taken a keen interest in how things like voluntary protection products are sold, financed, and disclosed to consumers. Also, you must not charge more for the vehicle than the advertised price; do not increase the price of the vehicle due to consumer credit. Also, don’t add products to the contract that the consumer didn’t order, make sure the down payment amount matches, and never forge any signature on a contract.

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