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Kentucky Sues J.D. Byrider

December 17, 2004
Kentucky Attorney General Greg Stumbo has filed a consumer protection lawsuit against national used car dealership franchiser, J.D. Byrider, Inc. and the Louisville J.D. Byrider franchise owned by James Maguire. The state says the car dealership engaged in "multiple" violations of Kentucky's consumer protection laws.

The lawsuit alleges that the local franchise engaged in multiple violations of the Kentucky Consumer Protection Act, as well as the federal Magnusson-Moss Warranty Act and Truth in Lending Act which harmed hundreds of consumers. The allegations include the following violations of law:

• failing to repair or correct vehicle defects under an implied warranty of merchantability as required by law;
ѽ making unfair, false, misleading and deceptive statements that it had disclaimed all warranties when in fact it was prohibited from disclaiming such warranties as a matter of law;
• refusing to recognize customers' right to revoke acceptance of their contract as required by law; • making false, misleading and deceptive statements that vehicles were "certified" or "inspected" when such was not the case;
• charging consumers unlawful deductibles for warranty repair work;
• requiring consumers to purchase credit life insurance and service contracts and failing to disclose these items as a cost of credit in violation of the federal Truth in Lending Act and state law; and
• offering unlawful inducements to consumers in the form of referral sales "commissions" in violation of Kentucky statutory law.

The complaint also alleges that the business model of the franchiser, utilized by the local franchise, unfairly makes consumers vulnerable to abusive sales tactics and is unlawful. The complaint charges the business model intentionally targets credit-vulnerable consumers, discourages consumers from choosing cars to purchase, hides or fails to disclose the purchase price, requires detailed financial information and a credit check before disclosing price, sells the "payment" to the consumer, and keeps consumers at the site of the local franchise for hours resulting in unfair contracts for consumers.

The complaint seeks restitution on behalf of consumers including those who were required to pay deductibles for warranty repairs that should have been performed at no cost due to the implied warranty of merchantability and for consumers who attempted to revoke acceptance of a substantially defective vehicle whose attempts were wrongfully denied by the defendants. The complaint alleges that the violations were willful and seeks civil penalties of $2,000 per violation.

The Attorney General's Office has been engaged in negotiations with the local franchise which has voluntarily made some positive changes in its operations addressing the practices noted in the complaint. The attorney general said he hopes to continue to pursue a resolution of all outstanding issues including consumer restitution during the course of the litigation.

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