Several federal and state agencies regulate auto dealers through California used car dealer laws and dealer laws for new cars. The purpose of these laws is to protect consumers and ensure vehicle safety.
Not surprisingly, dealers do not choose of their own accord to display window stickers, so the federal government and California new- and used car dealer laws make it mandatory. Title 15 of the U.S. Code requires dealers to post the notices. In fact, pursuant to this statute, a dealer who removes the sticker prior to sale can be fined and sent to prison.
The federal window sticker law is an example of government regulation of the auto sales industry. Dealers must comply with California used car dealer laws and with regulations imposed by various government agencies overseeing the sale of new cars. However, of all the mechanisms put in place to protect car buyers, the most effective regulation – the lemon law – was designed to be enforced by consumers themselves. Buyers of defective vehicles covered by warranty can initiate a California lemon law claim to obtain a refund or replacement from the manufacturer.
California Used Car Dealership Laws
It always feels a little risky to buy a used car, and that’s why agencies have created regulations to protect buyers and guide the actions of auto dealers. Following are descriptions and information about the entities that regulate auto dealers in California. As you can see, several different state and federal agencies are involved in establishing and enforcing California laws relating to used cars.
Department of Motor Vehicles (DMV)
When California created the DMV in 1915, there were less than 200,000 registered vehicles in the state. Today there are more than 30 million. As the agency has grown through the years, so too have its responsibilities. In addition to registering vehicles and issuing driver’s licenses, the DMV is now tasked with, among other things, the licensing and regulation of California used car dealers and dealers that sell new cars.
Serving as the licensing authority means that the DMV has direct control over who can and cannot operate a dealership. The application process is quite rigorous. Anyone looking to become a car dealer in California must:
- Pass a criminal background check
- Take educational courses and pass a written test
- Obtain a $50,000 surety bond
- Comply with property use, front office, signage, and display lot requirements
- Undergo an on-sight inspection by a DMV officer.
The DMV also requires the licensing of auto “salespeople.” A salesperson is defined as anyone who sells or leases (or supervises the sale or lease of) vehicles on behalf of a dealer. Like dealers, salespeople must pass a background check to ensure they have not been convicted of crimes or engaged in improper conduct relative to their job duties.
New Motor Vehicle Board (NMVB)
The NMVB is technically part of the DMV, although it is overseen by the California State Transportation Agency (CalSTA). The program serves two primary functions. It works to resolve:
- Disputes between auto manufacturers and franchised dealerships
- Disputes between consumers and manufacturers/dealerships.
With respect to consumer disputes, the NMVB is authorized only to mediate in order to help the parties reach a mutually acceptable resolution. The Board does not have the power to enforce California’s lemon law or to order a manufacturer to comply with the law.
Department of Consumer Affairs (DCA)
In the early years of California statehood, businesses operated with practically no government regulation. Then, in 1876, the legislature passed the Medical Practice Act, bringing regulation to the medical profession. Other industries came under state authority in the following years. In 1970, the DCA was created. The agency now regulates 250 different categories of businesses in California.
The DCA is involved with regulating auto dealerships primarily through its Arbitration Certification Program (ACP). Consumers who believe they may have purchased a lemon vehicle can submit their claim to the ACP. The process is free, an attorney is not required, and participating manufacturers have agreed to abide by the result. But be aware that submitting your lemon law claim to the ACP for arbitration may be harmful to your interests. Here is why:
- The program is funded by the participating auto manufacturers. (although, by law, decision-making is supposed to be insulated from their influence).
- You can hire a lemon law attorney to handle your claim through the regular civil court process at no cost to you. Thus, the fact that arbitration is free and does not require an attorney is of no benefit.
- Any decision rendered against you by the arbitrator can be used as evidence in later civil court proceedings.
If you are considering the ACP as a means of resolving your lemon law claim, we strongly encourage you to schedule a free telephone consultation with one of our attorneys first to discuss potential negative consequences.
Bureau of Automotive Repair (BAR)
The BAR regulates auto repair services in California, including repairs performed by dealerships. Consumers can visit the BAR website to research a particular auto repair dealer, to access manufacturer-specific warranty information, or to file a complaint.
