If you are a Michigan resident and you are looking at tips on how to buy a new car, you may want to consider the kinds of protections denied to you by the State of Michigan before you buy.
As consumers in the marketplace, it is our right to choose. One important factor in deciding which goods to buy is the rights we receive as part of the transaction. Here in the state of Michigan, the time has come for consumers to recognize that their interests are best served by buying cars anywhere else than Michigan.
For a long time now, Michigan politics, legislative, regulatory, and judicial efforts have been directed at creating a favorable atmosphere for businesses. As a result of these efforts, Michigan now stands alone in its lack of protections afforded to consumers. Michigan is one of only four states to exempt car dealers and finance companies from consumer protection regulation. Now, the Michigan Court of Appeals has held that buyers of cars have no right to return defective cars to the seller.
Piece by piece, the normal and customary protections which are afforded to consumers in almost every other state have been eroded by the Michigan Courts and Legislature. Given this environment, every person within driving distance of any other state must now ask them self whether it is worthwhile to give up those rights in order to save the trip to another state.
Buying a vehicle is the second largest purchase which most of us will ever make, and we will likely make that purchase every five years. The following is a list of the top five reasons why Michigan consumers should consider buying their next car in Ohio, Indiana, Illinois, or Wisconsin rather than here. These car buying tips may save you the agony of being stuck with a lemon.
If you are curious why the political climate so heavily favors dealers, you may want to take a look at who the car dealers are giving money to. Click here to see the 2006 portion of the dealer’s PAC report. They have clearly spared no expense in obtaining “access” to the political system in ways that ordinary consumers cannot.
That being said, here are the Top Five Reasons to Buy Your Next Car Anywhere Other than Michigan.
1. You can’t take it back.
2. Dealers can lie with impunity.
3. You aren’t really entitled to any explanation of what you are financing.
4. The State of Michigan doesn’t care about your complaint.
5. The manufacturer doesn’t have to give your money back either.
1. You can’t take it back– Davis v. Lafontaine
For years, the consumers of Michigan have justifiably believed that if they bought a defective car, they had the right to return that car (or any defective goods for that matter) to the person who sold them the goods. Think for example of returning chipped dish ware, spoiled food, a television that does not work, or a defective garment. As consumers, we could expect that if we did not receive the substantial benefit of what we had paid for, that we could return the goods for exchange or refund.
No longer!
Under the recently-decided case of Davis v. Lafontaine Motors, the Court of Appeals has held that there is no right of revocation (the right to return defective goods) where a dealer disclaims all warranties. To put this in proper perspective, you should recognize that virtually every contract for sale of goods that you sign will disclaim all warranties, and virtually every other state in the country allows you to return defective goods.
Under the logic of this case, when you give a car dealer $20,000 or even $100,000 for a car, you do not have the right to return the car to the dealer if it’s a lemon or constantly in the shop. Unless you can afford to eat the cost of a defective car, you should consider whether you want to buy a car in a state where you can’t return a defective car when you can obtain that right by taking a short drive to Toledo, Fort Wayne, or Duluth.
2. Dealers can lie with impunity — Smith v. Globe
In 1999 the Michigan Supreme Court changed the legal landscape of consumer protection in Michigan. In that case, the Court broke with a long-standing line of cases which protected consumers from unfair and deceptive practices by overreaching businesses of all kinds. In its place, the Supreme Court created a new rule under which any business which is regulated will be exempted from complying with these rules of fair play. In the most recent cases handed down under this rule, car dealers have been held exempt from complying. The net result: car dealers can now lie with impunity and have confidence that they face not possibility of being sued under the Machine Consumer Protection Act. In the recent case of Mansooir v. Birmingham Imports, the Michigan Court of Appeals confirmed what courts have been hinting at for years since Smith: Car dealers and the banks who contrive financing frauds are immune from the Consumer Protection Act.
If you ever had any confidence that the laws of Michigan would protect you from abuse by one of the most consistently predatory group of businesses in this state (car dealers) think again. In Ohio, Wisconsin, and Illinois, your purchases are far more secure than here in Michigan where there is no statutory protection from car dealer fraud.
3. You have no enforceable right to a true statement of what you are financing
The Michigan Motor Vehicle Sales Finance Act requires car dealers to provide you with a true statement of the financing charges associated with your car purchase. While most other statute provide damages or other remedies when car dealers lie about these charges or completely fail to provide the statement, the Michigan act does not allow victimized consumers to sue for these violations or other misstatements relating to the financing of the vehicle.
The next time you try to purchase a vehicle on credit and you get the feeling that the dealer is trying to cheat you, take your business elsewhere. . . across the state line.
4. The State of Michigan doesn’t care if you have been defrauded, swindled or cheated by a car dealer.
If you believe that the state is working to protect your interests and will swing into action as soon as you file a complaint with the proper regulatory agency, think again.
In a recent deposition, a representative of the State’s Office of Finance and Insurance Services explained the mechanism by which the state enforces auto financing laws:
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18 Q. How many enforcement actions on an annual basis does
19 OFIS bring against car dealers?
20 A. Zero.
21 Q. You will have to excuse me but that’s a kind of
22 surprising number for me. Is that a consistent
23 number? It came very quickly from you.
24 A. It’s a consistent number.
25 Q. How long has that been the case?
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1 A. For at least ten years or more.
