Many car dealers cheat customers out of thousands of dollars everyday and most customers do not even know it. The fraud begins the moment you first talk to a salesperson on the car lot. You tell the salesperson you are interested in a particular car and the salesperson immediately asks for your driver's license so you can test drive the car.
Why did the salesman ask for your driver's license?
Most people believe that the car dealer simply wants to verify that you have a valid driver's license. WRONG. If that were the case, the salesman could immediately look at it and see whether it was valid. At most, he might want to make a copy of it for the information in case you drove off and never returned the test drive car.
The car dealer is really taking your information off of the license so the "F & I man" can run a credit report on you. "F & I " stands for Finance and Insurance. This is where most customers get taken to the cleaners without ever knowing it.
It is a violation of the Fair Credit Reporting Act to make an inquiry into your credit unless your expressly authorize it. Many car dealers never ask for your authorization and never disclose that they have already run a credit report.
The F & I man's job is to obtain financing for you with the highest interest rate they can get out of you and to sell you insurance that you do not need, such as credit life insurance, credit disability insurance, and service contracts.
The F & I man knows what interest rate his bank has approved for the month and he can tell from your credit report whether you will qualify. He and the salesman will go through a charade that they have to send your credit application to the bank to obtain approval.
They do need to send your credit application to a lender at some point, but there are no secrets. The F & I man knows what criteria the lender is looking for and what the interest rates are for varying criteria.
Either you have good credit or you don't. If you have bad credit, the F & I man knows ahead of time that you will not qualify from his regular source of financing. He usually knows which sub-prime lender will finance you.
If you have good credit, the bank will send a report back to the dealer approving your application at the base interest rate and list what rebate the dealer will receive if he talks you into a higher interest rate.
In other words, assume the bank told the dealer that it would finance for 7% as the base interest rate for the month. You have good credit and are approved. The bank will state on the approval that if the dealer has you sign the paperwork at 7%, the dealer gets nothing back. If the dealer gets you to sign at 8%, he gets X amount of money back. If the dealer gets you to sign at 10%, he gets even more money back as a kickback.
Next, the F & I man adds $295 for document preparation. What is that? It is nothing more than a junk fee. If you argue with the salesman long enough, they will give you credit somewhere else in the contract for this amount, but they will not remove it from the contract because of Federal Trade Commission rules on pricing which require them to give one customer the same pricing as the next for equivalent items.
$399 is added on a line that has "DEP" or "DVM" or some similar acronym on it. The salesman tells you that it is some mandatory fee. It really stands for "Dealer's Extra Profit" or "Dealer's Vacation Money" or some similar insulting phrase that the salemen and F & I men laugh about.
Next $1,346 is listed on a line that has "credit life insurance" by it. You tell the salesman that you do not want insurance and he assures you that you have not been charged because it is not in a column that is added up. WRONG. If you add up all of the numbers, they just added another $1,346 into the amount that has been financed.
Don't forget your trade in. The salesman tells you that they are giving you $5,000 for it. If you add all of the extra charges over and above the listed sticker price, you amazingly have agreed to pay more than $5,000 in extras. They call that stealing the trade-in.
At least that is all they could have cheated you out of. WRONG! You drive the beautiful low mileage, one owner, used car off the lot and two days later it won't start. No problem, it is still under the manufacturer's warranty. You have it towed to the manufacturer's dealer to be repaired. The manufacturer's dealer tells you they will not fix the problem because your beautiful low mileage, one owner car has been in a major crash and rebuilt.
The malfunctioning part was replaced after the crash and all of the electrical wires have been spliced back together. You take the car back to the salesman who sold the car to you and demand a different car. He laughs at you and says he did not know anything about a crash. He says he doesn't believe it was in a crash.
You spend a lot of time trying to negotiate with the "professionals' who so deftly cheated you. Unfortunately, this scenario is played out too often. Your only real remedy is to sue the dealer who sold the car and the finance company.
Wait -- here comes more fraud. The finance company tells you that they did not sell you the car and you are still liable to them for the whole amount. It sounds reasonable, but the Federal Trade Commission has a regulation that says that the customer retains all claims and defenses as against the finance company. The finance company knows all about this FTC regulation, yet they train their "customer service representatives" to falsely tell you that you have to continue paying them.