In a recent fiscal year, the BAR investigated 18,948 complaints submitted by repair shop customers in California. When a complaint is determined to have merit, BAR officers will contact the business on behalf of the consumer and attempt to negotiate additional work, a refund, or an adjustment to the bill.
Office of the Attorney General (OAG)
The California OAG dates back to 1850. The current attorney general is Xavier Becerra – a Sacramento native and the first Latino in state history to hold this position. Prior to serving as attorney general, Mr. Becerra represented downtown Los Angeles (California’s 34th congressional district) in the U.S. House of Representatives.
Most of the state agencies discussed previously have authority to enforce civil statutes and impose fines or other penalties on dealerships that do not comply with the law. Only the OAG has the authority to prosecute crime, however, making it perhaps the most feared regulator of all.
Criminal fraud committed by auto dealers may involve conduct such as:
- Concealing information that affects the value of a vehicle
- Knowingly making false statements to induce a purchase
- Advertising a vehicle as new when it is not
- Falsifying factory documents
- Rolling back the mileage on a used car’s odometer
- Perpetrating various scams related to customer financing.
Factory Warranty Holders
Factory warranties exist for new cars and also sometimes extend to newer used cars. When a consumer purchases a used car at retail in California, if there is any time left on the original factory warranty then those warranty protections transfer with the title to the next buyer. This can be a big help if something goes wrong with the vehicle. Several agencies are in place to enforce California used car dealer laws if you run into trouble.
California’s lemon law is also a unique and powerful tool. Owners and lessees of defective vehicles do not need to wait for a government agency to take action. They can assert their warranty rights against manufacturers directly. In a sense, consumers become the regulators, which is often the best way to achieve justice in these cases.
How Do I Know Which Agency To Contact?
That’s a great question. The nice thing is that California has been very progressive in protecting auto buyers; the hard thing is that you have to find your way through a myriad of regulations, legal jargon and paperwork to determine just what protections you’re entitled to. Neale & Fhima can help with that. Rather than spending your evenings and weekends sorting through laws in hopes of finding a remedy for your defective new or used car, let the skilled attorneys at our firm handle the legal end of things for you. We have years of experience protecting consumers’ rights. For a free initial consultation about your situation, contact us at (949) 661-1007.
Do I Have Fewer Rights with a Used Car Than with a New Car?
In some cases yes, but not always. California leads the nation in consumer protection of all kinds, and that is true of used cars as well as new cars. Several agencies govern the enforcement of California used car dealer safety requirments in an effort to protect buyers who are not able to afford, or do not choose to buy, brand new cars. If you have purchased a used car, rest assured that you live in one of the best states for consumers. One of the most powerful tools available to buyers is California’s lemon law, which protects consumers from taking a financial hit if they have been unlucky enough to buy a defective, or “lemon,” vehicle.
Are Used car Dealers Regulated As Stringently As New-Car Dealers?
You bet. California draws a hard line against any dishonorable behavior or misrepresentation by auto dealers. California used car dealer safety requirements some of the most stringent around, and they are highly enforceable. While you have less legal protection in private-party sales between a buyer and seller, you are entitled to significant protections when you buy a vehicle at retail. Don’t shy away from purchasing a used car – if that is the best choice for you and your family – because you worry about future trouble with a motor or brakes. California used car dealer laws have been put in place to protect you and to regulate vehicle safety.
Is It Complicated to File a Legal Claim?
In some ways it’s complicated, and it certainly is time consuming for the average consumer. But don’t let that deter you if you have been treated inappropriately by a car dealer or if you believe you have a lemon law claim. An experienced attorney can manage your claim for you at virtually no expense. Under California lemon law, attorneys collect their fees from vehicle manufacturers if they win their case. If a case is unsuccessful, then fees are waived and you owe nothing.
How Do I Find the Best Attorney for Me?
Good question. Take some time to look over a law firm’s web site, read the attorneys’ bios and find out what other clients have to say about their experience with the law firm. All lawyers are not created equal, and you don’t want to just pick any name off the internet or a billboard. If you have questions, call a firm and have a conversation. How were you treated? Did they really listen? How comfortable did you feel? By taking these steps, you’re sure to find an attorney that is a good fit for you.