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What California Car Dealers Need to Know About the Consumer Legal Remedies Act (“CLRA”)

California’s Consumer Legal Remedies Act (“CLRA”) has protected consumers since 1970, especially consumers who may not be especially savvy. You may know the law better by its colloquial name—the Lemon Law—and you may also know that it is used most often against used car dealers.

Written Notice & Attorney’s Fees

To file a successful claim under the CLRA, the consumer is required to give the dealer written notice of the violation the consumer alleges occurred. The demand letter must be in writing and sent by certified or registered mail, with return receipt requested, to the dealer’s principal place of business or to the place where the transaction occurred.

The demand letter must assert that the dealer committed one of the 24 unlawful business practices described in the CLRA. After the letter is received, the dealer has 30 days to remedy the situation before any further action can be taken by the consumer. Under the CLRA, if the dealer offers to provide “an appropriate correction, repair, replacement, or other remedy” within 30 days, the consumer is not able to seek monetary damages under the CLRA. It is important to note that this does not prevent the consumer from seeking an injunction (i.e. nonmonetary relief) against the auto dealer and for that reason, it is strongly recommended that car dealers retain the services of an experienced attorney to guide them through the process of responding to a CLRA demand letter.

If the auto dealer does not offer a reasonable correction offer, and if the consumer is ultimately successful with the claim, the court is required to award attorney’s fees and costs to the consumer.

How it’s Often Used

Consumers who make allegations against car dealers frequently do so by claiming that the dealer:

  • Sold a vehicle at higher than the advertised prices
  • Sold a rental car without disclosing that the car had been a rental
  • Sold an accident-damaged vehicle without informing them
  • Sold a “certified” pre-owned vehicle that did not meet the requirements to be certified
  • Sold what were classified as “certified” pre-owned vehicles, which did meet qualifications for the “certified” designation

In previous legal decisions, California Courts have said that the CLRA exists for two reasons: to protect consumers and to provide an efficient and economical procedure for consumers who seek protection. This is important for auto dealers to know because it means that allowing consumers to drag out a case and run up legal fees is against the very purpose of the CLRA.

Have You Been Accused?

If your dealership is facing CLRA allegation, you should know that though the CLRA can be a powerful body of law for an unhappy consumer to use against you, you are not powerless. With a skilled, experienced attorney who understands the CLRA at your side, you can avoid protracted and expensive litigation. Mohsen Parsa has experience representing clients in all phases of business litigation, including auto dealers accused of CLRA violations. Contact Mohsen Parsa online.

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