Why dealers must remain legally diligent

Donna Harris covers automotive retailing for Automotive News

Peter Welch, president of the California Motor Car Dealers Association, says plaintiffs’ attorney Hal Rosner has about every car dealer in the state scared silly.

Rosner sued San Diego dealership Pearson Ford, alleging the store repeatedly backdated finance contracts. Court documents say the practice resulted in interest overcharges of about $50 per transaction. A TV station and a few auto publications inaccurately reported that a judge ordered the dealership to buy back 1,500 vehicles.

The case has bounced from the trial court to the state appeals court and back to the trial court, with no final ruling, and it could be settled.

But the Pearson Ford case is an example of how Rosner is targeting legal missteps that can cost dealers millions of dollars in legal awards.

Another one of his targets is California’s requirement to itemize the license fees and registration fees on sales contracts. Many dealership computer systems were programmed to combine the fees on the same line, so many stores are at risk, Welch says.

Finance managers have to be careful. Even small infractions, if repeated, can run up millions of dollars in legal bills.

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