AFSCME 3357-HOF'S BLOG

U.S. Supreme Court to determine Truth-In-Lending Act Damages - in a Puppy Dog Car Sale Case

For years there has been a split among the Federal Circuits regarding whether Truth-In-Lending Act statutory damages are capped at $1000 for non-mortgage cases. The Supreme Court will soon decide the issue. I find interesting that of all the cases that have been offered to resolve this, they chose a car loan case involving a puppy-dog sale (a/k/a a "yo-yo sale, a/k/a "gimme back" sale). The car lenders like to call this on the spot financing. I like to call it on the spot coercion and deception. In a puppy dog sale, a dealer tells the customer that she (Most of the customer victims are women, with a disproportionate share being African-American.) has been approved for financing, and the customer leaves with the new car. A day or so later, the dealer calls the customer and says that "the lender" denied financing, and the customer has to bring the car back. They'll need a cosigner, or a downpayment, or a higher interest rate, whatever.

If you are a UAW-LSP attorney who confronts one of these, check in with our consumer group. We have several attorneys who are familiar with this. If you are a non-UAW-LSP attorney with one of these cases, network with a member of the National Association of Consumer Advocates (www.naca.net), and/or talk with someone at the National Association of Consumer Advocates (www.consumerlaw.org). These cases aren't usually too hard to defend as long as your client is not too greedy or too flakey. The usual result is simply getting the deal that the client was originally expecting, or getting the deal unwound completely, and getting the client's money back. A private attorney can usually negotiate enough to get a reasonable attorney fee paid. When I was in private practice, I found it was difficult to go beyond this, not because of problems with the case, but because the clients were usually too unstable to be relied upon in the long-term litigation that the dealers wanted to put us through.

You may be wondering why the term "Puppy Dog"? These sales got the name puppy dog because the dealer wants you to fall in love with the car when you take it home, show it off to your friends, and get you so invested in the car that you'd agree to anything to keep the car. It's like taking a new puppy home, hence the name.

Which way is the Supreme Court going to go? I'm not sure, but honestly, I think this is one that Congress should have weighed in on years ago. If the Supreme Court botches it, it's because Congress didn't proofread it's statute well enough when TILA was revised a decade ago. If the Supreme Court rules that there is no $1000 cap, the lobbyists will march to Washington to get what they want, and they'll probably get their way.


CNN.com - Top court�looks at�misleading car loan damages - Oct 5, 2004