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Court extends fraud law to online sales of vehicles

Discussion in 'The Hokey Ass Message Board' started by yoyodyne, Apr 17, 2009.

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  1. yoyodyne
    Joined: Nov 26, 2008
    Posts: 856


    New Jersey car dealers who sell lemons online can be held liable for fraud, the state Supreme Court ruled yesterday.
    The court said a 1970 Corvette convertible advertised in "good" condition on eBay by a Montville car dealer and pumpkin farmer and sold to a Missourian was a "textbook" case of what is covered by the state's Consumer Fraud Act.

    The unanimous decision determined the act, which in part covers merchandise advertised in print and over the airwaves, also extends to items sold online.
    "We are called on to determine whether the Consumer Fraud Act's reach extends far enough to grasp that transaction," wrote Justice Roberto Rivera-Soto, who noted Richard Conklin of Montville "had engaged in unconscionable commercial practices in connection with the advertisement and sale of merchandise."
    When Lyle Real of O'Fallon, Mo., got the 1970 Chevrolet Corvette for which he paid $13,651 on eBay, he noticed the car was not in "good" condition as advertised, the decision stated. In fact, the decision continued, the car wasn't even in good enough shape to drive in Missouri because its frame, rusted halfway through, would not have passed inspection. And when Real turned the ignition key there was a "large hesitation" when he tried to accelerate, it stated.
    When Conklin refused Real's offer to return the car, the decision continued, Real spent more than $40,000 to fix it up so it would run. Because of the court's decision, Real will now receive the $62,447 settlement he was awarded in the original trial.
    Yesterday's decision overturned a state appeals court ruling that said the consumer protection law did not apply to Conklin because he was only a "casual seller" of hot rods and historic vehicles. Conklin, who denied during the trial that he was a car dealer, also makes custom roadster wheels for his company, Radir Wheels Inc., the decision says.
    Conklin's lawyer, Clifford Weininger, said he was "surprised" by the court's decision, which may lead to more costly settlements for retailers.
    "The decision now applies to anybody who sells anything in the state of New Jersey," Weininger said. "Whether it's on eBay, in garage sales, it's now subject to the Consumer Fraud Act which means treble damages and legal fees."
    Peter Appleton, president of the New Jersey Coalition of Automotive Retailers, said while the Consumer Fraud Act was an "old law" that had not "been updated to address the Internet," dealers should still be "forthcoming and honest about the product."
    "The industry's view of online sales, the obligations to disclose and the advertisement requirements online are pretty much the same as any other media," he said. "Online's not that different from the newspaper or broadcast media."
    Appleton said advertising online helps sell cars but most people want to get a feel for the car before they put down the money.
    "Ten years ago, there was a lot of speculation that auto sales would be almost exclusively online," he said. "Consumers want to be able to shop and compare online but eventually they want to be in a dealership test-driving cars."
    The decision also affects car dealers who post ads on independently owned sites such as the Basking Ridge-based Brian Kelley, president of iBid, said he's never had a problem with dealerships falsely advertising on the site, but "constantly" hears about lawsuits over cars misrepresented online.
    "People take pictures, but a car might look great from the outside and be completely rusted underneath," Kelley said.
    Real's lawyer, Michael Halbfish, said the decision was "important."
    "It closes a loophole where a person can't go about running a business and claiming that they are acting independently," he said. "Now people are being held responsible when they commit fraud."
  2. the-rodster
    Joined: Jul 2, 2003
    Posts: 6,664


    Sound like Mr. Real's pussy hurts.

