Can a dealership claim a deposit is non-refundable if it's not in writing?

May 27, 2015 13:28 by Consumer Ed

Dear Consumer Ed:

Can a dealership claim a deposit is non-refundable if there was no written agreement and those terms are not explicitly written on their website?

Consumer Ed says: 

Generally, verbal contracts for transactions that are more than $500 are voidable (such agreements are usually required to be in writing).  However, if there were any circumstances that would make your oral agreement enforceable, the terms of such an agreement would be found in your discussion with the dealer.  You don’t indicate how you came to pay the dealer this deposit.  Even though there was no written agreement, a deposit can be understood as either money paid in anticipation of delivery of the vehicle or, under some circumstances, money paid to the dealer for its services rendered in finding you a car.  The dealer is likely taking the latter stance. However, if the terms under which you paid the deposit did not specify whether it was a deposit or a charge for the dealer’s services, the likely presumption is that you were paying the funds in anticipation of the sale going through; that is, as a deposit.  If you also agreed that the funds would be returned in the event the sale fell through, then the dealer should be required to refund the money.

Given this information, if you believe that the dealer in this case has no right to keep your deposit, you have several options.  First, you should write a letter to the dealership clearly explaining the situation and requesting a full refund of your money.  You could also submit a complaint to the Better Business Bureau (www.bbb.org) to receive help obtaining a resolution and to warn other consumers about the dealership’s practice.  You can also submit a detailed complaint to the Governor’s Office of Consumer Protection (www.consumer.ga.gov), which is responsible for investigating violations of the Fair Business Practices Act.  If the dealer continues to refuse to refund your money, you may also want to speak with an attorney regarding possible actions you could take.  The State Bar of Georgia (www.gabar.org) provides information to help you locate an attorney in your area that can assist you.

To avoid such pitfalls in the future, before you start shopping for a car, make sure you select a reputable auto dealer.  You can research dealerships through the Better Business Bureau’s website, www.bbb.org, to help you avoid doing business with companies that use these tactics.  When purchasing a vehicle,do not take possession of it until your financing has final approval from the lender.  Rather than obtaining financing at the dealership, consider applying for financing through your bank or credit union before you start shopping.  This will allow you to know in advance that you are approved for the loan and it will make negotiations much easier.  You should also require that the dealer put everything in writing.  If you are going to place a deposit with a dealer, you should obtain or yourself create a written document stating the purpose of the money and under what circumstances you are entitled to a partial or full refund.

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Can a car dealer or creditor tell my employer I am late on a lease payment?

April 16, 2015 14:12 by Consumer Ed

Dear Consumer Ed: 

I have been leasing a new car for the past seven months.  I was late on a payment for the first time, and someone called my office and told two of my managers that I owe them money. That is absolutely none of my managers’ business.  Not only was that bad business, but was it also illegal?

Consumer Ed says: 

While calling your employer and divulging your private financial information is certainly a distasteful tactic, it may not actually be illegal.  To answer that question, a little more information is needed.  First, it is important to find out who actually called your office.  If it was a third-party debt collector and not your actual creditor, you are likely protected by the Fair Debt Collections Practices Act (“FDCPA”), which prohibits certain kinds of contact, including calls to your employer or other third parties for any reason except to verify your employment and/or your location.  In that case, you should notify the debt collector in writing that you do not wish for the collector to continue contacting you or your employer without your express permission.  If the communications continue, go to www.consumer.ftc.gov and file a complaint with the Federal Trade Commission.

If, however, the phone call came from your actual creditor, and not a third-party debt collector, then you probably would not be protected under the FDCPA.  However, there may be other protections available. For example, if your actual creditor is a bank or other financial institution, there may be other federal protections that would prohibit it from disclosing this information, provided there’s no language in your sales contract permitting it to do so. You should take a look at your loan documents to determine what the agreement says about the creditor’s ability to disclose information, and whether there is any kind of grace period before your account gets sent to collections.  There could be statements allowing or restricting communication to third parties; most such agreements will also specify whether you’re entitled to written notice before your account goes into collections.  If the language of the document permits it, or if your employers are listed on the agreement as either credit references or as sources to provide confirmation about your current employee status, the creditor may have some leeway to call them to inquire about you.


On the other hand, if there was language in the sales agreement that set a specified grace period and the creditor ignored it, and/or if there was nothing in the agreement that implicitly permitted contact with your employer, then the actions could still be considered a violation of Georgia’s Fair Business Practices Act.  To file a complaint, you can contact the Governor’s Office of Consumer Protection at 404-651-8600, or visit our website at www.consumer.ga.gov.

You can also report his behavior to the Better Business Bureau.  Go to www.bbb.org to find your local Better Business Bureau chapter, and follow the prompts if you decide to file a complaint. This will inform other potential customers of these bad business practices and hopefully help end any abusive behavior.

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Car sales price is higher than advertised price

March 31, 2015 14:57 by Consumer Ed

Dear Consumer Ed:

I responded to an ad for a car on a website listed for $24,799. When I spoke to a salesman, he said the price is actually more than $1800 higher. He explained this difference was because the advertised price includes discounts and rebates that I did not qualify for. I asked him to show me where this was stated on the website, and he was unable to do so. What are my options?  

Consumer Ed says: 

From what you’ve said, it sounds like the dealer is claiming the advertised price factored in a special incentive program that wasn’t disclosed in the ad. A special incentive program is one involving rebates, discounts, and/or financing that does not apply to all of the buying public. Auto dealers are permitted to offer such programs; however, because only a small percentage of the buying public usually qualifies, the dealer may not factor in these types of discounts in the advertised price. Special incentive program discounts may be included in an advertisement, but must be listed as a separate, additional discount available only to those who qualify.  Information about the specific qualifications required to receive the discount must also be included clearly and conspicuously in the advertisement.  The advertised price should be the price available to all of the buying public.

Because the dealer incorporated special incentives and discounts in the pricing, the Governor’s Office of Consumer Protection considers this to be a violation of the Fair Business Practices Act (“FBPA”).

If you have a copy of the advertisement, you could consider contacting the dealer again and asking that the original advertised price for the vehicle be honored.   You can also submit a complaint to the Governor’s Office of Consumer Protection at www.consumer.ga.gov, or by calling 404-651-8600.

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