The new trend in handling vehicle litigation cases is not for the consumer's lawyer to focus on what the consumer alleges his problem is with the vehicle transaction, but instead to go for what has become known as the “quick kill.”

Virtually all states have enacted laws that regulate the conduct of car dealerships engaging in consumer transactions.

These statutes are commonly referred to as “UDAP” statutes because they are designed to protect consumers against unfair and deceptive acts and practices. The laws often present special challenges in subprime and buy here-pay here transactions when financing issues also exist with the sale.

While state UDAP statutes vary, they typically set forth non-exclusive lists of specific acts that constitute unfair and deceptive sales practices. Moreover, they also contain “administrative rules” outlining additional unfair, deceptive or unconscionable conduct that constitutes a violation of the statute.

Many statutes also have a mechanism whereby local court decisions are used to define a UDAP violation. The distinction between a statutory violation and a violation of a rule or case decision is important because the remedies available to a consumer can vary depending upon the violation.

When a statutory violation occurs and is proven, most UDAP statutes allow a consumer to either recover actual or consequential damages or rescind the transaction. In cases involving a violation of a rule or case decision, however, a consumer is also usually entitled to damages and often can recover attorney's fees.

While many dealers often have the impression that UDAP statutes only protect the consumer, a closer examination of the typical UDAP statute will reveal language which, when utilized properly by a dealer, can provide a number of valuable defenses to a consumer action. One particular defense that merits special attention is the bona fide error defense.

The bona fide error defense is applicable when a dealer can show that it maintains procedures reasonably adopted to avoid an error. Being able to establish the bona fide error defense is important because the consumer's remedies are typically limited to actual damages or rescission of the transaction.

The consumer's right to recover statutory damages and attorneys' fees is eliminated. The elimination of these two components frequently takes the consumer's lawyer, who is no longer able to recover his fees, out of the equation and puts the supplier in the more favorable position of dealing directly with the consumer.

An added bonus of maintaining dealership policies and procedures necessary to raise the bona fide error defense is that the dealership also has the ability to more easily ward off class action lawsuits wherein the claim is for negligent and/or fraudulent practices. These lawsuits have become increasingly more popular with plaintiffs' attorneys.

To raise a bona fide error defense the dealership must maintain procedures reasonably designed to prevent errors from occurring. The procedures should involve two components: sales practices and forms compliance. Many dealerships take the time to develop sales and training procedures, and a few even put them in writing. Although the development of sales training procedures is the harder of the two components, this is not where the dealership encounters the greatest legal exposure. Ironically, the area that creates the biggest legal challenge for most dealerships is their forms.

Forms compliance is often overlooked or it is delegated to third parties who are not knowledgeable about the motor vehicle industry or about the vast number of frequently changing laws and regulations with which dealers are required to comply.

Over the last few years alone, we have seen amendments to various federal and state consumer protection statutes. In addition, hundreds of case decisions addressing a wide range of issues from payment packing to various topics that directly affect a vehicle sale have been rendered in motor vehicle litigation. As a result, almost every form in the average dealership has been impacted, either in the form's content or how it is completed.

The new trend in handling vehicle litigation cases is not for the consumer's lawyer to focus on what the consumer alleges his problem is with the vehicle transaction, but instead to go for what has become known as the “quick kill.”

The consumer's lawyer carefully scrutinizes the dealership's paperwork looking for violations of law which might provide the basis to successfully rescind the transaction. Often, when multiple violations exist, the case is turned into a class action lawsuit and the dealership finds itself in a very expensive and time consuming no-win situation.

While “bullet proofing” one's forms to eliminate all mistakes in their use may not be possible, a periodic forms review can help protect the dealership from consumer litigation, and help ensure that the dealership can establish an effective bona fide error defense should litigation occur. Remember, if you don't review your forms, someone else will!

Keith E. Whann is an attorney with Whann & Associates.