  3. yoyodyne
    Joined: Nov 26, 2008
    Posts: 856


    Seller of bum ’Vette online pays in court
    Lyle Real of O’Fallon, Missouri, thought he knew what he was getting when he purchased a 1970 Corvette on eBay in 2002 from a seller in Montville, New Jersey. Lyle isn’t a novice car collector, and the $13,651 he paid for a base 300hp Corvette described as in “good condition,” with accompanying photographs, was a believable deal. But according to the opinion published by the New Jersey State Supreme Court on April 8, 2009, “Upon receipt of the car, however, plaintiff realized the condition of the vehicle was not as advertised, and he filed suit against (name withheld to protect the guilty), individually, and (ditto) a company owned by (defendant), alleging breach of contract, common law fraud, negligent misrepresentation, violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -166, and fraudulent inducement. In their answer, defendants denied all liability.” How bad was the car? The description stated: 1970 Corvette Convertable [sic]. Matching numbers, One owner Car, 350/300HP 4 speed, Good Frame, New exhuast [sic] system, Power steering, Soft top is good. New Carpet. Runs Strong, Original rallys, Original radio/cassette. Title is original from 06/24 1970. Vehicle Condition Needs door hinge pins, Radiator support, original interior is ok but seats are a little worn. Painted once now has a few chips. Windshield has a small crack in the lower left corner. But according to the decision, when Lyle got it home, it was not a “one-owner car,” and: He brought it to Dan Hughes, a mechanic at Just Corvettes, for an “assessment” and “a safety inspection.” When Hughes “put the car on the lift to start the safety inspection,” he discovered the frame, which was advertised as “good,” was “rusted nearly in half,” rendering the car unsafe and unlicensable in Missouri. Further inspection of the car showed the soft top, which was also advertised as “good,” was in poor condition (“someone had stapled it with metal staples to hold it together”), the driver’s seat was “ripped in numerous places,” “the driver’s seat frame was broken, and the radio/cassette, which was advertised as “original,” was an aftermarket item. The issue at the heart of the case was whether the transaction was protected under the CFA. Lyle won a judgment in trial court in 2005 “that dismissed the complaint against [company], but awarded plaintiff treble damages of $25,953, counsel fees of $29,950, and costs of $6,544.81 under the CFA.” He appealed, in part because of the $40,000-plus he’d spent on a restoration; and in part because the earlier judgment ruled that [defendant] wasn’t a dealer. “On appeal, defendant claims the trial court erred in finding “a casual seller of automobiles over the Internet” is “a merchant or dealer pursuant to the Consumer Fraud Act.” In addition, defendant contends the trial court erred in denying his motion to dismiss plaintiff’s consumer fraud claim at the close of plaintiff's case in chief, as was required by Rule 4:37-2(b). “We are constrained to agree.” This judgment reversed the 2005 decision and awarded Lyle $8,651 (the difference in value between the car he bought, and the car he thought he was buying) — the matter now goes to trial to determine the damages to which Lyle is entitled. We’ll see if they cover either the costs of the restoration, or his time and heartache. But it does send a clear message: You don’t have to be a dealer to be held accountable for fraud. Had the seller acted in what we’ll call “honorable ignorance,” this would not have been a matter for a high court. However, the court found [defendant] deliberately misrepresented the car, thus making him liable to prosecution under the CFA, rather than civil remediation. Expect to see this judgment cited in many cases to come.
    - By David Traver Adolphus
  4. Let the buyer beware, I guess. When I sell something I make sure I state 'as is, where is. No guarantees, implied or otherwise.' And what did he expect for that price??? Bloomington Gold?

  5. moparted
    Joined: Oct 29, 2008
    Posts: 73

    from upstate ny

    why would anyone buy a car site unseen?
  6. budhaboy
    Joined: Feb 6, 2007
    Posts: 157


    hmmmm, this might make me think twice about buying from Radir Wheels. prolly not tho
  7. Von Rigg Fink
    Joined: Jun 11, 2007
    Posts: 13,428

    Von Rigg Fink
    from Garage

    not him..the other guy..Real was the guy who was awarded the settlement

    "Real will now receive the $62,447 settlement he was awarded in the original trial. "
    Last edited: Apr 17, 2009
  8. I don't understand why in the worst possible case, the guy is entitled to more than he paid for the car as damages, and maybe the transport costs to bring it home. He should in no case be entitled to the costs to completely restore a 40 year old car. In fact $60,000 could restore two cars.

