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'Certified pre-owned' programs defraud car buyers, suits say.

"Certified pre-owned" (CPO) vehicles are marketed as more reliable than other used cars, but there may be little difference between them except price, say lawyers and consumer groups. Car dealerships that sell CPO vehicles at a premium are misleading and defrauding consumers, recent lawsuits allege.

In one case against Ford Motor Co. and a California dealership, "We deposed the technician that completed the certified pre-owned inspection, and he testified that the inspection he performs is the same as he does on any used vehicle," said John Gomez, a San Diego lawyer. In that case, a 17-year-old California girl died in an accident in a CPO car that her family later learned was sold with frame damage and a history of brake and steering problems that the dealership did not disclose. They sued the other driver, Ford, and the dealer, and the parties settled in May. (Banaei v. Ford Motor Co., No. GIC811883 (Cal., San Diego County Super. Ct. filed June 3, 2003).)

Gomez also represents William Ray Kearns, who filed suit in June against Ford and another California dealership, Claremont Ford. He alleges unfair and deceptive business practices and violations of consumer protection laws. The case seeks class action status. (Kearns v. Ford Motor Co., No. BC335493 (Cal., Los Angeles County Super. C t. filed June 22, 2005).)

Kearns seeks "an order enjoining defendants from advertising Ford CPO vehicles as having gone through a particular, rigorous inspection process in an unfair, fraudulent, and deceptive manner" and to recoup the price he paid for the CPO label.

Ford's marketing campaign says, "If we don't certify it, it's just used." The automaker's Web site says its CPO program "takes the risk out of buying a previously owned vehicle. Driving a Ford CPO vehicle means driving with knowledge and confidence that the vehicle you purchased has been thoroughly inspected and comes with manufacturer-backed limited warranty coverage."

CPO Ford buyers receive certificates signed by Steve Lyons, president of Ford Division, assuring them that the vehicle passed "a series of rigorous inspections to verify that it meets or exceeds all program standards and quality commitments."

Gomez said such practices lead consumers to believe the manufacturer is more involved in the process than it really is. "You think the factory is involved in this particular car, but that's just not the case," he said.

To qualify to perform CPO inspections, technicians need only watch a video, review an instruction book, and take a 20-question test, according to Kearns's complaint. More than 1.3 million CPO vehicles were sold in the United States in 2004, and Ford receives about $400 per vehicle sold through the program, although it is not involved in the certification or sale, the complaint says.

"Hopefully lawsuits like this one will force manufacturers to be more honest and complete in their disclosures and therefore allow consumers to determine exactly what they're paying for," Gomez said.

"CPO programs tout how the vehicles go through a rigorous inspection," said Mona Wallace, a Salisbury, North Carolina lawyer. "However, if that inspection is no more rigorous than what a non-CPO used car received, we are concerned about whether the consumer is being taken advantage of." Wallace represents James Wright, who recently filed suit against a North Carolina Cadillac dealership. (Wright v. Arngar, Inc., No. 05-CVS-13406 (N.C., Mecklenburg County Super. Ct. filed July 21, 2005).)

Wright alleges that the dealership sold him a CPO vehicle and told him it was a "local car," but he later learned it had been in an accident in New York. Wright had become dissatisfied with the car and took it to a different dealership for a trade-in estimate. That dealership ran a Carfax report that revealed the crash, and the dealership told Wright that because of the accident, the car was worth almost $26,000 less than what he paid for it. Another appraisal revealed extensive body repairs.

"It was unfair and deceptive for the dealer to tout the vehicle as certified pre-owned and as having met a 100-point rigorous inspection when the dealer did not even make the presale disclosure to the consumer equivalent to what a Carfax report contains," Wright's complaint says. It adds that a consumer shouldn't have to get his or her own Carfax report to verify the dealer's representations.

Another suit, filed last year against DaimlerChrysler AG and a dealership in California, is also seeking class action status. It alleges the dealership is selling used rental cars through a CPO program without informing buyers, despite the fact that rental cars typically have lower resale values than other used cars.

Criteria for CPO programs vary from one manufacturer to another, said Norma Garcia, a senior attorney with Consumers Union. "Consumers really aren't aware that there is no particular standard. They're just sort of taking someone's word for it that this is a better used car because it's certified," Garcia said.

On July 27, the Car Buyer's Bill of Rights was signed into law in California, establishing some standards for certified used cars. "It's a good starting place," Garcia noted.

"The real problem is that there's a lack of clear understanding of what you're actually paying extra for, so any standards that would require dealers and manufacturers to make that very clear would be helpful," Gomez said.
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Title Annotation:California
Author:Burtka, Allison Torres
Date:Sep 1, 2005
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