OVERCOMING LANGUAGE BARRIERS AND OTHER
CHALLENGES TO A MOTOR VEHICLE SALE
By: Keith E. Whann
As the population in the United States becomes more diverse, there
is increasing debate over whether motor vehicle dealerships should
take additional measures to accommodate those individuals that
struggle with the English Language. While few laws mandate the
use of a language other than English, dealerships are responsible
for making sure that consumers have an understanding of the transaction.
This responsibility extends beyond the issue of language barriers.
National heritage, age, and mental and physical disabilities can
all have an impact on how a dealership conducts a transaction.
The following are answers to some of the most frequently asked
questions from dealerships throughout the Country on these issues:
Q: Which laws address a dealership’s obligation to ensure that a
consumer understands the transaction?
A: There is a host of federal and state laws that affect a motor
vehicle transaction. The key issue is whether the consumer has the
ability to understand the transaction.
Q: Is there one law that impacts this area more than others?
A: State unfair and deceptive acts and practices (UDAP) statutes
deal most directly with these issues. Virtually all states have enacted
statutes that regulate the conduct of suppliers who engage in consumer
transactions and protect consumers against deceptive business acts
and practices. While they vary somewhat from state to state, most
contain a provision that prohibits a dealership from knowingly taking
advantage of the inability of a consumer to protect his interests
because of physical or mental infirmities, ignorance, illiteracy,
or inability to understand the language of an agreement.
Q: Can you give me an example of how national heritage can impact
a transaction?
A: When entering into a transaction with an individual that resides
on an Indian Reservation, tribal law may preempt state law.
Q: Are there any laws that specifically require the dealership to
conduct the transaction or provide paperwork written in another language?
A: The FTC’s Used Car Rule requires dealerships to provide a Spanish-language
Buyers Guide to consumers who conduct a transaction for the purchase
of a used motor vehicle in Spanish.
Q: A number of lender/dealer agreements we have seen require us
to warrant that the buyer has the “legal capacity to contract”. What
does this mean?
A: Generally, this means that you must determine whether the consumer
is of legal age to buy a vehicle, which is a state law issue. A dealership
can sell a vehicle to someone that has not reached legal age but,
since a car is not a “necessity” (i.e. food, clothing or shelter),
a minor can bring the car back and rescind the transaction. This
issue may also be relevant when selling vehicles to elderly persons
because an individual with power of attorney may have to sign contracts
on their behalf in order to protect their interests. The dealership
would need to obtain copies of the power of attorney to know who
is empowered to do what.
Q: Are there any other issues that we should be looking for in the
lender/dealer agreements?
A: The entire list of business and legal issues that dealerships
should be looking for in the lender/dealer agreements is too long
to address here. One representation and warranty that immediately
comes to mind is that the dealership’s paperwork and sales procedures
comply with the law. Some agreements also require the dealer to warrant
that the documents provided to the consumer will be written in English.
Q: Language is often a barrier to effective communication with a
consumer, how can we overcome this problem?
A: There are several policies that the dealership may consider implementing.
If it is located in an area where there is a large population of
people that speak a language other than English, the dealership may
want to employ an individual who is bi-lingual. As an alternative,
the dealership can suggest that the consumer bring a family member
or friend that speaks English to assist him with the transaction.
Q: If a significant portion of a dealership’s business is conducted
in another language, can the forms be translated into that language?
A: The dealership may translate the forms into another language,
provided that the translation is accurate and the forms are made
available in English upon the consumer’s request. For example, Regulation
Z states that all required disclosures must be made in the English
language, except in the Commonwealth of Puerto Rico, where creditors
may make disclosures in Spanish. If Spanish disclosures are made,
English disclosures must be provided on the consumer’s request, either
in substitution for or in addition to the Spanish disclosures.
Q: What other options do we have?
A: You could have the consumer sign a “delivery checklist” or “we
owe” form written in the consumer’s native language. The consumer
should acknowledge that the documents he signed are written in English,
but that he had the opportunity to ask questions and have the documents
explained to him and that he fully understood the transaction and
the implications of signing the documents.
Q: I have heard of cases where consumers were able to rescind the
transaction or get multiple damages and attorney fees because the
dealership violated a state UDAP statute. Is that true?
A: Yes, most state UDAP statutes allow a successful consumer to
either recover actual or consequential damages or rescind the transaction.
A successful consumer is also usually entitled to some form of minimum
and/or treble damages and often can recover attorney's fees. The
typical UDAP statute also contains language that can provide valuable
defenses to a consumer action.
Q: What type of defenses and how do they help dealers?
A: One defense that merits special attention is the bona fide error
defense. The importance of being able to establish the bona fide
error defense is that the consumer's remedies are typically limited
to actual damages or rescission of the transaction. The consumer's
right to recover statutory damages and/or attorneys' fees is eliminated.
Q: How does a dealership have to do to establish a bona fide error
defense?
A: The dealership must be able to show that it maintains procedures
reasonably designed to avoid errors from occurring (with respect
to both sales practices and forms compliance) and, notwithstanding
those procedures, an error occurs. The dealership should review its
forms on a regular basis to make sure they comply with applicable
laws.
Q: Other than language issues what other things should we look for
in our forms?
A: Not only should the dealership’s forms include the disclosures
required by federal and state law, they should be clear and conspicuous
and written in language that can be easily understood by the average
consumer. Using different font sizes, styles and colors helps to
accomplish this goal. Dealerships that use photocopies of forms should
be conscious of the fact that copying a document repeatedly can result
in text being cut off and unreadable. Copying forms used by other
dealerships can also be a problem if they do not work in conjunction
with the other forms utilized by the dealership and its business
practices. Consumer lawyers carefully scrutinize dealership paperwork
looking for a violation (or violations) of law that might provide
the basis to successfully rescind the transaction when a buyer has
remorse and there is no other legal reason to undo the deal.
While selling a motor vehicle seems like it should be a relatively
simple and straightforward thing, in reality, it often turns out
to be anything but that. The motor vehicle industry is heavily regulated
and, with all of the issues that have been discussed in this article
to consider, the sales process can become quite complicated. If you
have not had the opportunity to review your dealership paperwork
and related procedures in a while, this would seem to be the right
time to start the process. |