    Then again I don't know why someone would buy a car without at least looking it over good first. Unless they were dropped on their head as an infant, or their mother smoked crack when pregnant. It's kind of sad that a court will reward you to the tune of $60,000+ for being an idiot.

    It seems to me you could protect yourself from this law with a lot of obvious statements of "sold as-is" "Inspect vehicle in person before you commit to buy" and so forth.
  9. the-rodster
    Joined: Jul 2, 2003
    Posts: 6,664


    My gut reaction is that Real is a pussy.

    He bought a 40 year old car described as "good" and expected it to be perfect, and for half of the book value at that.

    Fuck him.

    I did a google search and came up with this posting on another board.

    "This is certainly a cautionary (and frightening) tale for anyone who is considering selling a used car via the internet.

    If ever "gross miscarriage of justice" applies, it applies to this situation.

    Rich Conklin is an extremely reputable member of the classic car & hot rodding community, and it is an insult to accuse him of fraud; an insult compounded by apparent judicial grandstanding by a judge with political aspirations, a newspaper's sensationalism in an effort to sell papers, and a newspaper writer who knows nothing about cars, let alone classic muscle cars.

    The facts:
    1) The car is a 1970 convertible.
    2) It was advertised in "good" condition (not "very good", not "great", not "excellent", but only "good")
    3) The buyer bought it for $13,651
    4) The buyer complained of some rust on the frame, and about "significant hesitation" on acceleration.
    5) The buyer claims he put $40,000 into the car to "fix" it.
    6) The buyer claimed that the rust would prevent the car from passing inspection in his home state of Missouri (this I find especially dubious, given what I've seen on the roads of rural Missouri).
    7) Rich is NOT a car dealer, but simply a hobbyist

    The case was brought to court. Rich lost the first round, won the second (on appeal in the appellate court), and now has lost the 3rd round on the buyer's appeal.

    Friggin' NJ - the highest number of lawyers per capita of any state. The NJ "Lemon Law" was created to protect consumers from used car dealers' odometer roll-backs & the like, not to go after honest hobbyists.

    The car was advertised in "good" condition"? Doesn't the judge know that "good condition" is a relative term for any 40-year old, and especially for a 40 year old car?

    Today's NADA "book value - low retail" for a base 1970 Corvette convertible is $31,000. (Yes, I know that's more than a bit high, but the point is that we're not talking about a cheap car here). It certain appears that the buyer got a great deal at $13,651 and should be thankful. $40,000 to restore it? The seller should NOT be responsible for his customer paying someone else way too much to restore the car to "mint" condition?

    The customer complained and sued because of frame surface rust and "hesitation upon acceleration" in a 1970 car? Well, maybe the customer needs to know that these cars have carburetors. That the car would need some repairs and carb adjustment is not a surprise. Did he think he were buying another 2003 Corvette? Or a 2008 Cobalt? "
  10. 49ratfink
    Joined: Feb 8, 2004
    Posts: 17,944

    from California

    sounds like bullshit to me. what the fuck kind of idiot buys a 40 year old car without looking at it?

    I used to hang out on the ebay motors discussion board. these pussys would show up once a week complaining about the old car they bought that wasn't as nice as they had hoped.

    you hear the "I brought the car to my mechanic and he said it needs bla bla bla......"" all the time.

    some people should just buy new cars from the dealer.
  11. Rich Rogers
    Joined: Apr 8, 2006
    Posts: 2,018

    Rich Rogers

    Geez, if he was a member of say THE HAMB, he could have asked a member to check it out for him before he decided to bullshit his way through a deal like this. Trust me I'm not meaning "him" but wouldn't any somewhat normal thinking "car guy" be more than a little leary to buy any car without looking it over 1st? What an asshole
  12. metalshapes
    Joined: Nov 18, 2002
    Posts: 10,760

    Tech Editor

    '70 Chevy, Ebay, Lawyers...
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