A bank is not liable for the actions of a dealership accused of 'price-bumping,' or secretly hiking the price after the price was agreed on, according to a ruling in U.S. District Court in Lynchburg, Va.
The Virginia dealership, Alta-vista Motors Inc., is charged with fraud and consumer protection violations. First National Bank of Altavista, which funded the loan, faced similar charges.
According to the complaint, William and Shelby Crews verbally agreed to buy a 1998 Dodge Dakota truck from Altavista Motors in 1998, for $25,290. When they later reviewed the buyer's order, however, the price had increased to $27,899. They still went ahead with the transaction.
On the finance contract, the 'amount financed' was higher still, at $28,727. Meanwhile, the dealership also promised a $500 'cheerful customer satisfaction rebate,' according to the suit.
But when the buyers went to pick up the rebate check five days later, they allegedly were told to sign a new contract, at 12 percent interest, in place of 9.9 percent. That increased the finance charges, even though the amount financed was reduced and the value of their trade-in, a 1996 Ford Ranger, was increased.
'They agreed to pay the (original agreed) price and then got bumped three times,' said the Crews' lawyer, Elmer Woodard of Danville.
The dealership's lawyer, Bill Bayliss of Richmond, said the terms changed because the transaction was subject to finance approval. He said the dealership had to guarantee the loan, to get it approved.
'It was all more than adequately disclosed,' Bayliss said.
Judge Norman Moon ruled that the bank was not liable. 'Independently, punitive damages against the bank would be inappropriate as there are no allegations of wrongdoing on behalf of the bank,' the judge said in a written ruling last month.
The bank's lawyer, Leighton Houck of Lynchburg, said, 'They (the plaintiffs) were not claiming the bank did anything itself against the consumer.'
The ruling did not address the claims against Altavista Motors, which sells Chrysler, Dodge, Plymouth, Ford and Mercury brands.
The suit also accuses the dealership of violating the federal Truth in Lending Act and asks for punitive and compensatory damages, including twice the finance charge.
The dealership has denied any violations. The suit against it is pending.