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Empire Justice Memo: Protect Consumers from Fraudulent Auto Financing

June 11, 2015


A.7930-a (Dinowitz)/S.5506-a (Savino)

Empire Justice Center strongly supports and urges the swift passage of this legislation.  A.7930-a/S.5506-a would amend section 302 of the personal property law, and will have a considerable positive effect on New York State consumers who are defrauded by auto dealers when obtaining automobile financing.

Currently, consumers have limited legal recourse when an auto dealer offers a loan based on falsified financial information, and is subsequently assigned to a third party.  To sell more cars, some unscrupulous car dealers covertly falsify auto loan applications by providing inaccurate and inflated financial information about consumers.  Meanwhile, the consumer remains unaware of this falsification.  After the consumer signs the loan forms, it’s common practice for car dealers to immediately or contemporaneously sell/assign the note to a third party.  This practice frequently leaves consumers with a loan and payment that is both unaffordable and without a remedy.  Under the current law, if a consumer challenges the legality of the fraudulent auto loan held by an assignee, any recovery from an assignee is limited to the amount the consumer owes to the assignee.  The costs and attorney’s fees associated with the consumer’s suit are not statutorily recoverable, and are unfairly borne by the consumer.

This amendment expands the scope of liability by permitting the recovery of attorney’s fees to prevailing consumer plaintiffs in cases where they prevail against assignees in automobile financing transactions.  This provision will empower consumers to enforce their rights under the statute by acting as private attorney generals, thereby allowing scarce government enforcement resources to be directed towards other priority areas.  The recovery of attorney’s fees is an essential component to increasing access to justice for all New Yorkers, and will permit aggrieved low income consumers to retain private attorneys to represent them without cost in meritorious cases.  In this manner, the door to the courthouse will be open and hold deceitful car dealerships and their assignees accountable for the fraudulent financing provided. In addition, requiring assignees to pay prevailing consumers’ attorney’s fees will help further deter fraudulent automobile financing practices.  Finally, these important legislative changes will serve as an incentive for fair, accurate automobile financing and permit legitimate automobile dealers to compete fairly in the marketplace.

Empire Justice Center strongly A.7930-a/S.5506-a, and urges its swift passage.

For more information, please contact:

Maggie Robb

Empire Justice Center
Telesca Center for Justice
One West Main Street, Suite 200
Rochester, NY  14614

(585) 454-4060
(585) 454-2518