Audits dealers for compliance:
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17 Q. Okay. Do you have any idea how often dealerships
18 are audited for their compliance or inspected for
19 compliance with the statute —
20 A. Yes, I do.
21 Q. How often is that?
22 A. Never.
23 Q. Again, a definitive answer, coming rather quickly.
24 Is that, again, one of those budgetary constraints
25 that is there because you don’t have the staff
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1 available to do this?
2 A. Yes; we have never the staff or the funds to support
3 the staff and no support from the industry.
Assigns personnel to auto financing enforcement
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12 A. Yes. In addition, we have in our agency staff who
13 are categorized as examiners or investigators. We
14 have no examiners or investigators assigned to deal
15 with motor vehicle sales finance matters.
16 Q. Am I correct in assuming that if those investigators
17 are not assigned to that specific statutory area
18 then there is nobody there authorized to do it? You
19 have no floating examiners that run from statute to
20 statute or have authority that exceeds one statute?
21 I just want to make sure I understood your answer
22 correctly, that there is really nobody here to do
23 this.
24 A. There is no one assigned to do this. To the extent
25 a serious issue arose, we would deal with that in an
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1 ad hoc — on an ad hoc basis and find some staff
2 person to do an investigation. We have no staff
3 dedicated to that task.
Revokes licenses of bad actors
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3 Q. Has OFIS ever withdrawn or refused to issue a
4 license to a motor vehicle dealer based on
5 violations of the act apart from failing to pay the
6 fees or complete the necessary forms?
7 A. I don’t know.
8 Q. To your knowledge, has there ever been one?
9 A. Not to my knowledge, but I don’t know for certain.
Budgets for future efforts to insure compliance.
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12 A. Yes. In addition, we have in our agency staff who
13 are categorized as examiners or investigators. We
14 have no examiners or investigators assigned to deal
15 with motor vehicle sales finance matters.
16 Q. Am I correct in assuming that if those investigators
17 are not assigned to that specific statutory area
18 then there is nobody there authorized to do it? You
19 have no floating examiners that run from statute to
20 statute or have authority that exceeds one statute?
21 I just want to make sure I understood your answer
22 correctly, that there is really nobody here to do
23 this.
24 A. There is no one assigned to do this. To the extent
25 a serious issue arose, we would deal with that in an
30
1 ad hoc — on an ad hoc basis and find some staff
2 person to do an investigation. We have no staff
3 dedicated to that task.
In short, every other kind of financing activity is enforces through a series of investigators whose salary if funded by fees set by the regulatory agency. In this fashion, the enforcement efforts are self-sustaining based on the fees paid by industry. In the auto finance area, however, the fees are set by statute. In spite of the fact that car dealers were allowed to increase their documentary fees on consumers from $40 to $160 just recently, one might expect that the dealers would return at least a fraction of that money back to the licensing agency to insure enforcement. But, not so. Again, if you wonder why, you may want to take another look at the political donations of the dealers. Click here to see the 2006 portion of the dealer’s PAC report. They have clearly spared no expense in obtaining “access” to the political system in ways that ordinary consumers cannot. to see the report.
5. You can’t give it back to the manufacturer
In holding that consumers have no right to return a vehicle to the dealer where warranties are disclaimed, the Michigan courts relied on the idea that new car buyers would have their remedy against a manufacturer. What the Court of Appeals forgot, was that the State of Michigan does not permit consumers to sue manufacturers for revocation of acceptance.
Under current Michigan law, consumers are not entitled to return defective goods to a manufacturer, even if that manufacturer has given an express written warranty. This law relies on an archaic doctrine called “privity” of contract. Under this doctrine, unless you have entered into a contract with a party, you can’t return goods to that party. This harsh doctrine has been rejected in most states, allowing consumers to enforce promises made by manufacturers and other third parties. Michigan, nonetheless, has adopted this pro-business minority rule.
This state of affairs leaves all Michigan consumers with no effective rights to return new or used goods, irrespecitve of what a salesman tells you, promises made by a manufacturer, or advertisements urging you to rely on worthless products.
Because this position is a minority rule, you can obtain these benefits by simply crossing the border and buying your next car somewhere else.
Conclusions
It is clear in Michigan that you cannot return a defective car to a dealer that has disclaimed its warranties. Likewise, it is clear that you cannot make a manufacture take the car back, even if it has given you warranties. Car dealers may lie to your face to get you to buy a car and you will have no right to sue. And in those cases where you ask the state to help you with a remedy against a car dealer, there will be no help since the car dealers pay for the enforcement and there isn’t enough money to support enforcement in any meaningful way.
In conclusion, Michigan car buyers have no real remedies against car dealers who sell defective cars or lie to their customers.
If you are within driving distance to any other state, you should strongly consider buying your next car anywhere other than Michigan. The dollars you spend here in Michigan will not provide the same value that the same purchase would buy in virtually any other state. To the extent that your vehicle is covered by a warranty or service contract, you will likely be able to obtain the same service close by without any restrictions. On the other hand, if you buy here in Michigan, your purchase will support the political activities of the car dealers that has brought about this state of affairs, and reward them for their anti-consumer activity. Simply put, do you want to give your hard-earned dollars to the car dealers and politicians that think so little of you?
The choice is yours.