A new client came to us with what sounded like a rock solid lemon law buyback claim: a brand new 2008 Subaru was out of service for over 30 days, and required replacement of the engine, exhaust, and oil pan. We sent a demand letter to the manufacturer and, a few days later, we received a callback questioning why we had even submitted the demand. Their position? The car had no material defects.

The client sent in his documents, including his sales agreement and service records. The discrepancy was immediately solved. The purchase agreement was from an independent auto dealership and the vehicle had been bought on eBay. The customer had not had the opportunity to test drive the vehicle prior to winning the eBay auction. Thus, his first drive in it was the drive home. He immediately noticed a vibration, which grew increasingly worse as the days passed. He brought the Subaru to three different auto mechanics, including a manufacturer authorized dealership, and all three came back with the same opinion; the vehicle had been in a serious accident and had sustained heavy damage to the front end, as well as to the exhaust.

The exhaust and oil pan were replaced first. The customer informed the seller of the issues with the vehicle and the necessity for the repair, to which the seller voluntarily agreed to pay half of the bill. Soon thereafter, the vehicle was returned for service, which was when the client was told he needed a new engine.

The takeaway? Beware of “new” used cars, and deals that seem too good to be true. If you’re going to buy a used car, do a CARFAX check on the vehicle’s history, take it for a test drive, and have it inspected by a mechanic. If you buy a previously wrecked vehicle and the dealer doesn’t tell you, you may have a cause of action against the dealer, but you don’t have a lemon law claim.

The Chicago Tribune recently reported a phenomena that provoked another “What the…?” reaction for us. If you’ve never heard about “clip jobs,” you’re not alone. Say that you’ve been in a bad car crash. You expect your insurance company to pay to either have your car repaired to its pre-crash condition or to declare the car a total loss and pay you the car’s value.

But what if, in their not-so-infinite wisdom, the insurance company decides that the best course of action (or, rather, the cheapest course of action) is to take the part of your car that is still in good shape, find another car of the same make and model with the missing part intact, and put the two pieces together. That’s a clip job.

According to the Tribune, no one really knows how many clip jobs are out there, but State Farm just took a position against them, and the American Insurance Association doesn’t have a position one way or another.

There’s little doubt that a clip job can have dire consequences, in no small part because cars are designed for different systems to work in concert in order to protect the passengers. When different parts of vehicles are fused together, that synchronization is off.

Most vehicle manufacturers take a strong stance against clip jobs, including Chrysler, Ford, Toyota/Lexus, Acura, BMW, GM, Honda, and Jaguar.

If you’re in a major crash, you should be sure to ask the body shop how they’re going to repair your vehicle, and go to the mat with your insurance company to avoid a clip job. If you’re in the market for a used car, make sure to check CARFAX and have a reputable mechanic or body specialist look over the vehicle to verify that it hasn’t been subject to a clip job.

In the summer of 2007, the Missouri Supreme Court affirmed a lower court decision that a bank’s document preparation fees violated the Missouri Merchandising Practices Act. Basically, the court found that by charging fees, the bank was illegally practicing law. What does this have to do with cars? Plenty.

In a previous post, we talked about car dealer Earl Stewart’s crusade against the dealer preparation and document fees that dealers charge. They’re essentially a means of padding profit and ripping off consumers. It turns out that the Missouri ruling paved the way for consumers there to launch class action suits against that state’s car dealers for charging these fees.

According to Charles Emerick over at BNET, the latest twist is that one dealership is trying their hardest to force the plaintiffs to accept arbitration instead of proceeding with their class action suit. Lee’s Summit Honda is seeking to overturn a lower court’s decision that rejected their premise, and instead allowed the class action to proceed.

Stay tuned!

Rebuilt Wrecks Are A Danger

Back in 1992, Congress passed a law mandating the creation of a national database (the National Motor Vehicle Title Information System) that lists all of the vehicles written off by insurance companies due to accidents, fires, floods, and the like. Why haven’t we seen such a database? According to consumer advocates, it’s because the insurance industry has been putting pressure on the federal government to delay implementation of the law.

The database is supposed to help prevent consumers from being defrauded by unwittingly purchasing vehicles that have been previously deemed total losses.

According to an article in the New York Times, consumer groups sued the Justice Department, and the U.S. District Court for the Northern District of California rejected the Justice Department’s request to dismiss the suit. As a result, the insurance industry has to start providing information on salvage vehicles by March 31, 2009, and consumers must have access to that database.

That’s an important ruling, but the database isn’t fail-safe. For one thing, just as with lemon laws, state laws regarding re-titling vehicles as “total losses,” vary considerably. In other words, a vehicle that might be considered a total loss in one state might not be in another. This can lead to the practice of “title washing,” whereby vehicles are transported from a strict state to a more lenient state in order to obtain a clean title.

Some who are in the collision repair industry note that, because they are on the front lines, they know when a vehicle is a total loss. Yet, even when they write off a vehicle, an insurance company may send out an adjuster who assesses the vehicle damage at a lower amount, thus making the vehicle eligible for a “salvage” title (meaning it can be resold as re-buildable) instead of a “junking” title (meaning that the vehicle needs to be dismantled).

A total loss database is long overdue, but measures should be taken to ensure its integrity. Similarly, a national lemon buyback database should be initiated, so that consumers who buy used cars can get reliable information about whether or not the car they are considering has been repurchased by the manufacturer as a “lemon.” About half of the states in the country require that manufacturers rebrand lemon buybacks, but some find ways to get around those requirements. And, when lemons are sold at auction, some unscrupulous people take those lemons to more lenient states in order to “wash” the titles. They then resell those lemons to unsuspecting consumers.

The Department of Justice is accepting public comment on the National Motor Vehicle Title Information System through November 21, 2008. You can read more about it, as well as download Federal Register information here.

According to the National Highway Traffic Safety Administration (NHTSA):

Mercedes Benz is recalling 4,564 MY 2001-2006 CL-Class (Model 215), MY 2002-2006 S-Class (Model 220), MY 2003-2007 SL-Class (Model 230), MY 2007-2008 CL-Class (Model 216), and MY 2007 S-Class (Model 221) passenger vehicles equipped with Active Body Control (ABC) acceleration sensors on the front struts. These sensors measure acceleration around the Z-axis of the vehicle and assure an automatic adaptation of the front struts to maintain a relatively level body position. Variations in the soldering process resulted in soldering points on the board of the ABC sensors which may not be within design tolerances. Signals from the affected sensors measuring the acceleration may not be accurately transmitted to the engine control unit. A variation in the transmitted values between affected and unaffected sensors can result in one front strut adjusting to a value indicating body movement while another strut does not adjust presenting the driver with an uneven front suspension. This condition may lead to unexpected body movements at the front axle which can adversely influence the vehicle’s directional stability and could lead to a vehicle crash. Dealers will inspect and replace, if necessary, the front ABC sensors in all potentially affected vehicles. The recall is expected to begin during September 2008. Owners may contact Mercedes-Benz at 1-800-367-6372.