Proud to report that our work on behalf of victims of identity theft and auto fraud continue.
Kakalec & Schlanger, LLP Files Fair Credit Reporting Act Cases Against Consumer Reporting Agencies, Banks, And Auto Dealership In Connection With Identity Theft Scam
Kakalec & Schlanger, LLP recently filed suit against Equifax Information Services, Inc., Experian Information Solutions, Inc., American Honda Finance Corporation, Bank of America, First National Bank of Omaha, Municipal Credit Union, Valley National Bank, Manhattan Jeep Chrysler Dodge, Inc. and others in connection with a series of auto financing related identity thefts. The suits are brought on behalf of two New York consumers – a police officer and a retired detective – who allege that they suffered damage to their credit when credit bureaus, auto finance companies and auto dealerships were notified that the consumers’ identities had been stolen and their signatures forged on dozens of auto finance agreements and failed to respond properly. The suits, Regan v. Equifax Information Services, Inc., et al. (17-cv-06166) and Tracey III v. Equifax Information Services, Inc., et al. (17-cv-06157), allege claims under the Fair Credit Reporting Act and state law, and are currently pending in U.S. District Court for the Southern District of New York.
These two related cases are examples of the firm’s recent advocacy on behalf of victims of identity theft.
Kakalec & Schlanger, LLP Files Suit Against Lee’s Motors, Inc. And Toyota Motor Credit Corporation Alleging Auto Fraud
Kakalec & Schlanger, LLP recently filed suit in U.S. District Court, Eastern District of New York against Lee’s Motors, Inc. and Toyota Motor Credit Corporation on behalf of two individual consumers, a father and son. The suit, brought under the Truth in Lending Act, the New York Motor Vehicle Retail Instalment Sales Act, and New York General Business Law, alleges that the auto dealership incorrectly listed the son as borrower on the father’s loan documentation, failed to provide required loan disclosures, and refused to fix the loan documentation despite repeated requests, causing each of the plaintiff’s real harm.
The suit, Islam, et al. v. Lee’s Motors, Inc., et al., 1:17-cv-03955, is pending in U.S. District Court, E.D.N.Y., and is one of several our firm has or is in the process of filing that relate to the practice of having consumers provide “digital signatures” which are then affixed to documents that are not properly disclosed to the consumer.
Kakalec & Schlanger, LLP Files Suit Against Carsbuck, Inc. and Westlake Financial Services, Deceptive Auto Financing Practices
Kakalec & Schlanger, LLP recently filed suit in U.S. District Court, Eastern District of New York, against auto dealer Carsbuck, Inc. and Westlake Financial Services on behalf of consumer Carlos Guerrero-Roa. The suit, brought under the Truth In Lending Act, the Equal Credit Opportunity Act, New York’s Motor Vehicle Retail Installment Sales Act and New York’s deceptive practices and usury statutes, alleges that the dealership refused to accept cash for the vehicle and then engaged in a variety of misconduct in order to inflate the price of the vehicle and the cost of financing. The lawsuit addresses the increasingly frequent dealership practice of having consumers provide their signature via use of a digital “pad”, and alleges that despite instructing the consumer to provide his signature in this manner, the dealership failed to provide the consumer with the relevant loan documents, including statutorily required disclosures regarding the cost of borrowing.
Although auto loan deficiencies are not the most common form of debt we see in our office, we do regularly see (and represent) folks who are being sued (after their vehicles have been repossessed or “voluntarily returned”) for alleged deficiencies between their outstanding balance and the price at which the vehicle was purportedly sold for.
Although many of the defenses in these types of action are common to collection cases more generally (assignment, statute of limitations, service of process, etc.), others are specific to this particular type of debt.
Over the next couple of months, I will be reviewing various substantive defenses specific to vehicle repossession deficiency cases. Many of these defenses are less well-known but nonetheless powerful and worth considering. Today, we start with defenses rooted in Article 9 of New York’s Uniform Commercial Code
The New York Uniform Commercial Code Provides Significant Protections. For example,
- NYUCC 9-614 provides for detailed notice prior to sale of a consumer’s vehicle. These notice requirements are in addition to the notice required in commercial cases, and include, e.g. a description of any liability for a deficiency, a telephone number to call in order to redeem the collateral and a telephone number or mailing address to obtain more details regarding the disposition of the vehicle; the time and place of any public sale, etc.
- NYUCC 9-615 requires a detailed written explanation of any deficiency to be sent to the consumer following the sale of the vehicle.
- NYUCC 9-610 provides that every aspect of the sale of the collateral must be commercially reasonable, including the method, manner, time, place and other terms of the sale.
- NYUCC 9-623 provides the debtor with a right to redeem the collateral prior its disposition.
All of this would be interesting but academic were it not for powerful but underutilized remedies with regard to consumer UCC deficiency cases:
Some Courts, including those in New York’s Second Department, have held that there is an absolute bar against recovery of a deficiency where the repossessing party has failed to meet its Article 9 UCC obligations in a consumer transaction. Most other Courts have held that non-compliance in consumer and non-consumer cases triggers a rebuttable presumption against recovery of the deficiency. See Coxall v. Clover Commer. Corp., 781 N.Y.S.2d 567, 574, 4 Misc. 3d 654, 661, 2004 N.Y. Misc. LEXIS 714, *15-16 (N.Y. Civ. Ct. 2004) (collecting cases)
Statutory damages, fees and costs may also be available. For example, NYUCC 9-625 entitles a consumer to statutory damages for non-compliance to the interest on the loan plus 10 percent of the principal amount of the loan, as well as actual damages.
Bottom line: If the debt the consumer is being sued on stems from an auto loan or other secured transaction, be sure to go over the facts, including all correspondence, carefully for potential UCC related defenses and counterclaims. A repo notice violation or other UCC non-compliance can completely change the dynamics of the case.
I am excited to report that I will be presenting a Lawline CLE this coming February titled “Using the Truth in Lending Act to Challenge Predatory Auto Lending”. The webinar will be presented live on February 8, 2016 at 2:30 PM EST, and should be available as part of Lawline’s catalog after that.
For more information about the presentation, and to sign up, click here.