Car buying - the great American passsion. New businesses may encounter a variety of legal needs. What sort of business entity should I use, sole proprietorship, LLC, corporation, partnership, limited partnership? What sort of license or insurance will I need? I can help you with these needs as well as contract review. Whatever you do, make sure you read everything that you are asked to sign. And make sure you understand what you are signing. Do not just sign the first draft that is put in front of you. You also should make sure that the draft that you do sign has the corrections that you made and the other party claimed to agree to. It is not uncommon for the person preparing the contract to agree to something and then not include it in the final draft. Whether it was negligence or intentional won’t matter when a dispute arises and the clause that you thought was there is not. Regulatory compliance is another area that some businesses run afoul. An attorney can assist you in finding all regulations that apply to your business and helping you comply with the regulations. Lastly, do not forget litigation strategy. It is very important to properly assess your probability of success or liability and what actions will or might result in what consequences. What is the downside? What is the upside? The worst and best case scenarios? Several hours spent on strategy can often save you many years of regret. The Fair Debt Collection Practice Act requires debt collectors to engage in the practice ethically and prohibits practices which have been deemed to be unfair or unconscionable. It is a violation of the Fair Debt Collection Practice Act for a debt collector to lie to you or attempt to collect more money than you owe. After a debt collector contacts you, they are required to send a letter within five days of the communication which sets forth the amount of the debt and the name of the creditor. There is an attorney fee provision in the Act and I can be compensated by the debt collector if a violation has in fact occurred. If you feel like you have been harassed or treated unfairly or harshly by a debt collector, there is a good chance that the Act has been violated. Do not sit on your rights because there is a one-year statute of limitations. You must see an attorney as soon as possible after the violation occurred because the action must be filed within one year of the date of the violation. All persons should have a will, durable power of attorney for financial matters, and a durable power of attorney for healthcare decisions (sometimes called a living will). The question is whether you need a living trust or just a will. The quick answer is that you still need a will, even if you have a living trust. The harder question is whether you really need a living trust. There are many hucksters who will tell you that you definitely need a living trust because probate is a waste of money and time. These people generally offer to sell you a living trust for $500 to $2,000. You should be wary of such offers because they usually are sold by insurance agents and stock brokers who are looking for people with liquid assets. Why would they want to find people with liquid assets? They want to sell over priced insurance products or securities to people who most likely do not need them. For these salesmen, the real point of doing a living trust is to find out what your assets are. They cover their costs by charging a nominal fee. If that is not bad enough, these "living trusts" may not be valid or may be totally inappropriate for your situation because these salesmen are not experts in the law of estate planning. They usually have one form that fits all. Sometimes these insurance salesman/stock brokers will have an attorney on hand, but this is a very unethical practice for the attorney. Who really is the attorney’s master; the insurance salesman/stock broker or you? If you do not need a living trust and the attorney advises you of that, do you believe that the insurance salesman/stock broker will keep him around very long? Read the California Bar Opinion on attorneys participating in schemes to sell living trusts. Estate planning is more than selling a form and filling in blanks. Estate planning is a process that does not happen in an hour or one sitting. Expect to pay approximately ½ of 1% of the value of the estate for a well-thought out plan. If you are a married couple with more than one million dollars in assets, you should probably start to think about the value of a living trust. Trusts are also useful to direct how funds are spent after your demise if you doubt the responsibility of your beneficiary. State Bar, attorney general halt trust mill sales In a settlement agreement reached with the A lawsuit filed last July charged that the Orange County-based AMA used unfair business practices, including high pressure tactics, to peddle living trust and annuities to thousands of senior citizens. The complaint also accused the company of engaging in the unauthorized practice of law because sales agents who were not lawyers provided legal advice in the course of selling and preparing the living trusts. Under the settlement approved by Los Angeles Superior Court Judge Ronald M. Sohigian, AMA and its owners, Stephan and Victoria Adams, can no longer prepare living trusts or provide any advice about probate or estate planning. Although the company is not prohibited from selling insurance- related products or annuities, it can only do so under stringent restrictions. The settlement was reached after several months of litigation and mediation conducted by former attorney general John Van De Kamp. Although the complaint against AMA's three current in-house counsel was dismissed, the bar is conducting a disciplinary investigation of the three. Two other defendants, attorney Herbert Rhodes and the Fremont Life Insurance Co., did not settle and remain in the lawsuit. Under the terms of the judgment, the AMA did not admit any wrongdoing. According to the complaint, AMA pitched its product through door-to-door sales, television, radio, telemarketing, and presentations at senior centers. Sales representatives set up a living trust and then used confidential information to sell annuities. The company sold more than 10,000 living trust packages and more than $200 million in annuities. Bar officials said it is unclear how many wills and trusts were prepared improperly and are invalid. But Attorney General Dan Lungren used the settlement as a warning to the public about living trusts. "They are complex documents that must be properly prepared to meet an individual's needs," he said. "Any decision regarding living trusts should not be taken lightly and the proper legal advice is necessary." Because the company's sales agents provided legal advice, the bar had charged that AMA engaged in the unlawful practice of law. Its non-lawyers were trained to promote themselves as "certified trust advisors" or estate planning experts. Company representatives discouraged seniors from consulting with their children or attorneys before signing up. The price of a living trust package varied from $1,000 to more than $2,000, according to the suit. Sales agents typically earned a 30 percent commission on each package, with vacation bonuses for high sales volume and an additional 10 percent commission for an annuity sale. Agents also allegedly used confidential information provided for the living trust to persuade the senior citizen to cash in IRAs, stocks, mutual funds and other savings accounts in favor of "safer annuities." Some agents did not explain that cashing-in might trigger early withdrawal penalties or have adverse tax consequences. They also claimed that the annuities were "100 percent safe" and that no one had lost their principal with an annuity, although one company whose annuities AMA sold was placed in liquidation. Individuals concerned about any business with AMA can write to the attorney general's office. Letters should include the individual's name, address and copies of any pertinent documents relating to the company. Inquiries should be sent to: Betty Mason, Department of Justice, Office of the Attorney General, 300 S. Spring St., The State Bar also maintains a hotline -- 1-800/445-4LAW -- for information about how to select an estate planning attorney. CALBARJOURNAL Probate in It helps to have a list of all close relatives, with addresses and telephone numbers. Notice must be mailed to every person who would have an interest in the estate if the person died without a will, to all persons listed in the will, and to all known creditors. If a person died with less than $20,000 in assets, the person entitled to the property may file an affidavit after 40 days and obtain the legal right to the property. If the person died with less than $50,000 in property, there are special rules that allow for probate to be concluded more quickly than usual. If the estate has less than $200,000 in it, then a summary administration of the estate may occur. Summary Administration has more requirements than if the estate had $50,000 or less, but fewer requirements than normal probate.
Business Law and Litigation
Fair Debt Collection Practice Act
Trust Mills - CA Bar Article
THE CALIFORNIA BAR JOURNAL
OFFICIAL PUBLICATION OF THE STATE BAR OF
May, 1997
by Nancy McCarthy
Staff Writer
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A multi-million dollar trust mill accused of large-scale consumer fraud last year has agreed to halt its sales of estate planning services and living trusts.
Probate